tag:blogger.com,1999:blog-31427364.post8495949991282055567..comments2024-03-26T03:52:23.395-07:00Comments on Housing Analysis: I'll Just Sellmohicanhttp://www.blogger.com/profile/06094213357140749289noreply@blogger.comBlogger16125tag:blogger.com,1999:blog-31427364.post-43441613870617628962010-05-23T15:27:54.195-07:002010-05-23T15:27:54.195-07:00mohican, thanks as always for your rational post
...mohican, thanks as always for your rational post<br /><br />I've been trying to send you an email at the address you provide, and I get an email back saying your email address doesn't exist.<br /><br />Please send me an email at chibidani at gmail dot com<br /><br />Thanks!daniellehttps://www.blogger.com/profile/06715326251573275596noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-12006165413089332352010-05-21T21:09:34.896-07:002010-05-21T21:09:34.896-07:00This comment has been removed by the author.AndrewJhttps://www.blogger.com/profile/04813082701244060724noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-83465137049836726132010-05-21T21:08:58.064-07:002010-05-21T21:08:58.064-07:00Not a huge difference right? But if you still pay ...<i> Not a huge difference right? But if you still pay the 2792.44 per month with the extra 10K down you can pay off the mortgage almost a year sooner. Saving you almost 33K over the life of the mortgage. And you still end up with the same house. </i><br /><br />I know! I think like that but I don't think most people get much past "want shiny house", "bank give money", "buy buy buy". You would hope the insanity will end sometime but it's been a good long time. Only bright point on the horizon is the current rapid rise in inventory.AndrewJhttps://www.blogger.com/profile/04813082701244060724noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-44696575443727204032010-05-21T16:00:52.886-07:002010-05-21T16:00:52.886-07:00Note that for the 35 year loan your interests cost...<i> Note that for the 35 year loan your interests costs for the life of the loan (assuming no increase in interest rates) is $420,000 as opposed to $223,000. </i><br /><br />Exactly! The longer the mortgage the more the downpayment actually saves you in the long run. An extra 10K down is like taking 10K off the very end of the mortgage.<br /><br />500K mortgage 4.59% (assumed for length or mortgage)<br /><br />Monthly payment = 2792.44<br /><br />490K mortgage 4.59% (assumed for length of mortgage)<br /><br />Monthly payment = 2736.59<br /><br />Not a huge difference right? But if you still pay the 2792.44 per month with the extra 10K down you can pay off the mortgage almost a year sooner. Saving you almost 33K over the life of the mortgage. And you still end up with the same house. <br /><br />Paying a little more up front and/or accelerating your payments a little bit makes a big difference when it is all said and done. <br /><br />That being said the difference would be much bigger if interest rates were higher. So I do see your point about the low interest rates mitigating the importance of down payment.Unknownhttps://www.blogger.com/profile/16361217381016612518noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-69559041205366014012010-05-21T15:22:10.912-07:002010-05-21T15:22:10.912-07:00"...because so many people would be unable to...<i>"...because so many people would be unable to buy."</i><br /><br />True here because savings rates are low. Would the same sensitivity exist if savings rates were markedly higher and would a high savings rate have prevented, or at least muted, an asset bubble?jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-53369945072553366902010-05-21T15:00:09.072-07:002010-05-21T15:00:09.072-07:00But if higher down payments were required prices w...But if higher down payments were <b>required</b> prices would have to go down because so many people would be unable to buy. Ditto if amortization was reduced.<br /><br />The introduction of the 0/40 was no accident.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-82346500361236717952010-05-21T14:33:31.665-07:002010-05-21T14:33:31.665-07:00BTW I put 40% down on my first house and that was ...<i>BTW I put 40% down on my first house and that was without any help.</i><br /><br />Downpayment isn't worth much these days with a 35 year mortgage and low interest rates even significant downpayments aren't worth more than a few hundred a month.<br /><br />E.g. <br />Assumming a 5 percent fixed rate:<br /><br />$300,000 25 year loan + $100,000 down payment $1744 a month. <br /><br />$380,000 35 year loan + $20,000 down has payments of $1905 a month.<br /><br />Note that for the 35 year loan your interests costs for the life of the loan (assuming no increase in interest rates) is $420,000 as opposed to $223,000.