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TRex
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« Reply #15 on: October 04, 2006, 02:30:11 PM » |
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Well, either way you are betting on the valuation of the house. Just as you are betting on the valuation of the stocks. No good return can be gotten without some risk. I disagree with the extra payments, and if you do make those extra payments - you must be explicit in the contract when you get the loan, that they will go towards the principle.
The standard in the loan industry is to give 1/2 percent lower intrest rate on 15 year or shorter mortgages, and that is a primary reason to go for the shorter term. And if you can't afford it on a 15 year mortgage, you should be asking if you can afford it at all. On a 3 or 4 year turn around, keeping the loss due to intrest down is the primary goal. Bigger down payment. Trading a couple of points for a lower intrest rate. But don't get yourself in a bind. Default is a hard word to swallow, and leaves a bad, bitter aftertaste for years (about 7 of them).
On a 3 or 4 year turnaround you also have to consider the market with an extremely skeptical eye. You will already lose some (about 4 to 8 percent) to real estate broker fees. I didn't get any real valuation increase until the housing market boom a couple years ago. And most of that is (temporarily) gone do to a short term change in market conditions. Of course in my case, it will be back, and then some in another couple of years. The thing is the window for making a profit comes and goes. You have to buy in one of those down years to get any gain by selling in the next upturn.
TRex
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Magellan
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« Reply #16 on: November 11, 2006, 10:00:21 AM » |
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I'm not about to offer anything in the personal finance area, there I fit the liberal stereotype to a T. But I offer this to those who use a Mac. I recently have gotten into X11 and open source software, and it's free. Unless you donate to those who make them. It's good practice. A couple of programs I have found, which again if you already are into this you would know them, Gimp(X11), Open Office(X11) and Buddi. Gimp is image manipulation program. Open Office is, well, like MS Office. And Buddi is a financial program. Sort of like quicken or MS Money. I haven't really got into it yet, figures right, but if anyone wanted a personal financial program, or are just into open source software, here is the link http://sourceforge.net/search/?type_of_search=soft&words=buddi |
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« Last Edit: November 11, 2006, 10:01:57 AM by Magellan »
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TRex
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« Reply #17 on: November 13, 2006, 11:47:37 AM » |
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An aside to Magellan:
You fit the liberal stereotype to a T?
You inherited a lot of money, live on investments in
stocks, bonds and tax shelters - which your accountant
handles, then rail against big business and promote the
environment anywhere your privately chartered jet flies
you or your limo drives you, and believe everybody else
should be taxed to pay for welfare programs for those
who will not help themselves?
Somehow I doubt that.
I suspect you are not as liberal as you think you are.
But in the more serious light of software - I have foun
OpenOffice too complex and difficult to learn for my
needs, although I intend to try again - soon.
TRex
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TRex
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« Reply #18 on: November 14, 2006, 08:20:28 AM » |
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More aside to Magellan:
I hope I didn't offend. That last post was meant to be
funny. What I painted was, I know, a characature, more
than a description.
I am interested why you would call yourself a liberal
on the subject of buying a house - I don't see that
as a liberal or conservative issue.
TRex
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« Last Edit: November 15, 2006, 01:17:26 PM by TRex »
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Magellan
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« Reply #19 on: November 15, 2006, 08:27:25 PM » |
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I thought that was funny. But how do you know that is not me?  I probably am not as liberal as I think either. As far as homes, I was just trying to be funny, although, you will never confuse me with an accounting major. I don't think it is a liberal or conservative thing either. Although the deal I got on my home and the rate it has increased since, you would think I was a member of Congress. I am close to the old Hastert family land, so maybe there is some magic left in the soil.  |
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TRex
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« Reply #20 on: January 06, 2007, 02:18:12 PM » |
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It looks to me like the housing market is near bottom,
and now the only questions for potential home buyers
are where to buy and how to shop for interest.
You don't have to be an accounting major to keep up
with this discussion - that would only be a requirement
if you were giving advice for hire. Here we just want
to see our value go hire and not our interest rate :-)
TRex
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Magellan
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« Reply #21 on: January 07, 2007, 03:35:12 PM » |
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A little more peaceful in the battle rhythm then in the comments. OTB, Rob and dw been eaten their Wheaties.
Not to turn it political in here, but some of the reports or forecasting that I am hearing are saying that a democrat congress is going to be good for rates. Kind of like Clinton and the republican congress. Do you agree with that?
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TRex
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« Reply #22 on: January 07, 2007, 05:17:49 PM » |
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Will have to admit ignorance.
National economics isn't my forte, (micro economics is)
That would be Aleksandr's area of expertise.
And, at least on the short term outlook,
I don't think I have ever had a serious disagreement with him.
TRex
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Aleksandr
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« Reply #23 on: January 10, 2007, 10:15:03 AM » |
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Magellan, first, what do you mean when you say good for rates?
A high rate by the Fed is good for keeping inflation down, by limiting the ease with which people can get credit, thus limiting the amount of money that is in circulation. It is also good for investors that want to invest in government bonds, because they now have a higher yield. Obviously it slows the economy because it raises the cost of capital for small businesses and corporations.
A low interest rate is good for expanding business and for the housing market. With a lower rate, mortgages will be cheaper, and in theory housing purchases as well as housing prices should go up. The downside is what we had with Clinton, and that is the easy cash allows for large bubbles to be built up in different sectors of the economy. This will inevitably lead to a market correction like we had with the tech companies, and we should have had in the real-estate market (although, that is being artificially maintained by the Fed, so who knows when the real-estate market will really self-correct, though most likely sooner then later).
