Home loan question - 20% down or FHA????

[CanWoodsman]

Re: Home loan question - 20% down or FHA????

Yes you did!

No I did not. Read what I stated & you quoted. 5 year fixed rate. No mention of the term. You just assumed.

What you got was basically an adjustable mortgage that adjusts after 5 years.

Yes & no. After 5 years the rate may & most likely will change but at that time I'm free to pay it off in part or whole or move it anywhere else without penalty.

Obviously our banking systems and terms are different. The English language should be basically the same though.

 

[dingbat]

Re: Home loan question - 20% down or FHA????

I didn't say a 5 year mortgage only a 5 year fixed rate. My mortgage is based on 25 years.

That variable rate stuff is what got us in this mess in the first place. I'd take 3.875% fixed 30 year mortgage over a 25 year ARM any day of the week.

Imagine if the mortgage interest deduction was removed as is being kicked around the beltway.

Who is kicking what around the beltway? They discuss things like that ?inside? the beltway (DC), they certainly don?t discuss things like that around the beltway (Md. and Va.)

 

[CanWoodsman]

Re: Home loan question - 20% down or FHA????

That variable rate stuff is what got us in this mess in the first place. I'd take 3.875% fixed 30 year mortgage over a 25 year ARM any day of the week.

If I could have got 3.875 for 25 or 30 years I would have jumped on it. Best was about 9.45% for 25 years.
As for "That variable rate stuff is what got us in this mess in the first place" that's far from the problem.
The Canadian system survived far better & the variable rate stuff has been here for years.
Maybe mass loans with little or no down payments to those who didn't even have employment sufficient to cover payments & other expenses played a part. Once things started to melt down it just domino-ed. Many lenders were in far over their heads & went t*ts up causing further problems across the board.
Our problems in Canada for the biggest part were cause by the slump in the worlds economy (US was an important part but not all of it) not defaulted mortgages or failed financial institutions.

 

[dingbat]

Re: Home loan question - 20% down or FHA????

If I could have got 3.875 for 25 or 30 years I would have jumped on it. Best was about 9.45% for 25 years.

My goodness. You could have gotten a better rate at the local pawn shop.

 

[joewithaboat]

Re: Home loan question - 20% down or FHA????

My goodness. You could have gotten a better rate at the local pawn shop.

I remember horror stories from older folks in my family of rates in the low teens just as recent as the early eighties. Probably headed that way soon. They cant keep it artificially low forever! Get it while you can.

 

[CanWoodsman]

Re: Home loan question - 20% down or FHA????

Now is there any way you can doubt our banking system came through these last few years in a better position than in the US.
Not saying the individual Canadian had as good of results.

 

[Fly Rod]

Re: Home loan question - 20% down or FHA????

I have to agree with CanWoodsman...."Canada is in the business of making loans to people who will pay them back," ....there mortgage system is better, better for the lending institutions...mortgages are not forgiven... U can not turn in the house keys and walk away from a mortgage debt.....U still owe the balance....they have no Fannie May or Freedie Mac....Canada has no secondary market for mortgages.

Canadian banks generally provide 25-year mortgages, with 20 percent down payment. The first five years of the loan is a fixed rate, after which it adjusts to current market rates in five-year increments until the loan is paid off. Canadians have to have mortgage insurance if they put down less then 20%...."There is a lot of interest-rate risk that is being put on Canadian buyers now that we're looking at increased borrowing demands by national governments, everyone is projecting interest rates going back up" ....and with interest rate at 9% now in Canda just think what he could be paying in five years...... give me the 30 year fixed at 3.5 to 4 or 5%

 

[bruceb58]

Re: Home loan question - 20% down or FHA????

No I did not. Read what I stated & you quoted. 5 year fixed rate. No mention of the term. You just assumed.

In the US that is known as an adjustable rate loan because the rate adjusts after 5 years. Maybe its just how the two countries call it.

One of the things that was killing people is that they were getting the adjustable rate loans, like CanWoodsman got, and they got their interest rate bumped up per the terms of the loan at 5 years. Problem was, they were also underwater at that point and couldn't refi to a lower interest rate so that they are stuck at that adjusted rate.

 

[bruceb58]

Re: Home loan question - 20% down or FHA????

Now is there any way you can doubt our banking system came through these last few years in a better position than in the US.
Not saying the individual Canadian had as good of results.

The US got into its mess because it was too easy for people that shouldn't have been buying homes who were buying homes and the federal government was encouraging it.

Sorry...but not everyone can afford the so called "American Dream". The lady that cleans my house bought a $500K house in 2005. 3 years later, it was foreclosed on after her adjustable rate loan adjusted form its initial rate. She was able to qualify with stated income. Now the pendulum is swinging the other way and its really difficult to get a loan. My new loan with a loan to value ratio of around 40% was difficult to close even though I have 800 credit and I can qualify for a loan that is triple what I was borrowing. Kinda crazy.

 

[CanWoodsman]

Re: Home loan question - 20% down or FHA????

Fly Rod I some what agree with you but the "and with interest rate at 9% now just think what he could be paying in five years" it's not no where near there for at least a 5 year term. I got 2.99 % for 5 years. What happens in 5 years is to be seen.
My point is now at just under 3% I can knock the principle down greatly before higher rates most likely will become a reality.
Again if a 3.5-4 % option for 25 years was available I would have grabbed it. At over 9% I'll wait saving the money for the next 5 years to be applied to the principle.

 

[Fly Rod]

Re: Home loan question - 20% down or FHA????

scroll up about 8... must have missed read your post.