<br /><br />Downpayments just ain't what they used to be.AndrewJhttps://www.blogger.com/profile/04813082701244060724noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-4776912616561816612010-05-21T14:28:47.037-07:002010-05-21T14:28:47.037-07:00Living on welfare/OAS is hard. What's harder i...Living on welfare/OAS is hard. What's harder is getting sick mentally or physically and having nobody to help you navigate the system. <br /><br />Still, abject poverty in Canada is contained and uncommon enough to keep its consequences out of the vision of most of the populous. Not so in other parts of the world where I believe savings rates are higher as a direct result.<br /><br />The higher savings rates in many parts of Europe are a different matter altogether.jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-17663481690545660782010-05-21T13:47:24.455-07:002010-05-21T13:47:24.455-07:00...with a state that provides a level of welfare t...<i>...with a state that provides a level of welfare that limits absolute despair when things go wrong.</i><br /><br />I think you mean "starvation" not "absolute despair". I think most people have little idea what it's really like to live on welfare, CPP disability, or CPP/OAS/GIS.<br /><br />I think quite a few people are going to see a lot of despair ahead of them, quite soon.<br /><br />BTW I put 40% down on my first house and that was without any help.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-64290504665036115322010-05-21T10:55:24.812-07:002010-05-21T10:55:24.812-07:00"Ahhh if only everyone thought that way."...<i>"Ahhh if only everyone thought that way."</i><br /><br />The same logic that has people buying lottery tickets is the same logic that allows people to avoid planning for bad fortune. Bad luck usually happens to other people. <br /><br />North America has combined a culture that enjoys and promotes gambling with a state that provides a level of welfare that limits absolute despair when things go wrong. It's not surprising the savings rate is low in such circumstances.jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-13346119320164826472010-05-21T10:38:59.513-07:002010-05-21T10:38:59.513-07:00Ahhh if only everyone thought that way.
Then hou...Ahhh if only everyone thought that way. <br /><br />Then house prices might be, you know, rational. <br /><br />So many people are in (what I would consider) danger. They bought way to much house with not enough cash.<br /><br />How anyone can consider buying something like a house with less than 10% down is beyond me. Personally I wont do it with less than 20% but I am a reasonably safe person when it comes to money.Unknownhttps://www.blogger.com/profile/16361217381016612518noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-25863332765429542762010-05-21T10:14:18.363-07:002010-05-21T10:14:18.363-07:00I equate financial planning sans saving to a "...I equate financial planning sans saving to a "reverse lottery" -- 99% of such people don't lose but 1% of the time they are wiped clean.jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-17522970317592908302010-05-20T22:59:17.753-07:002010-05-20T22:59:17.753-07:00"is the plan to have the mortgage paid off at..."is the plan to have the mortgage paid off at age 65 and retire the next day."<br /><br />I laughed pretty hard at this. Awsome comment.buff_butlerhttps://www.blogger.com/profile/13312280863888753900noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-37304210070181611622010-05-20T05:48:52.836-07:002010-05-20T05:48:52.836-07:00If you have a paid for house you can get by on CPP...If you have a paid for house you can get by on CPP/OAS/GIC and the property tax deferral if necessary. Just barely. You can also sell and buy something smaller or just rent.<br /><br />It's the people who are carrying (or will carry) 6 figure mortgages past age 65 who have me scratching my head.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-5435331370575034002010-05-19T12:18:09.971-07:002010-05-19T12:18:09.971-07:00Yes, I see the same thing Robert. Somehow the hou...Yes, I see the same thing Robert. Somehow the house is going to put food on the table or gas in the car.<br /><br />Additionally, more and more retirees are going into retirement with a mortgage or large outstanding HELOC. It is not uncommon to see retirees with liabilities in excess of $100,000 and investments of less than $200,000. Luckily, for many of them, they have a pension but it is still an unattractive retirement strategy. The problem is that these people have no control over their spending and feel entitled to own 2 harleys, a big motorhome, a big house for two people, and take 3-4 expensive vacations per year.mohicanhttps://www.blogger.com/profile/06094213357140749289noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-7764132049078267752010-05-19T11:10:22.177-07:002010-05-19T11:10:22.177-07:00Mo, I see this stuff all the time as well. Another...Mo, I see this stuff all the time as well. Another that is just as common, is the plan to have the mortgage paid off at age 65 and retire the next day.<br /><br />I am constantly baffled by people, with no money in the bank, think they will be financially stable in retirement as long as their house is paid for.Robert Reynolds - HMR Insurancehttps://www.blogger.com/profile/10939128478955272061noreply@blogger.com