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SVTPerformance's Chain of Restaurants
Road Side Pub
Pay off the car or put a dent in student loan?
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<blockquote data-quote="Fat Boss" data-source="post: 16133648" data-attributes="member: 122645"><p>I got a funky loan called a 10/10/10 loan. I bought the house in mid 2016 and for the first ten years of the loan the percentage is fixed at 3%. Then, after the ten years the credit union has a formula that allows them to bump it up to 6% for the next ten years. Then after twenty, theoretically it could be as high as 9%. It makes no sense for me to pay off one extra cent ahead of my other investments with much higher returns, eg: 401k with matching, company stock purchase plan with discount, Health Savings Account. I am however, banking on significant capital appreciation over the near and long term by living close to Silicon Valley with a rental unit on the 2 acre property.</p><p></p><p> </p><p></p><p>I got hosed there. My loan was 80% at inception, but I only had 10% down. I was only able to get rid of the $165/mo Private Mortgage Ins by getting it appraised at 75%. It took me about two years of payments and appreciation to get where I was comfortable paying the appraiser $500 to come out.</p><p></p><p></p><p></p><p>Could you have just paid cash? That's a lot of money for someone to loan you for less than mortgage rates have been in the past ten years. I remember my folks buying an expensive house with an 18% interest rate. They banked on inflation bailing them out, but that fell and so did interest rates and they were able to refi. Hell at this point they've probably refi'd about 5 times in 35 years. They still owe what they paid for the house, but it's now worth about 10x what they paid.</p></blockquote><p></p>
[QUOTE="Fat Boss, post: 16133648, member: 122645"] I got a funky loan called a 10/10/10 loan. I bought the house in mid 2016 and for the first ten years of the loan the percentage is fixed at 3%. Then, after the ten years the credit union has a formula that allows them to bump it up to 6% for the next ten years. Then after twenty, theoretically it could be as high as 9%. It makes no sense for me to pay off one extra cent ahead of my other investments with much higher returns, eg: 401k with matching, company stock purchase plan with discount, Health Savings Account. I am however, banking on significant capital appreciation over the near and long term by living close to Silicon Valley with a rental unit on the 2 acre property. I got hosed there. My loan was 80% at inception, but I only had 10% down. I was only able to get rid of the $165/mo Private Mortgage Ins by getting it appraised at 75%. It took me about two years of payments and appreciation to get where I was comfortable paying the appraiser $500 to come out. Could you have just paid cash? That's a lot of money for someone to loan you for less than mortgage rates have been in the past ten years. I remember my folks buying an expensive house with an 18% interest rate. They banked on inflation bailing them out, but that fell and so did interest rates and they were able to refi. Hell at this point they've probably refi'd about 5 times in 35 years. They still owe what they paid for the house, but it's now worth about 10x what they paid. [/QUOTE]
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SVTPerformance's Chain of Restaurants
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Pay off the car or put a dent in student loan?
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