Second, whoever says that Democrats will affect the rates does not know what they are talking about because the Federal Reserve Banks (the Fed) are in charge of setting the rate. The Fed is a semi-private organization that with the exception of appointment of the Chairmen by the President with the approval of the Congress is independent of the government. So while Democrats might want to have control of the rates, the Fed is the one that really has the power, no matter how limited it is (since rate manipulation and currency production are only two small factors in economic growth).
What the Democrats will have power over is business regulation, tariffs, and subsidies. As we all learned in basic economics the more the government regulates the worse that it is for business and thus for the economy as a whole. However, with the exception of minimum wage the Democrats don't seem to have an urge to add to many other business regulatory policies. Their attitude towards China is no improvement over the Republicans, so that will mean that, with the exception of taxes (which are a form of regulation); there should be little effect on the economy.
On a personal note, could we all send out letters to our Congressmen and some in the right to leave the Sarbanes-Oxley act alone? Common this is the first government aid (welfare) bill intended specifically for accountants and it is the one that comes under assault. Give a brother a hand; this legislation is the reason why I have a good job.
Also TRex, thanks for agreeing with me in the short term, but when have I been wrong in the long term?
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TRex
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« Reply #24 on: January 12, 2007, 12:25:15 PM » |
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I think, when Magellan says "good for rates" he means that he has heard when the Democrats are in office the mortgage rates will go down - being good for home buyers. Personnally I wouldn't expect anything they do to have any effect for about 3 - 5 years.
That 3 to 5 year lag is, in my mind, why it is so hard for people to understand the relationship between getting good politial policies into law and getting a good return in the economy. Hence what Carter did in the last two years of his term was seen soon after Raegan got into office, what Bush41 did was seen right after Clinton got into office. What the congress of 1995 thru 1998 did was seen in 1998 to 2001. and what Clinton did in 1997 thru 2000 was felt in 2001 thru 2004. (I chose those years based on the overriding fiscal policies that were in play during those times, and who pushed to get them into play). We should be beginning to see the effects of the 2002 tax cuts now.
When you make statements like "as we all learned in basic economics" you need to remember most of us didn't get to the courses you think of as basic economics. (At least when I was in H.S. they made us take a course that taught the basics of balancing a check book, writing a budget and what the difference between a stock and a bond are. Nowadays, I am not even sure that is taught any more.)
I think you need to expand more on the Sarbanes-Oxley thing. I know it has to do with honest accounting by corporations, but not much else. What do you reccommend we tell our congressmen (and of course why)? I take it you are in an accounting job? Last I knew, you were a student (but I won't go into how I know that).
Also, I didn't say you ever were wrong - but for instance I do disagree with you on some issues. Stuff like 15 vs 30 year mortgage, and I am still not too sure about international trade in general.
TRex
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Aleksandr
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« Reply #25 on: January 12, 2007, 12:48:21 PM » |
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You are completely correct on waiting a few years for policies to show their effects. As well as the fact that the mortgages will go down, but that will increase house prices since there will be more customers.
As for Sarbanes Oxley I was just trying to lighten the mood, unless you really want to support it. The biggest thing it does is require any public company (no matter their size) to do internal and external audits every year, thus adding to costs of businesses, but also increasing business for accountants. I've have had some sort of an accountant job (some better then others) for some years now, that is one of the ways I pay for the school; I am currently getting everything I need to be able to sit for the CPA.
As for the 15 over 30 year mortgage it has to do with not getting into long term debt as its main advantage.
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TRex
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« Reply #26 on: March 17, 2007, 03:45:55 AM » |
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As intrest rates - and electric rates - have climed a little higher in the past 16 months, many people who thought they were homeowners found out they are that in name only. Foreclosures and bankrupsies are happening at record rates, and the subprime lending sector is collapsing creating a shockwave in the economy, as I have noted here http://crypto-corinthian.blogspot.com/2007/03/markets-stumble.html (let me know if the background links on that page fail). Too many people have been getting in way over their head in debt. Aleksandr has mentioned Dave Ramsey (and I don't know how he knew I listen to Dave). Dave Ramsey is a financial counciler of sorts, and his formula is to limit your mortgage payments to 25% of your take home pay, limit your term to 15 years, and NEVER touch adustable rate mortgages or intrest only options or other gimmics. And when you get your mortgage, it should be the only debt you are carrying. Military may take some small liberty with this, since their job is virtually garenteed for at least a couple years at a time, and they tend not be at risk of losing their wage because of sickness or injury (in the short run) - but too many of them go overboard on risk. TRex |
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TRex
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« Reply #28 on: July 11, 2007, 02:50:06 PM » |
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Subprime lenders are in the news again - along with one of the largest homebuilders in the nation (DR Horton), which is also in a downward spiral.
Of all the subprime mortages, 11% are in deep trouble - or already forclosed. Almost all have had their intrest hiked to the point where they may get into deep trouble soon.
The ripples felt though the housing market are temporary - but are likely to continue for months. Unless congress undoes the changes to banking laws that allow this slime (subprime lenders) to permeate, there will be a steady flow of homes going through foreclosure for decades to come.
TRex
TRex
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