Cash or Mortgage
Kendrah
2 years ago
last modified: 2 years ago
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Kendrah
2 years agoElmer J Fudd
2 years agoRelated Discussions
Extreme M.O. foreclosure
Comments (3)The home at 5489 Ahyoka Dr. has 5,500 square feet after the 2005 makeover, WGCL CBS46 reported. Well something just does not add up here. The ad says it was built in 2005 and has 1,549 sq ft. It's presently for sale by someone for $950K. I've often wonder how the recipients of the makeovers were ever able to afford heating, cooling, taxes, and insurance on the bigger much improved homes. I'm sure all those things would be considerably more than they were when it was just a small humble abode. Sue Here is a link that might be useful: Real Estate Ad at Zillow-5489 Ahyoka Drive, Lake City, GA...See MoreShould I stop paying the Mortgage occasionally?
Comments (30)Well, I know 2 Accords or Camrys will set you back 53K. A suburban and a camry could be more like 70K. If financed, she is probably upside down, and would lose money selling them. Anyone here ever sold a car on her own? Its one thing to trade in, but quite another meeting strangers for test drives. I guess there is carmax, but I'm quite sure they are in full lowball mode in this economy. You are making several assumptions: 1. Toyota only sell Camrys. They actually sell less expensive models, such as the Corolla. Honda also sell the Civic for far less money. Are they fancy cars? No. 2. New car purchases. The OP can buy used cars. There lots of used cars selling for $10k-15k - heck I saw 2 year old used Saabs going for $15k. 3. Carrying $53K in auto debt is the default and it's not worth lowering debt if you can't erase all of it. Sure, she may be underside down and may still have some debt afterwards but likely it'll be less than $53K. She needs to run the numbers to figure out if it's worth it. Finally, I would take a course at the local community college about basic auto mechanics. Learn how to change a tire, check the oil, change the oil, check tire pressure, etcs. I learned a long time ago that basic auto care is necessary. Ten years ago, I got a flat tire on I-95 so I changed the tire myself - not one person stopped to help me (maybe I looked a bit too competent). We've sold a car to CarMax. I'm sure we didn't get the absolute best price for the car but it was a fair price (I had done some research on the internet to get a ballpark price). It was amazingly easy to sell to CarMax. I would recommend it to people who don't want to do it themselves....See MorePay cash and get mortgage?
Comments (10)Hello, Bellamy. Here are the reasons: 1. At the price point I'm looking at, there will be some substantial repairs needed. The longer those are delayed, the more damage will occur and the more they will cost, so they should be done right away. Leaky plumbing is different from an ugly kitchen as far as how soon it must be dealt with. A nicer kitchen can easily wait till I get everything paid off. Structural stuff can't. 2. I'm not considering the mortgage deduction at all in deciding whether or not to do it this way, although I would prefer to do the loan as a mortgage so that it's deductible. If I'm paying some interest, why not have it be at least partially deductible, if it can be? I know what you're saying, though. My mother had a friend who was fairly well off and her accountant kept urging her to pay off her older mortgage, which was at a higher interest rate. She wouldn't, because she wanted the deduction, since it was the only big deduction she had. That was silly. 3. Yes, I could pay cash for the house and for the repairs, but it would put me in a position where I would feel very uncomfortable if I had a catastrophic medical situation, for example, and the total cost of the mortgage over its lifetime at the current interest rate would be approximately $4K, plus whatever fees. While it would be nicer not to have to put out that kind of money, to me it would be worth it to know that I could do this and still be set for emergencies and not making a huge dent in my retirement savings (I'm self-employed). I can live hand to mouth and have done that, but it's much pleasanter not to. I totally hate debt, but I've looked at this from a number of different angles and in the long run I think that buying will be cheaper than continuing to pay rent, since I live in a winter resort area and the only places where rents are going down proportionately to the drop in sale prices are those where the owners are in pre-foreclosure and desperate for any income. I don't want to get into that kind of situation. If my income level continues to be what it is now, I should be able to pay off the loan in four or five years at the most, and at worst I could scrape by on minimum wage and still make the basic payment as well as HOA, taxes, insurance. If I could pay cash for everything, if I stayed 6 or 7 years I could give the place away at to charity at the end of that time and really not be out more than I would if I continued to rent the same amount of time. The mortgage interest means I would need another year or so to get to the same place....See MoreAre we better off paying Cash or getting a Mortgage ????
Comments (67)The idea of front loaded interest on mortgages is a bit of a misconception, while you pay more interest in the early years that is only because you owe more money (If you have a 3.9% mortgage then you pay 3.9%/12 on the outstanding balance you owe each month). While that may sound pertinent, the discussion is really about effective interest versus compounding interest. As you pay on your principle you pay less interest, so over time the interest charges are smaller because your principle is smaller. While on an investment you start with a principle and if left alone for some period of time the interest continues adding to the principle and therefore pays more interest. This discussion is largely around the idea of people who have some income coming in and some ability to make payments. While, I could note that guaranteed payment annuities are about equal to house payments, they are no more liquid than houses so not really an investment that is better than a house. In the end, we are discussing people who want to be done with the headache of a mortgage and not people who simply don't have the income to continue paying a mortgage. Edit: It is also important to remember that a 15 year mortgage doesn't mean you have to make 15 years of payments. Making even a few years of payments before liquidating the investments to pay off the balance will typically result in gains. I think a lot of people focus too much on the stress of coming up with the money for monthly payments and forget that any time you get tired of stressing over payments, you can simply liquidate your investment and pay off the loan. While I have said the same thing jn3344 has many times, I have a completely different conclusion. When you have a paid off house and little money in the bank you have no options for dealing with uncertainty. Cash gives you options, the farther you get from cash the less options you have, and nothing is farther from cash than a house. Think of it this way. My father was just this week presented with a treatment option for a medical condition that was not covered by Medicare, the time sensitive treatment was going to cost $35,000, but it would greatly improve his quality of life. What allowed my father to make that decision was having access to $35,000, if he paid for his house outright and didn't have any money then he couldn't make that decision. Now suppose spending this $35,000 means my father will not be able to continue paying his mortgage and will have to move out of his house into a smaller apartment. I feel confident he will tell you walking around his smaller apartment beats not being able to walk around his bigger house. Edit: Many people have a false sense of security from a home. The only real security a paid off home provides is the equity (the access to cash). Homes are fairly inefficient domiciles, the taxes, maintenance and less efficient utilities minimize any real savings over renting. The path to homeless has nothing to do with a paid off house and a lot to do with not enough cash....See MoreAngel 18432
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