 

[rivermouse]

Re: Home loan question - 20% down or FHA????

Also, the difference between a 5 year loan at 2.99% and a 30 year loan at 3.99% is relatively small. Way better to have the option of paying down the 30 year loan faster but still keep the mandatory lower monthly payment in case something happens where you only have to make the lower 30 year payment. When I recently refinanced I took out a 30 for that reason. I own 3 houses with loans on them and paying off the highest mortgage one the quickest first. I will have all 3 paid off within 10 to 15 years. They all have 30 year mortgages.

Not sure what the difference is if you have the money in an account that they will get or in the equity in a house. And if you don't want them to have a money grab that can taken care of easily. Put in your will that all proceeds of the house go you your favorite charity.

What I mean is where is the motivation to leave a home that is 100% paid for compared to it being only 60 to 80% paid for. I think the last years of peoples lives should not be on a strick budget based on how much they are saving or how much a loan on their home is as long as they can make the payments with no problems. A friend my age bought a home that cost about 400k. I asked him when he planned to have it paid for and his answer was.".NEVER As long as I can aford to live here until I die,and I will,Why does it matter to me if it is ever paid for"? This made me look at things a little differant.In his case his wife is dead and his only child will most likely quicky run through anything he leaves her anyway....So he makes sence to me.

 

[ezbtr]

Re: Home loan question - 20% down or FHA????

great info guys!!!

 

[bruceb58]

Re: Home loan question - 20% down or FHA????

So he makes sence to me.

Makes zero sense to me! My parents haven't had a house payment for 20 years. Trust me, they are glad they don't. Your logic would have them refi the house take money out of it and resume a loan? I assume you like having car payments too?

 

[jkust]

Re: Home loan question - 20% down or FHA????

Who is kicking what around the beltway? They discuss things like that ?inside? the beltway (DC), they certainly don?t discuss things like that around the beltway (Md. and Va.)

Ha, yes 'inside' the beltway.

 

[bassman284]

Re: Home loan question - 20% down or FHA????

I remember horror stories from older folks in my family of rates in the low teens just as recent as the early eighties. Probably headed that way soon. They cant keep it artificially low forever! Get it while you can.

I was selling real estate back then and it was a mess. At that time, only S&L's made long term mortgages and they were running out of money to loan. The reason was that banks were paying up to 14% on CDs and people were pulling their savings out of the S&Ls to cash in on the CDs. For a year or more, there were at most 3 mortgages a week being made in a town of 60,000.

Qualifying requirements were very stringent and many folks were qualifying at their max. I once had a sale killed because the interest rate moved from 11% to 11.25. The buyer no longer qualified at 11.25.

Yessiree, the good old days.

 

[dingbat]

Re: Home loan question - 20% down or FHA????

Makes zero sense to me! My parents haven't had a house payment for 20 years. Trust me, they are glad they don't. Your logic would have them refi the house take money out of it and resume a loan? I assume you like having car payments too?

We could have stayed in the old house and been w/o a mortgage starting next month, but then what? We would still have a $660 a month property tax bill and we would have lost an $8-10K per year mortgage interest write off. We were better off taking advantage of the interest rates and the reduced property values and buy up which we did.

Only time will tell, but given the past history of high rates of change in home values locally, the mistake would have been to sit in the old house without a mortgage payment and not reinvest the money in another properly.

 

[joewithaboat]

Re: Home loan question - 20% down or FHA????

We could have stayed in the old house and been w/o a mortgage starting next month, but then what? We would still have a $660 a month property tax bill and we would have lost an $8-10K per year mortgage interest write off. We were better off taking advantage of the interest rates and the reduced property values and buy up which we did.

Only time will tell, but given the past history of high rates of change in home values locally, the mistake would have been to sit in the old house without a mortgage payment and not reinvest the money in another properly.

Makes zero sense to me! My parents haven't had a house payment for 20 years. Trust me, they are glad they don't. Your logic would have them refi the house take money out of it and resume a loan? I assume you like having car payments too?

I think depending on your situation both of these are great points...

Bruce is right if the retiree ends up with a limited fixed income.

If you have the money and want it to work for you and can afford to step out to make the average yearly gains of real estate investment work for you.. than dingbat has a good point.

I know for my single Mother having one paid off is the only thing that would allow her to live in as nice a home as she does. Considering the overall state of the economey, her portfolio and the realestate maket as of late.

After all you have to sell in the same market your buying in currently.

 

[rivermouse]

Re: Home loan question - 20% down or FHA????

In todays world many people will not be able to pay off every dime they owe before they die. It would be great but maintaining a quality life style until they die is more important that dying with lots of money in the bank and their home "free and clear". I can understand why the other poster who would be in line to inherit all that might not see the logic in this. Car payments are not investments and most people will need a place to live longer than they will be able to drive....ps you cant pull equity money out of a car like you can your home.I would prefer my parents to eat well, take trips, enjoy life etc NOW even if would mean spending the long time built up equity in their home rather than try and save up for me to get it when they die. Some people dont think so though, they want a windfall they havent earned.

 

[bruceb58]

Re: Home loan question - 20% down or FHA????

and we would have lost an $8-10K per year mortgage interest write off.

I understand your moving up in homes but as Dave Ramsey would say, it doesn't make sense giving the bank $10K in interest if you are trying to get $2.5 K in writeoffs. Yes, take advantage of the writeoffs if necessary but you don't want to force yourself to have a mortgage in order to get them.