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Participantsdcellar, please go here for the rates I’m referring to. Right now, Countrywide Bank Savings will give you 5.40% APY if your balance is between $50,000 – $2,499,999. I’m currently gettin 5.3% in my GMAC account. There are also many others offering between 5.3 and 5.4%. Also, I’m referring to getting a 30 year fixed rate so your mortgage rate wouldn’t change. Regarding the 6.2%, please ask bob2007, he got it. When I got pre-qualified a few weeks ago, i was quoted around the same # as well. So no, I’m not making up stuff.
I’m also assuming he/I stay in the house for at least 30 years. So no selling here. Also, do you think interest/savings rate will stay this low for the next 30 years? Since you get a 30 year fixed, your mortgage rate would stay the same. Over 30 year period, at what savings rate will you be breaking even? I would assume it’d be 5.75%. What’s the chance of interest rate get above 5.75% over the next 30 years? What I’m trying to calculate is over 30 years w/ this 400k, can I make my money work harder for me in a no risk way.
Sorry Rustico, the accident/lost of jobs is a bad example/reason. I might have worded my reasons/ideas badly but I’m just trying to think outside the box and try to get my money work the hardest for me. I was trying to head toward the point that cash is better than equity to me. If I understand your answer regarding HELOC, if you don’t have equity left, you can’t withdraw from the HELOC. So, if you still have that 400k in cash and you lost 400k in equity, and you have an accident/lost of job that prevent you from working for 1 year. The cash will help you sustain w/out having to worry as much. Another reason for having cash in my mind is if some GREAT opportunity comes along but you need the cash to take advantage of it and you have no equity left to withdraw(HELOC), wouldn’t cash give you that opportunity? All of this is assuming I can pay both mortgage scenario comfortably of course.
Participantsdcellar, please go here for the rates I’m referring to. Right now, Countrywide Bank Savings will give you 5.40% APY if your balance is between $50,000 – $2,499,999. I’m currently gettin 5.3% in my GMAC account. There are also many others offering between 5.3 and 5.4%. Also, I’m referring to getting a 30 year fixed rate so your mortgage rate wouldn’t change. Regarding the 6.2%, please ask bob2007, he got it. When I got pre-qualified a few weeks ago, i was quoted around the same # as well. So no, I’m not making up stuff.
I’m also assuming he/I stay in the house for at least 30 years. So no selling here. Also, do you think interest/savings rate will stay this low for the next 30 years? Since you get a 30 year fixed, your mortgage rate would stay the same. Over 30 year period, at what savings rate will you be breaking even? I would assume it’d be 5.75%. What’s the chance of interest rate get above 5.75% over the next 30 years? What I’m trying to calculate is over 30 years w/ this 400k, can I make my money work harder for me in a no risk way.
Sorry Rustico, the accident/lost of jobs is a bad example/reason. I might have worded my reasons/ideas badly but I’m just trying to think outside the box and try to get my money work the hardest for me. I was trying to head toward the point that cash is better than equity to me. If I understand your answer regarding HELOC, if you don’t have equity left, you can’t withdraw from the HELOC. So, if you still have that 400k in cash and you lost 400k in equity, and you have an accident/lost of job that prevent you from working for 1 year. The cash will help you sustain w/out having to worry as much. Another reason for having cash in my mind is if some GREAT opportunity comes along but you need the cash to take advantage of it and you have no equity left to withdraw(HELOC), wouldn’t cash give you that opportunity? All of this is assuming I can pay both mortgage scenario comfortably of course.
ParticipantI rent a condo in that area and I don’t see any homeless folks, so it might just be urban legend. But it might be other part of the complex, who knows.
ParticipantI rent a condo in that area and I don’t see any homeless folks, so it might just be urban legend. But it might be other part of the complex, who knows.
ParticipantRustico, based on sdcellar’s #, you’ll be losing 3900/year. That would take many years for you to go bankrupt. It would take 102 years to erode your $400k principal IF the savings rate doesn’t change. So I don’t really get your point. At this point with the flatten yield curve, I don’t see the big advantage in CD since money market and online savings yield about the same with no penalty.
The heloc or mortgage money in cd’s would be for very good equity positions and possesion other assets and at the very least non-employment income to cover.
Isn’t this what I’m trying to say? I’m confused.
One other question about HELOC. If let say you have 400k equity in your house so you open a 400k HELOC and the property dropped by 400k, can you still withdraw from that HELOC?
