15-year fixed vs 30 year fixed for $80,000 mortgage.

[99cobradave]

investing borrowed money is never the better deal!


if it is so easy how much money do you have free and clear?

Say what? You're not investing borrowed money. Why would you pay off a 6% load early, when you can take the same money and invest it for 10%?

It makes no sense. Look at euphoric's example.

The 30 year loan is a better deal at these low interest rates.

 

[99cobradave]

by mortgaging your future and investing other peoples money you are playing the real life game of risk. i know some people who have escaped this risk so far and i also know people that have lost everything.
as for me i will get out of debt(yes including the house) and start puttin 1k+ cash every month away into savings and investments to build wealth with my money! the quicker one can pay off the house the faster one can start making real money!

Good to see that your are building wealth. I wish more people would see the light.

But you'd build it quicker if you kept your low interest mortgage, not pay it off early, and invest the difference in higher yielding securities.

"Debt" is not necessarily bad. A low interest loan (mortgage) is a great way to allow you to put your money elsewhere.

Paying off a 6% mortgage only earns you 6%!

 

[vipergts281]

investing borrowed money is never the better deal!


if it is so easy how much money do you have free and clear?

Here we go again.

Welcome to the real world. Borrowing money, especially for a mortgage is NOT a stupid thing to do. As already stated, use the extra money you would save by going with the 30 year and put it into a investment that pays more than 6%.

Not too mention if an emergency comes up and he needs some extra cash, if he goes with the 30 year, he is then not stuck HAVING to pay the 15 year payment. In the meantime, he can take the 30 year and just pay more toward principal every month. Hell, just buying doing bi-weekly payments will cut a 30 year down to around 23-24 years.

You seem so gung ho on NEVER financing. If we all made millions a year, then sure, pay cash for everything. But we don't. So financing allows people to buy a $500,000 a house and a $50,000 car. Gee, what fools they must be to finance them.

 

[ON D BIT]

i had written this long speal about numbers and its not worth it. how many people here have purchased a new car? how many people here have purchased a new car with liqued assets of more than a million dollars? these questions are here because the purchase of a new car will keep people who make money broke!

wealth is earned, not borrowed! all of you here who want to talk numbers and how to get rich go right ahead. but until you can show me it worked for you i will not listen to a word you say! and for the others of you out there, is it the smartest thing listen to broke people talk about money?:idea:


talk to the millionaires who still buy used cars. talk to the billionaires who still drive thier jeep to the office. and most of them will say exactly what i am saying. pay off your debt. pay off your house. let your income work for you not against you.:read:

there is a reason why credit is a multi billion dollar industry! and its not the borrower who wins! my advice to anyone who wants to learn about building wealth is to listen or read about dave ramsey. this guy has been a millionaire twice in the past 20 years. who heard that correct.
made 4 million by investing off of borrowed money. bankrupt at 28 years old after a lender got nervous. without using credit after bankruptcy he rebuilt his wealth. and now what does he say about money?????????????? :shrug: :shrug:

the borrower is slave to the lender! :beer:

 

[vipergts281]

but until you can show me it worked for you i will not listen to a word you say! and for the others of you out there, is it the smartest thing listen to broke people talk about money?:idea:

So you are obviously very wealthy then?

pay off your debt. pay off your house. let your income work for you not against you.:read:

So how is taking a 30 year mortgage stupid compared to taking the 15 year? Take the money saved, and invest into something that gives back a higher rate of return.

there is a reason why credit is a multi billion dollar industry! and its not the borrower who wins!

Yeah, the reason is because people use credit cards to buy things that are WAY out of their budget. Use common sense when using plastic.

my advice to anyone who wants to learn about building wealth is to listen or read about dave ramsey. this guy has been a millionaire twice in the past 20 years. who heard that correct.
made 4 million by investing off of borrowed money. bankrupt at 28 years old after a lender got nervous. without using credit after bankruptcy he rebuilt his wealth. and now what does he say about money?????????????? :shrug: :shrug:

It just tells me that he takes action and only knows how to succeed and reach his goals.....that's all he knows how to do. It's the same reason why most people who win the lottery lose it all a few years later....they never had money before because of a certain reason. So when they get it, they have no clue how to manage it.


There is something about you that I just can't put my finger on. I get the impression you went to Barnes and Noble and bought all of theses BS books on saving money and crap like that. And now you live by it. You do nothing but preach "never finance things, always pay cash." Like I said before, in a perfect world that is obviously the best course to take. But, maybe you have noticed, we don't live in a perfect world.

Financing is NOT always a bad move. 95% of people can NOT afford to buy a $250,000 house in cash. So then, according to your philosophy, they should buy a $50,000 house (or whatever dollar amount they have in cash). Give me a break. If they make enough monthly to afford the mortgage on the house, then what's the problem?

Have you forgotten about how the value of the home will increase? Or the fact that a mortgage payment has some nice tax advantages?

If we all lived by "pay cash for everything", then most people would lead a shitty lifestyle. Hey, if you want that, then by all means go for it.



So I ask you again, are you wealthy? Surely you must be from the first quote above.

.

 

[99cobradave]

all of you here who want to talk numbers and how to get rich go right ahead. but until you can show me it worked for you i will not listen to a word you say!

It worked for me. I'm trying to tell you, but you won't listen.

The 30 year loan is a better deal. Do you not know how compound interest works?

