Mortgage a Done Deal
Posted April 25th, 2005 @ 01:02pm by Erik J. Barzeski
Carey and I went to sign the mortgage today after first stopping by to sign the contract. It's now about as official as it can get. Just a few steps remain:
- Get a home inspection (home, pest, radon). Scheduled for 3:30 on Thursday.
- Get home insurance. Carey and I will call around today.
- Get the money ready. That's happening soon.
- Closing is set for May 27, give or a take a little.
- Wait…
- Move. Gosh, I hate moving.
The whole process has been pretty stress-free for me. Heck, buying my dog was more stressful. A mortgage payment of barely more than I paid - alone - for rent in Florida just isn't cause for stress, I guess ($1009.04/mo for 30 years and $210k in interest or $1360.47/mo for 15 years for $91k in interest - which do you think we'll choose? :-P).
Finally, Thursday, I should be able to get my own pictures. The inspector takes some (we chose Pillar to Post), so they shouldn't have any problems with us taking some too. We just want to get the colors so we can buy some accessories.
Donate Life
Posted 25 Apr 2005 at 2:36pm #
Congratulations!
Posted 25 Apr 2005 at 3:15pm #
Congratulations - that's exciting. BTW I hope you'll go the 30-year route. Here's why.
Posted 25 Apr 2005 at 6:55pm #
The "don't pay your mortgage off early" makes sense if you can find an investment that fairly reliably pays you 8% or more, and from which you can fairly easily withdraw (i.e. to buy a car, whatever). I don't know a whole lot of investments that pay 8% or more per month, but I suppose it's worth checking into.
For the first year, I think the extra income will pay off the car loan I have, which is higher than the mortgage rate. It's got about 14 months left on it, and if we can make that 10 months, that'd quite beneficial.
Posted 25 Apr 2005 at 7:06pm #
Congrats on getting the house. I'm sure you'll enjoy it once you get to set it up to your liking. Trish and I will begin searching for a home of our home in the coming months...
Posted 25 Apr 2005 at 8:30pm #
Congrats also. We have also just purchased a new home in Southern California. Howerver we did it a little different. We are buying a new home that is getting built. The reason we like this is that we can select the flooring, cabinets and even the number of wall sockets we have. However we had to do an 5 year interest only loan because of the price of homes out here. (And we live in one of the cheaper areas of So Cal).
I'm not sure of anything out there these days that can gurantee you 8% return. Personally we are going to make extra payment on the house for the first 5 years so that we are at least paying off some of the loan. To me I would rather gain the equity in the house and pay it off early....
Posted 26 Apr 2005 at 3:21pm #
Dan, Ric Edelman's argument seems solid, but it exists unchallenged so you can't clearly see it's holes.
First, as you know, most people are not as disciplined as Ric's proposal would require them to be. Inevitably, people have 30, 40, 50 thousand dollars around and marketers get to them and then they want to spend it.
Second, you have to compare the percentages realistically. Banks are making their 6% on well over $100,000. Most people do not have nearly that amount of initial capital. 6% of just $100K is $6,000/year. If you're lucky you'll have an extra $20K around unused when after you buy your first house, but you'd require a 30% return on that $20K to get the same $6K that the bank is extracting from you... at the conservatively low $100K.
So, Ric is right and does make sense, but only if you have a lot of money on hand at the time of purchase to invest, and can get a better interest rate. If you have any amount of investable cash on hand that is less than what you borrowed from the bank then you need a larger and larger percentage return on your money to make up for the smaller amount of investible capital.
I hope this makes sense. I'd really like to explain it with some visuals, but the comment box is lacking.
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Erik
You're intuition about these things (and others) is very often on point. Furthermore, you seem to rarely have self doubt. Given those two things and these rough estimates... if you're only wrong 10% of the time, and only doubt yourself 10% of the time then your self doubt will only help you catch an error in judgment 1% of the time over the long haul. (yes, this is a shitty, overly cute argument, but)
Go with your gut.
Posted 02 Aug 2005 at 10:56am #
They say that getting married and buying a house are some of the most stressful things you can do. Carey and I eliminated the stress in getting married by doing it on the cheap and easy, but we knew that...