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View Full Version : 50 year mortgage!


bcampbe7
05-10-2006, 05:01 PM
I can finally afford the house of my dreams. :rolleyes: :rolleyes:

http://money.cnn.com/2006/05/10/news/economy/economy_mortgage/index.htm

erkoehler
05-10-2006, 05:08 PM
Nothing like driving up the debt!

sanjuan23
05-10-2006, 05:09 PM
50 years!!! Wonder how that intrest payment looks every month. When could one expect to gain any equity...

bcampbe7
05-10-2006, 05:12 PM
I don't know, but could you imagine buying a house at 30 and not having it paid off till you were 80?!? :eek:

I guess if you live in an area where the cost of living is high, you have to have long mortgage term.

Tom023
05-10-2006, 05:12 PM
I just recalculated my 15 year mortgage at 50 years. The payment was just about cut in half, but the amount applied to principal on payment #1 went from $1050 to $127. Might as well just call them interest only loans or rent.

6ballsisall
05-10-2006, 05:18 PM
They have their place. 40 year mortgages have been around for a while. Like the article said, if you are only going to be in the house for a few years (relocating constantly for work for example) they can make sense. In a few years time even with a 15 year loan you aren't going to make much a dent in the principal. If your going to be there a while than thats not the right type of loan. I still don't know how Californians do it, I make good money but I'd struggle in California. They can keep their state as far as I am concerned :rolleyes:

6ballsisall
05-10-2006, 05:19 PM
I just recalculated my 15 year mortgage at 50 years. The payment was just about cut in half, but the amount applied to principal on payment #1 went from $1050 to $127. Might as well just call them interest only loans or rent.

Just for giggles wanted to do the same comparison, what site did you use for the calculations? Only sites I know of have 30 year #'s.

sanjuan23
05-10-2006, 05:19 PM
How many of us purchase a home and really expect to be somewhere for 50 years. Let alone 10 or at least that is my personal experience. Since we bought our first house in March last year, we kinda felt like we should be packing up and moving again. Guess its something you just get used to after a while. I agree you might as well call it an Interest Only.

Tom023
05-10-2006, 05:21 PM
I just did it in excel. I happened to have a loan amortization spreadsheet I made when I used to have an adjustable rate mortgage, just to keep the lender honest, so I ran that out with my now fixed rate mortgage at 15 years and 50 years.

Ric
05-10-2006, 05:23 PM
How many of us purchase a home and really expect to be somewhere for 50 years. Let alone 10 or at least that is my personal experience. Since we bought our first house in March last year, we kinda felt like we should be packing up and moving again. Guess its something you just get used to after a while. I agree you might as well call it an Interest Only.
that's a nice avatar san juan ;)

6ballsisall
05-10-2006, 05:25 PM
I just did it in excel. I happened to have a loan amortization spreadsheet I made when I used to have an adjustable rate mortgage, just to keep the lender honest, so I ran that out with my now fixed rate mortgage at 15 years and 50 years.

always wanted to know the formula for that. Care to share it with the math challenged folks?

sanjuan23
05-10-2006, 05:26 PM
Ric, I have been looking for one for the last two weeks when I stumbled across your photos! I guess I should thank you for letting me "borrow" it. :cool:

Ric
05-10-2006, 05:26 PM
always wanted to know the formula for that. Care to share it with the math challenged folks?
get you a trusy HP10B calculator... it'll do all of it for ya :D

Tom023
05-10-2006, 05:26 PM
PM me your email and I'll send you the spreadsheet.

Ric
05-10-2006, 05:28 PM
Ric, I have been looking for one for the last two weeks when I stumbled across your photos! I guess I should thank you for letting me "borrow" it. :cool:
it's cool, mine is borrowed from farmer ted, jrandols is from markp etc etc

6ballsisall
05-10-2006, 05:36 PM
PM me your email and I'll send you the spreadsheet.

