ZOMG I JUST BOUGHT A HOUSE

[BluffBlank]

I know a few people that have recently put down 0% on their new home. It's not something I feel comfortable doing. I dislike debt.

[Nicholasp27]

anyway, the 80/20 vs putting 20% down, etc can be debated all day long


the MOST IMPORTANT thing to do is to pay extra to your mortgage principle each month...u can pay biweekly instead of monthly, which means 1 extra payment a year...this will save u a TON of money and a few years of paying the mortgage


example: 200k loan @ 7% interest

payment = $1330/month for 30 years => 279,017 interest paid!!!

extra payment/year = 110.83/month extra = paid off in 27 years => 210,758 interest paid

279,017-210,758=$68,259 saved in interest simply by paying $110/month more

[Zurvan]

[ QUOTE ]
I know a few people that have recently put down 0% on their new home. It's not something I feel comfortable doing. I dislike debt.

[/ QUOTE ]

I considered the 0 down payment. Interest rates were 2% higher than on a normal mortgage. I don't have much cash, but that's just crazy.

[Nicholasp27]

sighing,

not having the 40k available now to put 20% down on a 200k house doesn't mean someone shouldn't get into the house

if someone has steady income (not poker) that allows them to pay the 200k note + 2 extra payments each year, then why should they continue to pay rent and not build equity?

as long as you get a fixed rate and can afford that rate, u are fine...obviously if u stretch urself to get into a house, then u are in trouble going 100% because if something happens, u don't have the equity necessary to get out of the house (may be upside down in bear market) and u won't be able to afford the payments anymore

but if u have 6+ months payments in savings and u can comfortably afford the payment that is FIXED, then there is no problem imo with going 100% and it's better than throwing money away on rent each month

[DMBFan23]

[ QUOTE ]
you could do what my buddy does, and just force your kid to mow it frequently

[/ QUOTE ]

EDIT: I don't actually know anyone with kids

P.S. congratulations Z

[Nicholasp27]

bluff,

debt is NOT necessarily a bad thing
what is bad is revolving debt like credit cards
good debt is interest-deductible debt like a mortgage


if u had 500k in the bank to buy a 500k house, it's better to mortgage the house and invest the 500k than to just pay cash for the house

also, u get lots of leverage with mortgage debt; say u buy a rental property and rent it out for ur monthly expenses (note+tax+insurance+maintenance+etc)....u got it for 10% down, say...then u rent it out for a few years until it has gone up 20% in value...u made much more than 20% return...u got a 100% return on ur investment

AND, if u put that profit back into more real estate within 90 days, then it's not taxed...so it's 100% tax-free roi

[Stephen H]

The important take-away here, Zurvan, is that you're going to Home Depot more than you could possibly imagine. I spent every weekend going at least 2-3 times for something like 3-4 months. And it's that short because i'm a lazy good-for-nothing with no skill for tools (although I did manage to put up the blinds without too much disaster).
Congrats and enjoy [img]/images/graemlins/smile.gif[/img]

[Nicholasp27]

yeah; u don't have to be a handyman to go to home depot/lowe's constantly

u'll wanna do lots of little 'projects' urself and then have a list of projects u wanna outsource as well...the little projects u can handle urself and are cheaper so u'll end up doing those first

[Nicholasp27]

anyway, good debt = (hopefully tax deductible) debt that helps u build wealth, so it's on an asset that may appreciate in value (real estate, business ventures, student loans, etc)

bad debt = non-tax deductible debt on items that depreciate quickly or will not ever bring u any return (maxing out cards for clothes/jewelry/toys/etc)

/hijack

[bravos1]

[ QUOTE ]
anyway, the 80/20 vs putting 20% down, etc can be debated all day long


the MOST IMPORTANT thing to do is to pay extra to your mortgage principle each month...u can pay biweekly instead of monthly, which means 1 extra payment a year...this will save u a TON of money and a few years of paying the mortgage


example: 200k loan @ 7% interest

payment = $1330/month for 30 years => 279,017 interest paid!!!

extra payment/year = 110.83/month extra = paid off in 27 years => 210,758 interest paid

279,017-210,758=$68,259 saved in interest simply by paying $110/month more

[/ QUOTE ]

ZOMG.. 200K loan? WTF do you live? My new neighbors got a 80/20 and the 20% 2nd loan was 200K.

I'll let you live in my mailbox for 200K! [img]/images/graemlins/tongue.gif[/img]