I am very wealthy (don't confuse income with wealth) for my age, but I still have 15 years left on my 30 year mortgage. That baffles some people, but I understand compound interest VERY well. Other people don't. I started out with 7.375% 15 years ago on a 30 yr. fixed rate mortgage, refinanced twice, and now I'm at 5.125%. Why pay that off early? It's only 5.125%! Instead, I'm putting the money in my ROTH, 401k and taxable MF accounts and earning twice that much! Now I'm looking back and seeing the fat part of the compound interest curve working it's magic on the decisions I made in my 20's.

You sound like a saver, which you and I are of the same ilk. I'm not trying to get nasty with you, but listen to what I am saying.

To the poster of this thread. Go with the 30 year loan for as low of an interest rate you can find. Then take the difference of the payment of the 15 yr vs the 30 yr loan and INVEST THAT IN A ROTH IRA EVERY MONTH FOR THE LIFE OF THE LOAN. Be consistent, don't stray and you'll be amazed 15 to 20 years from now.

 

[NeedaCobra]

Thanks for all the helpful advice and number-crunching.

I do like to avoid debt. I'll probably go with a 30 at first then when school/work, etc. is more steady and secured, I can get it paid off either with extra payments or refinancing if the Fed. hasn't raised rates too much at that time.

Until then, more watching and listening to Dave Ramsey, Suzie Orman, Jim Cramer (Booyah!), etc. :-D

Also, what has hindered me most so far in investing is small credit card stuff here and there. The interest paid on those is more than I would most likely gain in the market, so that's another reason why debt (at least at high interest rates) hinders personal finances. You can never see the effects of compounding interest 'cause you're paying that interest to someone/something else instead of realizing it at the end of the month. :read:

BTW, I am sorta against buying a new car (except with cash), as they just lose value so much. I usually just drive cheap cars, because after all, all it does is get you from point A to point B. I know too many people who think March's tax return means they're supposed to get a new car.

 

[99cobradave]

Thanks for all the helpful advice and number-crunching.

I do like to avoid debt. I'll probably go with a 30 at first then when school/work, etc. is more steady and secured, I can get it paid off either with extra payments or refinancing if the Fed. hasn't raised rates too much at that time.

Again, assuming you can get a low interest rate, why would you want to pay it off early?

You are young. Take advantage of that. Do you have a Roth IRA yet? If not, you need one.

 

[NeedaCobra]

Again, assuming you can get a low interest rate, why would you want to pay it off early?

You are young. Take advantage of that. Do you have a Roth IRA yet? If not, you need one.

Once all my credit cards are payed off, I will.

I have 3 cards, totally around $3300 total. The average interest rate I'm paying is 25%, so yeah, I'm young and dumb. :-D But I don't think it'd be smart for me to invest yet in the market or in a Roth IRA until get them paid off. I have an account with Scottrade ready to go, I just haven't put it into use as I'd be 25% or so in the hole, which is well beyond the market average or Roth IRA average, and I'm certainly no Peter Lynch. op:

Oh, and I just found this neat compounding interest calculator :-D
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

 

[YesterdayAgain]

Why are Roth IRAs so good? I was under the impression you are unable to withdraw funds from Roth IRAs until you are 59 1/2 years old. That doesn't sound so swell to me.

 

[99cobradave]

Why are Roth IRAs so good? I was under the impression you are unable to withdraw funds from Roth IRAs until you are 59 1/2 years old. That doesn't sound so swell to me.

lol. Well, all IRA's are for "retirement," so you cannot withdrawl until a qualifying age w/o penalties. It may not sound good now, but you'll think differently when you are 59 1/2 and you don't have any money saved up.

However, a traditional IRA is tax deductable, ie. you can deduct the contributions from your income taxes each year, and it's tax deferred (gains and/or dividends are not taxed). BUT, upon your qualifying age, you are taxed at the reqular tax rate when you withdrawl. Boooooo!

A ROTH IRA is not tax deductable, and grows tax deferred. BUT, upon your qualifying age, the money IS TAX FREE when you withdrawl!!!!! Now that is a good deal!!! You can withdrawl from your ROTH at any time before your qualifying age, but there are stiff penalties.

Long term, the ROTH is the better deal.

 

[Morningstar908]

If you can swing the 15 get it. Don't fool yourself into thinking that you are going to make double payments on your 30. Its been my experience that people spend the extra money they make, not make extra payments. The temptation to buy another car, for example, instead of making those double payments will be too great.

 

[99cobradave]

Once all my credit cards are payed off, I will.

I have 3 cards, totally around $3300 total. The average interest rate I'm paying is 25%, so yeah, I'm young and dumb. :-D But I don't think it'd be smart for me to invest yet in the market or in a Roth IRA until get them paid off. I have an account with Scottrade ready to go, I just haven't put it into use as I'd be 25% or so in the hole, which is well beyond the market average or Roth IRA average, and I'm certainly no Peter Lynch. op:

Oh, and I just found this neat compounding interest calculator :-D
http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Ah. Yeah, pay off that 25% loan first! Then open up a ROTH IRA and start contributing to it instead of double payments on your low interest mortgage. Be disciplined!

 

[NeedaCobra]

Ah. Yeah, pay off that 25% loan first! Then open up a ROTH IRA and start contributing to it instead of double payments on your low interest mortgage. Be disciplined!

Based on the link someone posted in my other thread (about Bank of America and illegal immigrants), maybe I should just say I'm an illegal alien and get a home loan that way. :mj:

But anywhoo, doing things the honest way pays off in the end, even though at times it may seem not too, it'll all work out in the end with hard work.