You've got a PM ;)

robisjo
05-10-2006, 05:37 PM
They have their place. 40 year mortgages have been around for a while. Like the article said, if you are only going to be in the house for a few years (relocating constantly for work for example) they can make sense. In a few years time even with a 15 year loan you aren't going to make much a dent in the principal. If your going to be there a while than thats not the right type of loan. I still don't know how Californians do it, I make good money but I'd struggle in California. They can keep their state as far as I am concerned :rolleyes:
It takes mortgages like the 50 year mortgage, interest only, reverse amortization loans for people in CA to buy houses. I am a CPA and have numerous mortgage banking clients and the majority of the loans in CA are interest only or adjustable rates. Luckily, I purchased by first home for less than $100K and sold it five years later for $250K. I rolled the equity over into my new house so my payments are managable however I could not afford the current house that I live in now if I had to buy it today with little or no down payment. It will be interesting to see what happens in the coming years in CA with the rise of interest rates.

6ballsisall
05-10-2006, 05:39 PM
I cant say I am familiar with what a reverse amort. loan is. Can you explain just to cure my curiousity?

robisjo
05-10-2006, 07:02 PM
I cant say I am familiar with what a reverse amort. loan is. Can you explain just to cure my curiousity?
A reverse amortization loan is a loan where your payment is less than the actual interest costs. The difference between your payment and the actual interest rate is added to your principal balance. Most of these loans, I believe start out with a payment based on an interest rate of 2% however the actual interest rate of your note is 7% so essentially each year the additional 5% of interest cost that you did not pay is added to your principal. It is a risky loan as the lender only lets you add so much to the principal then the payment reverts to a 30 amortized loan. Your payment could double overnight. If you are going to be in your home for a short period, it makes sense in a market with 25% appreciation each year. The mortgage brokers and bankers make very good money on these loans hence the reason they push them. Also you can get a large house for a small payment. Either way you look at it, too risky for me. I never even considered it however very popular during the past couple of years in CA.

Ric
05-10-2006, 07:14 PM
PM me your email and I'll send you the spreadsheet.
pm at ya!!! !

Footin
05-10-2006, 08:00 PM
Amazeing, 50 years, this and the interest only put more and more people into houses they should not be in. Anyone listen to Dave Ramsey? (financial dude). I have been listening to him for 8 years and I now I am just 7 years from paying off my house.

Just my opinion of course.

sanjuan23
05-10-2006, 09:07 PM
Is he nationwide or local for you??

Footin
05-10-2006, 09:14 PM
He is syndicated through out the US.

LakePirate
05-10-2006, 09:15 PM
Does anyone see the similarities in the housing market and the day trading boom of the late 90s?

Everyone has all of this equity, but is any of it really liquid. Sure If I sell my house I can take my equity with, but I turn around and put it back into another house, hence it is no longer liquid. If I have a house that has appreciated over the past 5 years and I have 30 grand more in equity I turn around and pay it on a house that is 30 grand more than I can afford because of this found money. Can this continue to last?

Workin' 4 Toys
05-10-2006, 10:12 PM
I am glad there is a 50, small payment, and you could CHOOSE to pay towards principle.

When will they start leasing homes......:rolleyes:

bcampbe7
05-10-2006, 11:26 PM
Amazeing, 50 years, this and the interest only put more and more people into houses they should not be in. Anyone listen to Dave Ramsey? (financial dude). I have been listening to him for 8 years and I now I am just 7 years from paying off my house.

Just my opinion of course.


He has a house on our lake and lives in Franklin, TN. :cool:

Footin
05-10-2006, 11:29 PM
There was an article about him last year in Waterski mag, he does own a Mastercraft.

Hoosier Bob
05-10-2006, 11:29 PM
My home will be paid for 10 years after I am gone and my boat 4 years after that! Good thing they also have a 30 year auto loan as long as I have a mailbox attached to it and claim it as my primary residence! :D

Ric
05-11-2006, 12:38 AM
Amazeing, 50 years, this and the interest only put more and more people into houses they should not be in. Anyone listen to Dave Ramsey? (financial dude). I have been listening to him for 8 years and I now I am just 7 years from paying off my house.

