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#21
10-09-2007, 05:13 PM
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Re: advice for first time home buyer?
I'd strongly consider moving out to the county if you don't mind the commute and consider relocating later in the future to SE or Madison. Your 110-140k will go much much farther. Talk to a loan officer before you look at houses or talk to a RE agent. This is really gonna determine what you can buy.
Go 30 year on the mortgage, it'll give more flexibility without much more cost. 
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#22
10-09-2007, 05:14 PM
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Re: advice for first time home buyer?
Not necessary to pay off your loan. Only necessary to not miss a payment. Repeat: since you have very few credit lines, how you behave on those lines will strongly affect your credit score (and subsequently, the terms on your future mortgage). A little debt is not a bad thing. Just make all your payments on time.
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#23
10-09-2007, 05:27 PM
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Re: advice for first time home buyer?
[ QUOTE ]
Go 30 year on the mortgage, it'll give more flexibility without much more cost. [/ QUOTE ] If he were gonna go 30, these wouldn't be the reasons to do so. Go 15, unless you want to "leverage" your home, which is stupid IMO. The flexibility should be a non-factor as you should be able to afford payments on 15 year loan if you can on 30 year loan. If you can't, then you are buying too much anyway. And it's a lot bigger cost to go 30, unless again, you are doing it for leverage.
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#24
10-09-2007, 05:34 PM
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Re: advice for first time home buyer?
[ QUOTE ]
[ QUOTE ] Go 30 year on the mortgage, it'll give more flexibility without much more cost. [/ QUOTE ] If he were gonna go 30, these wouldn't be the reasons to do so. Go 15, unless you want to "leverage" your home, which is stupid IMO. The flexibility should be a non-factor as you should be able to afford payments on 15 year loan if you can on 30 year loan. If you can't, then you are buying too much anyway. And it's a lot bigger cost to go 30, unless again, you are doing it for leverage. [/ QUOTE ] Um... Explain how its a bigger cost. You make the same amount of payments you'd make on the 15, but if you decide to not make an extra payment... you don't. Assuming the rate on the 30 is no higher, its essentially the exact same loan when you apply an extra payment to principle.
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#25
10-09-2007, 05:45 PM
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Re: advice for first time home buyer?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] Go 30 year on the mortgage, it'll give more flexibility without much more cost. [/ QUOTE ] If he were gonna go 30, these wouldn't be the reasons to do so. Go 15, unless you want to "leverage" your home, which is stupid IMO. The flexibility should be a non-factor as you should be able to afford payments on 15 year loan if you can on 30 year loan. If you can't, then you are buying too much anyway. And it's a lot bigger cost to go 30, unless again, you are doing it for leverage. [/ QUOTE ] Um... Explain how its a bigger cost. You make the same amount of payments you'd make on the 15, but if you decide to not make an extra payment... you don't. Assuming the rate on the 30 is no higher, its essentially the exact same loan when you apply an extra payment to principle. [/ QUOTE ] Rates are lower on 15 year loans.
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#26
10-09-2007, 05:49 PM
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Re: advice for first time home buyer?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] Go 30 year on the mortgage, it'll give more flexibility without much more cost. [/ QUOTE ] If he were gonna go 30, these wouldn't be the reasons to do so. Go 15, unless you want to "leverage" your home, which is stupid IMO. The flexibility should be a non-factor as you should be able to afford payments on 15 year loan if you can on 30 year loan. If you can't, then you are buying too much anyway. And it's a lot bigger cost to go 30, unless again, you are doing it for leverage. [/ QUOTE ] Um... Explain how its a bigger cost. You make the same amount of payments you'd make on the 15, but if you decide to not make an extra payment... you don't. Assuming the rate on the 30 is no higher, its essentially the exact same loan when you apply an extra payment to principle. [/ QUOTE ] That is correct but usually the interest rate is a tad better on a 15 yr fixed. I also disagree with if you can't afford a 15yr you can't afford a 30yr. It is just a matter of a opinion though.
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#27
10-09-2007, 06:12 PM
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Re: advice for first time home buyer?
Per Marketwatch.com 30yr fixed is 6.09% right now and 15 yr fixed is 5.72%
$140K loan comes out to following mo. payments: 30: $848 15: $1160 $165K in total interest on the 30 year (assuming you don't make extra payments of course) and $69K total interest on the 15 year. IMO the extra flexibility is not worth it. If you can afford $850, you can afford $1160. And if you have little emergencies that month put them on your credit card and pay it off 4 weeks from now when you've got the money. At 72K household income this shouldn't be an issue as he's saving $2K a month.
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#28
10-09-2007, 06:15 PM
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Re: advice for first time home buyer?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] [ QUOTE ] Go 30 year on the mortgage, it'll give more flexibility without much more cost. [/ QUOTE ] If he were gonna go 30, these wouldn't be the reasons to do so. Go 15, unless you want to "leverage" your home, which is stupid IMO. The flexibility should be a non-factor as you should be able to afford payments on 15 year loan if you can on 30 year loan. If you can't, then you are buying too much anyway. And it's a lot bigger cost to go 30, unless again, you are doing it for leverage. [/ QUOTE ] Um... Explain how its a bigger cost. You make the same amount of payments you'd make on the 15, but if you decide to not make an extra payment... you don't. Assuming the rate on the 30 is no higher, its essentially the exact same loan when you apply an extra payment to principle. [/ QUOTE ] Rates are lower on 15 year loans. [/ QUOTE ] I know. Otherwise it wouldn't even be a question.
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#29
10-09-2007, 06:29 PM
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Re: advice for first time home buyer?
am I missing something? Did you guys say a 30y loan will cost you as much as a 15y loan?
I feel i may have misread something, or myabe I just dont understand financing as well as you guys. I was always led to believe that you will save a ton if you are not paying interest for those extra 15 years. If you guys could clear this up I would be greatful.
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#30
10-09-2007, 06:33 PM
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Re: advice for first time home buyer?
[ QUOTE ]
[ QUOTE ] [ QUOTE ] [ QUOTE ] [ QUOTE ] Go 30 year on the mortgage, it'll give more flexibility without much more cost. [/ QUOTE ] If he were gonna go 30, these wouldn't be the reasons to do so. Go 15, unless you want to "leverage" your home, which is stupid IMO. The flexibility should be a non-factor as you should be able to afford payments on 15 year loan if you can on 30 year loan. If you can't, then you are buying too much anyway. And it's a lot bigger cost to go 30, unless again, you are doing it for leverage. [/ QUOTE ] Um... Explain how its a bigger cost. You make the same amount of payments you'd make on the 15, but if you decide to not make an extra payment... you don't. Assuming the rate on the 30 is no higher, its essentially the exact same loan when you apply an extra payment to principle. [/ QUOTE ] Rates are lower on 15 year loans. [/ QUOTE ] I know. Otherwise it wouldn't even be a question. [/ QUOTE ] I thought you were assuming the rate on the 30 was no higher. Obviously, if the rates were the same it wouldn't make any sense to tie yourself to the 15, but I don't know if that scenario would ever exist. You'd also have to make sure there was no pre-payment penalty even if you did find that scenario.
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