Mortgages

[MattB]

The vast majority of people that say it’s going to crash have been saying it since before Covid. If 2008 happened today, prices would still be higher than they were in 2018/19.

Yeah, when rates begin to drop lots of money that has been on the sidelines in anticipation will move into the market and push prices up. People who think home values are going to drop are being optimistically ignorant of the economic reality.

 

[180ls1]

That’s a great plan if buying a house while single, but if you’re married(like most people buying houses) the wife isn’t gonna put up with 2 or 3 of your bachelor buddies for long and you won’t have a house because she will take it in the divorce.


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Yeah, it's more ideal when single but it just depends. I have married friends in their 30's living with roommates. I can't think of any that are divorced. Everything is a trade off, you just gotta pick what works for you.

 

[180ls1]

Good thinking, then you get the house after you file for divorce for adultery?

Excellent, then you rent rooms to her girl friends?

 

[Hnthrdr]

google says- "In 2022, the median household income in Michigan amounted to 68,990 U.S. dollars"

300k would produce a lot more house here than id want, personally. but thats obviously up to the individual. my best friend lives in a 3bd 2ba home, 3/4 acre, 1500 sq ft, lakefront, supposed to be worth about $425k right now.

That’s awesome! If I wasn’t from Co with roots down deep and starting out it would be super tempting to go to a place like that, lake front is really hard to come by in Co and if you do almost guaranteed million plus

 

[Customweld]

I may have sounded discontent.
I was more joking than anything. But I've working in excavation for 8 years. Working on a two man crew. Can run any piece of machinery with some finesse.
Have no added benefits other than access to machinery. Work 40-50 hour weeks.(Nothing crazy)
And don't make anywhere near 100
Is this normal?
I have normal rent. Have a wife that has some side jobs but no real cash flow. (Which is fine).
And id like a house to. Lol
Or do I just need to go whole up in an office and poke buttons to make the real money.
Do people enjoy their jobs? Or do u work for the paycheck?

Location is everything. In the Boise area, the big contractors are paying top hands 30-40 an hour with good benny's . A good operator will bring in 30 /hr, foreman is going to be in the 40/hr range usually with as much OT as you want.

 

[MattB]

People in their 50s and 60s are off their rockers. 200k get's you a box in most cities in the US.

Buying the house you can afford and not the home you want, novel concept. When my parents bought their first home, they had an end table that was a cardboard box and an entertainment center that was cinder blocks and wood shelves. Our society’s values sure have changed.

 

[maxx075]

 

[william schmaltz]

Ya'll are insane or make a ton of $ to suggest putting 20% down on a house these days. Who has that kind of cheddar laying around?

I live in ND and a decent house is like 300k. Not many folks looking for their first house have 60k laying around paying $1000+/month for rent and groceries being up 100% in 4 years.

I guess numbers are numbers. The 20% isn’t necessary (I did 5%), but it may be necessary for the numbers to work. A guy earlier said he makes $170k and can’t afford the $100k down payment. So that makes it safe to assume houses in his area average $500K. After the government, insurance, SC, retirement, etc all take from his check; he probably brings home $9k/month. A mortgage on a $500k house w/ 5% down and today’s rates will be around 45% of his take home pay. The shitty reality is that he can’t afford the house with 5% down and on the other hand it’s nearly impossible to save up $100k and outpace the constant increases while wages remain.

Comparison is indeed the thief of joy. I grew up in your neck of the woods, just south of Bis. Lived in Bis/Man for 4 years before coming to AK. That place is the keeping up with the jones capital! Everyone upgrading their $80k boats and $80k pickups every couple years and buried in new house debt. Glad I avoided that trap. Me and my wife grew up with nothing in trailer houses, my goal in life was to someday have an air conditioner! I took the marry a Dr route and then got into a rapidly growing and highly technical industry that pays well myself. We’re knocking on the door of top 5% income and I still drive my 2005 duramax and my wife has her 11 year old Tahoe. We’re happy as can be an extremely grateful stuffed into our 1700sf house with a couple kids. Comparison is the thief of joy.

 

[Ucsdryder]

Hunting season can NOT get here soon enough. These threads are proof!

 

[william schmaltz]

Hunting season can NOT get here soon enough. These threads are proof!

Meh. Money, vehicles, sports, marital, parenting, etc threads are going 12 months a year here. Not hard to scroll past threads a person isn’t interested in or know they’ll be annoyed by. I don’t click on 98% of em.

Even during hunting season guys will need something to do while they’re supposed to be working

 

[Rich M]

Buying the house you can afford and not the home you want, novel concept. When my parents bought their first home, they had an end table that was a cardboard box and an entertainment center that was cinder blocks and wood shelves. Our society’s values sure have changed.

My wife and I bought something we could afford.

Our mortgage went up about 30-35% this year due to the predicted insurance rates (and they were right).

That would really suck on a $2,000 mortgage.

 

[IDVortex]

Even during hunting season guys will need something to do while they’re supposed to be working

mighty large assumption to think i work when im working.

 

[MattB]

The great majority of people who become wealthy do this. Why? Because it gives then more funds to invest, reduces risk, and changes spending behaviors in a way that leads to more wealth buildings.

Until people experience death, disease, divorce, debt issues, dumb people and default and unemployment, they never appreciate the tools available after being debt free.

Rarely is the lack of funds the problem for people when it comes to being wealthy in life. It's normally a behavior issue.

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Personal finance 400 moment: Talking with one of my wealthiest friends a few years back, he was telling me that he had done a cash-out refinance of his primary residence and took those funds and plowed them into investments. Said he “own(ed) too much of (his) home” and mortgage rates were way lower than historical market returns. We have since seen ~20% inflation, he is paying back 2020 3.xx% debt with 2024 dollars, and the stock market is up ~70%.

