Hi Muddbelly, Sorry to hijack here saphire, but Dave - where do you think rates will be after those 2-3 years (say late 2009)? Well... while my crystal ball is a little foggy, and I let the insurance on it lapse..... I believe that mortgage interest rates are going to remain flat, within a range of roughly 1/2% of where they are today, for a long, long time. If you have 5% for another 28 months, I would recommend leaving that alone, and making hay while the sun shines by aggressively stuffing every additional discretionary dollar you can into your tax-deferred and tax-free retirement vehicles. Hi Cmarlin, (I think you jumped threads (this is from elsewhere, no?...) but I'll answer here nonetheless.) I am also considering buying a 4 unit bldg (not owner occupied) I also do not have verifiable income. I live on investments, so there is a history, but I do not have much income on my tax returns. OK, you need to qualify using a special program process called "Self-Employed Investor, Stated Income." Does the lender look at the bldg as they do on larger multi-family, will the rate be better if I do not go above a four unit as opposed to a larger mix. Yes... both rates and terms are preferential at a 4-unit level than at 5+ units. I have good Ficos and about 50% down. Will I have a problem getting a mortgage? You shouldn't... at 50% down it ought to fly through OK. Cheers, Dave Donhoff Strategic Equity & Mortgage Planner

Hello Ellen J, It seems to me that you have two kinds of debt, possibly three. You bought a large asset that very few people are able to pay for with cash, namely a home. It will be an asset that will provide benefit for years, may go up in value. You paid for it with a large mortgage - I note that the amount of the mortgage was close to the purchase price, so you had a minimal down payment apparently. You didn't refer to student loans, which are a major debt carried by many youngish people. They, too, are an investment from which one expects to receive a benefit for many years. Consequently one can justify paying for it over an extended period - though the longer time that it takes, the lower standard of living one will enjoy throughout that period, due to ongoing interest costs. However - how long are you willing to pay for a loaf of bread, a night out on the town, or substantial repairs to your vehicle? Thirty years? The life of a mortgage? Most credit card debt is incurred to purchase things or services that we use up right away, or over a short period. If we pay off outstanding balances right away, we are living within our means, but if we carry outstanding balances owing over a period, we are condemning ourselves to living less high on the hog in future than now, for we enjoyed that dinner out tonight, but are going to continue to pay for it for months, even years. An extra cost is that which we pay in interest on that loan. If we carry the outstanding balance over the end of the year, then we will live less well next year, for we have that interest added to the debt, every month. With credit card debts, the rate is high. And almost always non-deductible. It seems to me that you should resolve to go into emergency saving mode and pay off those current debts as soon as possible. I am not in favour of adding them to a mortgage, thus paying them over 30 years or so. Do you want to be still paying for a loaf of bread in 2017 that you ate in 2006? I think not. I am reluctant to suggest that you make your savings plan drastic, as I gather from your message that you and hubby are not entirely in agreement as to the way to handle this issue, so you may well have less than enthusiastic agreement from him as to how to deal with this issue. By the way, I agree that you should plan to pay for stuff in cash, refusing to use the credit cards. Keep one in hand, though, in case of dire emergency need. But make sure that you use it for nothing else. Are you a kid or a grown up? I have some reservation about using part of hubby's bonus for emergency fund, though as a personal financial advisor I tell people all the time that they should have one as a high priority item in their financial agenda. However, if you are paying the 18% - 28% or so interest rates on current outstanding credit card balances, doesn't it make more sense to use most of the available bonus to pay down those current debts, knowing that the one or two credit cards that you have on hand can be used to cover emergencies - and you won't have to start paying interest on such debts until you incur them, but you're paying high rates on current debt now. Good wishes for making the best decision in this circumstance, and for having the self-will and courage to see it through. Good wishes for learning how money works. It's an interesting hobby - and one of the few hobbies that pays well. If you don't boss your money - it'll boss you. ole joyful

The link is to the "Investment Tool" websiteÂÂ.but I could not find the above mentioned article. That said, the drop in RE value is not a stand alone...much of both the unprecedented rise and drastic fall were both caused and facilitated by loans with absurd terms being approved for people who could not pay themÂÂand in most cases, were not even required to document that they could pay themÂ...especially when the reset terms kicked in. The "great loan give away" meant that an unprecedented number of homes could be "sold"...drastically reducing supply, while drastically ramping up demand....and as the law of supply and demand almost ALWAYS dictates, prices escalate as well. However, since so many of these homes were purchased with loans that did not have a prayer of being paid, a good portion of existing homes could not longer be classified as collateralÂwhich in turn started the devaluation ..aka, price plunge. Now, throw in the get rich quick ability that securitization brought...and it was "Let the games begin!" Now...letÂs play for a moment. IF the prices of homes had either remained steadyÂÂ..or appreciated....all that would mean is that owners could borrow even more $$$$...under equally predatory terms.....with both the lenders and the borrowers merely digging themselves in deeper. Can you imagine a one bedroom 40 year old basic condo in an average area going for 10 mil and beyondÂand lenders allowing the owner to continue to borrow against that value?? Exactly when did the lenders say that they would have FINALLY drawn the line? That said, the fact that there had never been a drop this bad is a pointless fact, if one does not take into account all of the contributing factors that occurred this time around that were not part of any of the previous RE rise and fall cycles. Nothing exists in a vacuumÂ....and to treat it as such is simplistic at best. Also, realize that during the last RE boom of the '86, (remember when greed was goodÂ..and Michael Milkin & co destroyed Drexel Burnham?) interest rates were very high. Friends who bought in Â84 had a 13% interest rate...we bought in '86Â..at 10.75%...and you could NOT buy in NY without at minimum 10% down...and PMIÂÂ..and the 10% could not come from a loan...either commercial or private. AndÂright before closing, we had to supply all sorts of documentation that our financial picture had not changed in any significant manner. IMO...any lender who thought that there was or is any comparison and banked on the past rise and fall patterns was again, either stupidÂ...or incompetentÂÂor both. Last but by no means leastÂÂnot all home values have tankedÂ..many areas have dropped a bitÂ..or remained steady. It appears as if the areas that have devalued the most are also those where the largest number of predatory loans was issuedÂand that pretty much says it all in terms of cause and effect.

Posted by mgmsrk (My Page) on Wed, Jun 6, 12 at 10:38 Will the lender give you a home equity line at the same time as the mortgage? If they do will they not just add PMI back as you are below 20%? Are you sure your closing cost will only be $10G, that seems low for the cost of the home. Are you including the escrow end of closing costs, 3-12 months of taxes and 6-12 months of insurance? Does your area have a mortgage or transfer tax? Credit scores tend to have more to do with rates, if your credit is great you generally get the best rate even if you borrow a bit more. A little bit more disclosure from me: it's a construction to perm loan. So, the escrows in the closing costs will be essentially the land property taxes - low with no building yet. They would establish the 2nd equity line HELOC to pay for the Closing costs. We are planning to pay the closing costs on the HELOC off with the proceeds from the sale of another property some time during the construction phase. Question: 1) What would be make good dollar sense at that point? 2) Would I have to Refi or Modify the original terms? Reasoning is the current lender seems to be steering me towards a jumbo loan ( amt would be 420k vs. 417k) & putting less of the closing costs on the 2nd HELOC. Not sure what the motivation play is here...unless we are getting better pricing for a jumbo (very rare IMO)