Just my opinion of course.
if there is a bubble, you have just named the reason for it for sure!

ajgressette
05-11-2006, 04:00 AM
50 year loan is NUTS!! Wonder if it has age restrictions? :uglyhamme

NORTHERN LIGHTS
05-11-2006, 07:24 AM
I just recalculated my 15 year mortgage at 50 years. The payment was just about cut in half, but the amount applied to principal on payment #1 went from $1050 to $127. Might as well just call them interest only loans or rent.
that's exactly what i was thinking....interest only loans

Leroy
05-11-2006, 07:39 AM
For homes a guy in the office 20 years ago told me his philosophy of buying the most home you can for the least down you can while young especially. Home values will always grow over time so if you buy 100k home and assume all homes grow 5%/year average and you put 5% down you have incredible return on your downpayment. If you could have afforded a $500K home then you have $25k of equity growing every year. THere are also areas that will grow more than others in any city. Of course this involves moving your famiily, picking growth areas of cities, etc. It has worked for me over the past 20 years. I would take a 50 year no interest loan anyday, and I'm sure I wouldn't be worrying about the outcome!

NORTHERN LIGHTS
05-11-2006, 07:39 AM
Does anyone see the similarities in the housing market and the day trading boom of the late 90s?

Everyone has all of this equity, but is any of it really liquid. Sure If I sell my house I can take my equity with, but I turn around and put it back into another house, hence it is no longer liquid. If I have a house that has appreciated over the past 5 years and I have 30 grand more in equity I turn around and pay it on a house that is 30 grand more than I can afford because of this found money. Can this continue to last?
I think it will continue...but...I have a few properties,business and personal. About ten years ago i bought my home(on water) and my business(on major route) and paid what I thought was a high premium. I wanted it, could afford it, and bought them.
What you said is exactly true, if your house goes up, your just gonna pay the premium for the next one you buy. problem nowadays is everyone has to be like the jones next door. Bigger better look at me!!! I've got buddies who are *ss deep in morgages because they refuse to settle down and build equity;;;bigger...bigger....bigger.
In the mean time, I have steadily improved/paid my properties and they are worth approx. 3x what i paid for them. real estate has gone crazy in southern coastal maine as it has everywhere else. House lots in executive neighborhoods are now 175k. May not be alot for some of you california boys but in maine....let me tell ya, there isin't that kind of income around here...thus the 50 year morgage...bigger..bigger..bigger

NORTHERN LIGHTS
05-11-2006, 07:44 AM
For homes a guy in the office 20 years ago told me his philosophy of buying the most home you can for the least down you can while young especially. Home values will always grow over time so if you buy 100k home and assume all homes grow 5%/year average and you put 5% down you have incredible return on your downpayment. If you could have afforded a $500K home then you have $25k of equity growing every year. THere are also areas that will grow more than others in any city. Of course this involves moving your famiily, picking growth areas of cities, etc. It has worked for me over the past 20 years. I would take a 50 year no interest loan anyday, and I'm sure I wouldn't be worrying about the outcome!
that's the other side of it--if it works for you then do it!! I've made good money moving real estate ( no I'm not a rel estater).

Workin' 4 Toys
05-11-2006, 02:38 PM
For homes a guy in the office 20 years ago told me his philosophy of buying the most home you can for the least down you can while young especially. Home values will always grow over time so if you buy 100k home and assume all homes grow 5%/year average and you put 5% down you have incredible return on your downpayment. If you could have afforded a $500K home then you have $25k of equity growing every year. THere are also areas that will grow more than others in any city. Of course this involves moving your famiily, picking growth areas of cities, etc. It has worked for me over the past 20 years. I would take a 50 year no interest loan anyday, and I'm sure I wouldn't be worrying about the outcome!
I took this same train of thought with my recent decision. I can only hope for the best....:eek:

6ballsisall
05-11-2006, 02:56 PM
Leroy, as soon as you find one of them no interest loans let me know. I'd be all over that like white on rice!!