Appropriately utilizing debt (leverage) is a far better wealth creation strategy than not using debt for savvy investors. I wouldn’t recommend that strategy to most people, but IMO accelerating the pay-off off mortgage debt that has a 2 or 3 handle right now is financially foolish - even if makes you feel better.

What your strategy of (pre)paying of debt with the goal of being debt-free robs you of being able to take advantage of compounding during that time window. You can take a dollar today and pay down a mortgage and get a guaranteed return of your mortgage rate (less any tax benefits), or you could invest that dollar today and experience the benefit of appreciation/dividend reinvestment, which over time should solidly outpace the financial benefit of debt (p)repayment. The value generated by a dollar invested today is much greater than one invest 10-15 years in the future.

 

[Johnny Tyndall]

Personal finance 400 moment: Talking with one of my wealthiest friends a few years back, he was telling me that he had done a cash-out refinance of his primary residence and took those funds and plowed them into the investments. Said he “own(ed) too much of (his) home” and mortgage rates were way lower than historical market returns. We have since seen ~20% inflation, he is paying back 2020 3.xx% debt with 2024 dollars, and the stock market is up ~70%.

Appropriately utilizing debt (leverage) is a far better wealth creation strategy than not using debt for savvy investors. I wouldn’t recommend that strategy to most people, but IMO accelerating the pay-off off mortgage debt that has a 2 or 3 handle right now is financially foolish - even if makes you feel better.

What your strategy of (pre)paying of debt with the goal of being debt-free robs you of being able to take advantage of compounding during that time window. You can take a dollar today and pay down a mortgage and get a guaranteed return of your mortgage rate (less any tax benefits), or you could invest that dollar today and experience the benefit of appreciation/dividend reinvestment, which over time should solidly outpace the financial benefit of debt (p)repayment. The value generated by a dollar invested today is much greater than one invest 10-15 years in the future.

Poor people are in debt.
Middle-class people fear debt.
Wealthy people use debt.

(or something like that)

 

[Michael Rankin]

School me on mortgages.
First time home buyer and trying to figure out what my options truly are. I know I know. Now’s not the time to buy. But realistically I’m tired of spending 1900 a month to rent, a new sub development is breaking ground just down the street and I think jumping on it is the best option for me right now. Homes will probably be in the 4-500 range. I guess my questions are

-conventional loan? Do I go with that and muster the 20-ish %?
- look into a FHA with 0 down and pay PMI? Making bigger principal payments? Is that even a thing?
-yesterday I went down the rabbit hole of ARM loans. Is that really a good gamble in this market? Basically betting the interest rate is going to go down in the next 5,7,10 years?

Thoughts comments advice all welcome!

If you can afford the down to not pay pmi it could be a good idea. It can be cheap, or very expensive depending on your circumstances.

Where I’m at in Oregon, it is VERY hard to beat one particular local credit union on rate AND fees.

When trying to figure out who has the best deal on a loan, it can be very confusing looking at the rate, monthly payment, fees, ect.

Looking at purchase price, down payment, then total loan balance will give you a really clear idea of all the fees the lender could be charging. Sometimes the lenders fees can be a little hard to figure out when doing your first mortgage.

If your not careful you can end up with a loan that cost you $10k-$12k to get.

 

[Marble]

The people who really push for the purposeful use of debt for wealth building have forgotten the last several economic disasters. It's a trap people fall in. They have immediate success and build false confidence in their plan.

To each their own.

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[MattB]

The people who really push for the purposeful use of debt for wealth building have forgotten the last several economic disasters. It's a trap people fall in. They have immediate success and build false confidence in their plan.

To each their own.

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Not hardly, the last "disaster" was what put me in the position to retire at 51.

“...be fearful when others are greedy and to be greedy only when others are fearful.”

- Warren Buffett

 

[SDHNTR]

The people who really push for the purposeful use of debt for wealth building have forgotten the last several economic disasters. It's a trap people fall in. They have immediate success and build false confidence in their plan.

To each their own.

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You mean the “disaster” that repriced stocks (and other assets) to very attractive levels and lasted less than 3 years?

 

[CCooper]

Much like others stated- not all unconventional loan programs are bad. At 19 years old I bought my first home on an interest only $0-down loan in 2005 at the advice of my investor (family friend) hedging the market increase and a sale of the home in 2 years. -Best decision I ever made. At that time my mortgage payment was less than the payment and insurance on my new pickup. I sold the house at 2 years and 2 months and made a very handsome profit which created the 20%+ for a down on the next home. Lived in that home for 10 years waiting for the market to correct, ended up there 10 years.
The wife and I purchased our dream home about 6 years ago with a handsome down payment- It is now valued at roughly twice what we paid for it after some renovations.
Moral of the story is nobody gave me shit. I worked 60–70-hour weeks out of town to afford myself the opportunity to get ahead and put my wife through undergrad and grad school and provide. I missed hunting seasons, holidays, birthdays, etc. Now we are at the top of our careers and enjoying life- we both gave up a lot and did it the old-fashioned way and sacrificed. I don't' see a lot of the younger generation willing to do so.
A lot of generational complaining in this thread
FYI- I'm a Millennial.
@SDHNTR is not wrong. His posts remind me of my Dad.
Lifes not fair, quit bitching, find a better job, get a second job, put your head down and work and be prepared to sacrifice if you want to get ahead.

 

[MattB]

Just read a piece published by Morgan Stanley’s wealth group. They made an interesting point that the lower 2/3 of the U.S. earners are being stressed financially having run out of COVID stimulus money and have been spending heavily on credit and now credit cards and auto loans are increasingly going past due. Unemployment/job cuts are also increasingly stressing this sub-set of the population.