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Sure, but it used to be that the NPNC option was maybe a quarter of a point higher. I never bundled closing costs in to the loan either, these were true NPNC.</p>
<p>This was also back in the day when rates were in the 8’s.</p>
<p>Now I see the NPNC option adding .75 to a full point to the rate.</p>
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How many of the 1/3 that own their homes free and clear had mortgages along the way? A pretty high percentage I bet.</p>
<p>And rent is essentially debt. When a tenant signs a lease with me they are agreeing to pay me a certain amount over a certain time, it’s no different than a mortgage or any other loan, just shorter-term. </p>
<p>Very few renters have the choice between “paying rent” or “live for free somewhere”. Otherwise they would be living for free somewhere.</p>
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<p>Yes, but we’re looking at a static point in time.</p>
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<p>No. Rent is an agreement. It’s more of a pay as you go arrangement. You are obligated, under the agreement, to make payments but you get something in return.</p>
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<p>That’s not the point. The point is that their lives are structured without debt; at least mortgage debt. Perhaps they don’t have the option of getting a mortgage. But that’s not the issue.</p>
<p>We’re going for the longer term loan because we’re self-employed and want the option of not paying a higher amount if we have cash flow problems (sometimes clients don’t pay their bills on time). We also have two sons with serious health issues, so some months we may be strapped due to their medical costs.</p>
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Your original statement was “I’m in the group that doesn’t like having any debt at all.” Not only does this not imply a static point in time, it isn’t limited to only mortgage debt.</p>
<p>And we as landlords treat entering into a rental agreement with someone exactly as if we were loaning them money. We verify their income, check their credit, do everything we can to make sure they can make the payments. I can sue them if they don’t make the payments. And in fact my lease (and every lease I’ve seen) is written as “you owe me $xxx, payable in monthly increments of $xxx/12”, not “you owe me $xxx/12 every month”.</p>
<p>Maybe you don’t think that counts as debt, but as for as I am concerned I’ve issued them credit, so what is the substantive difference?</p>
<p>Collecting unpaid rent from a deadbeat is unlikely in most cases. You take their deposit and get it re-rented. Not worth the trouble to go after them in most cases. There is a reason they are renting.</p>
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<p>^^You’d be much better off to pay those fees/ponints up front, because your money can only make .1% in the bank, .75%~1% over the life of the loan is a huge amount of money.</p>
<p>We bought our house at 6.825, 30 yr fixed in 1998 and refinanced to 5.625, 15 year fixed five years into the mortgage. Did not pull out any equity – just a straight refi of existing balance. Increase in payments was ~$100/mo and we will be free & clear in March 2018 – the 20th anniversary of when we originally bought. Saves us 10 years of interest payments.</p>
<p>We were considering rolling the home equity line and remaining mortgage into one loan, depending on interest rates, when S2 graduates. That assumed we were hitting the HELOC @ 4.25% for the amount we originally budgeted. Looks like we won’t have to do that since we’ve only had to hit the HELOC once, thanks to better FA than expected and my income. We had assumed zero FA for all eight years of the guys’ college, so anything we got for the two years they overlapped in school was a happy surprise.</p>
<p>OTOH, when we are finished paying tuition, there is a lot of deferred maintenance/upgrading that needs to take place. ;)</p>
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<p>I’ve made it clear in many posts that we had a mortgage. That I don’t
like any debt has to imply a static point in time.</p>
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<p>A bank can issue a line of credit. That does not mean that they have
loaned them any money.</p>
<p>Furthermore you have to provide them with a good or service - the
property, in usable condition for the period of the lease.</p>
<p>I’m not sure a distant observer could see any difference between renting and paying by mortgage. Each month the people in the house send off a sizable payment.</p>
<p>BTW, it was recently announced that the median income of CT residents fell 6% last year. As long as house prices continue to fall more than that annually, I’d say prospects for CT’s housing market are bright!</p>
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<p>The distant observer could merely look at the balance statement as opposed to cash flow.</p>
<p>In a rising market, the owner would look better. In a falling market, the owner would look worse. Typical fruits of leverage.</p>
<p>"^^You’d be much better off to pay those fees/ponints up front, because your money can only make .1% in the bank, .75%~1% over the life of the loan is a huge amount of money."</p>
<p>You are better off paying the fees up front…thanks for the reminder.</p>
<p>Artloversplus…you never answered my question…did you look for condos to buy in SF…and if you did…what did you discover?</p>
<p>“We’re going for the longer term loan because we’re self-employed and want the option of not paying a higher amount if we have cash flow problems (sometimes clients don’t pay their bills on time). We also have two sons with serious health issues, so some months we may be strapped due to their medical costs.”</p>
<p>We discuss…ok…we argue about things that can be pretty trivial…and then I read things like the above.</p>
<p>MaineLonghorn…what you wrote is a wake up call.</p>
<p>I wish you the best.</p>
<p>“I’ve refinanced 4 properties in the last year and taken them all to 15 year mortgages at ridiculous rates. I’ll trade a couple hundred a month in increased payments to knock 10 or 15 years off the mortgage all day long. The increase in payment is really all principal that is getting paid down, so it is all coming right back to me anyway.”</p>
<p>I like this too.</p>
<p>I would not buy SF condo’s for investment, too much rent control and too expensive for my taste.</p>
<p>Besides, I did not see any thing in SF that is 20% below the wholesale market.</p>
<p>Ok…thanks.</p>
<p>[Mortgage</a> Calculator - Bankrate.com](<a href=“http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx]Mortgage”>Mortgage Calculator | Bankrate)</p>
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<p>^^ Not sure how much was your mortgage balance, CD. but using the above mortgage calculator you can almost achieve the same thing by paying the difference to the 30 year mortgage lender.</p>
<p>Here is an example, for a $100k, 30 year mortgage at 6.825% the payment is $653, a 15 year mortgage for the same amount at 5.625% the payment is $823/mo. If you put that $170 difference to the 30 year mortgage as an extra reduction of principle, your effective pay off date is exactly 17 years 3 months. Assuming you made the refi after 5 years into it, and start to pay that $170 extra, it going to be just about the same pay off date. But with refi, you may incur extra costs.</p>
<p>As said before, a mortgage has to have more than 2 points spread to make refi worthwhile.</p>
<p>After 5 years, the balance would be $94K, giving a payment on the 15 year of $774. Paying the balance of the 30 year using a $774 payment would have taken an extra 17 years 7 months.</p>
<p>So by refinancing they shortened their payment period by 2 years 7 months.</p>
<p>Shortening the mortgage by 31 months saved $23,994. So refinancing for only one point lower seems worth it to me.</p>
<p>Not sure where this fits in here but I bought my first house in 1982 for $72k with 20% DOWN at a mortgage rate OF 17 3/8%. My two room-mates paid the vast bulk of the mortgage and taxes thru reasonable rent. I sold it just 36 months later for $155K when mortgage rates were down to 10%. </p>
<p>People do not buy homes based on their Interest Rate, but rather on their payments. </p>
<p>**LESSON: WITH MORTGAGE RATES AT HISTORICAL LOWS THIS IS NO TIME TO BE BUYING ANYTHING ON AN ADJUSTABLE RATE MORTGAGE AGREEMENT. **</p>
<p>Ignore this at you own peril.</p>
<p>Similar story - we bought when rates were over 10% and refied when they were quite a bit lower and then paid it off shortly thereafter. When interest rates are high, prices head down. Of course we may be in a period of low interest rates for quite some time.</p>