ParticipantRustico, based on sdcellar’s #, you’ll be losing 3900/year. That would take many years for you to go bankrupt. It would take 102 years to erode your $400k principal IF the savings rate doesn’t change. So I don’t really get your point. At this point with the flatten yield curve, I don’t see the big advantage in CD since money market and online savings yield about the same with no penalty.
The heloc or mortgage money in cd’s would be for very good equity positions and possesion other assets and at the very least non-employment income to cover.
Isn’t this what I’m trying to say? I’m confused.
One other question about HELOC. If let say you have 400k equity in your house so you open a 400k HELOC and the property dropped by 400k, can you still withdraw from that HELOC?
ParticipantThanks for the # sdcellar. I have a couple more questions. I was wondering how the number would look like if the fed raise another .25%, which would make savings rate go up to ~5.5%? Also, what I’ve seen with my pre-qualified rate I got and what bob2007 got was around 6.2%. Would that make it break even? My second question is, would $3926/yr be worth it for the safety of liquid cash just in case something happen? Such as a major accident or a job loss? If price keep going down like we all expect and that will eventually erode the 400k to a smaller amount or to nothing, which means you can’t HELOC or refinance again. To me, $3900/yr is definitely worth it to hedge my bet of a declining RE price and increasing interest/saving rate.
ParticipantThanks for the # sdcellar. I have a couple more questions. I was wondering how the number would look like if the fed raise another .25%, which would make savings rate go up to ~5.5%? Also, what I’ve seen with my pre-qualified rate I got and what bob2007 got was around 6.2%. Would that make it break even? My second question is, would $3926/yr be worth it for the safety of liquid cash just in case something happen? Such as a major accident or a job loss? If price keep going down like we all expect and that will eventually erode the 400k to a smaller amount or to nothing, which means you can’t HELOC or refinance again. To me, $3900/yr is definitely worth it to hedge my bet of a declining RE price and increasing interest/saving rate.
ParticipantSome of your points are valid (e.g. savings earning rate likely to go up), but for the here and now, you’d be losing money *and* you’d need considerable income to cover the higher payments (or I forgot, are you liquid or not?!).
My calculation shows that the saving interest you make should cover most of the difference in the increase mortgage payment. If my calculation is wrong, please show me. I’m hear to learn just like everyone else.And whoa, I don’t even get what you’re talking about regarding prolonging the tax write-off (and I suspect you don’t either). Finally, compound interest, taking advantage? How do you think a mortgage works? I think it might be taking advantage of you…
All I mean by this is if the difference in savings rate and mortgage rate gives you an advantage, why not extract your equity and have it work for you with no extra risk? You can always pay it back anytime.ParticipantSome of your points are valid (e.g. savings earning rate likely to go up), but for the here and now, you’d be losing money *and* you’d need considerable income to cover the higher payments (or I forgot, are you liquid or not?!).
My calculation shows that the saving interest you make should cover most of the difference in the increase mortgage payment. If my calculation is wrong, please show me. I’m hear to learn just like everyone else.And whoa, I don’t even get what you’re talking about regarding prolonging the tax write-off (and I suspect you don’t either). Finally, compound interest, taking advantage? How do you think a mortgage works? I think it might be taking advantage of you…
All I mean by this is if the difference in savings rate and mortgage rate gives you an advantage, why not extract your equity and have it work for you with no extra risk? You can always pay it back anytime.ParticipantI plugged the number in the excel sheet I created that calculate these # w/ the input I put in. I use my own tax bracket of 28% fed and 9% state. That’s 37% tax. That’s where I got the #. The tax deduction would be around 900-1000/month. I don’t get what you mean by the additional 400k will not fall into the highest tax bracket, can you explain? Lets assume my number is a little off and you’re only getting 600/month in tax deduction, that would still bring you to 1700/month after tax deduction. That’s close enough for me to take comfort in having the $ liquid still just in case. Also, there’s now talk about fed raising rates again. If that happen, my 5.3% saving would go up as well. Also, as bob2007 mentioned, jumbo 30 year fixed rate right now w/ great credit is in the low 6% and that’s what I was quoted as well. If you want a little higher rates in savings, you can go w/ a CD that pay around 5.5% instead. That narrow the difference to less than 1%. So if mortgage rate is 6.5% w/ 37% tax write off, the effective rate would be 4.1%. With a CD @ 5.5% and long term cap gain of 15%, the effective rate would be 4.6%. So your advantage would be .5% a year and your $ liquid. That’s how I see it. If I messed up my numbers, please correct me.
Regarding to a house paid free and clear, I don’t really see the point in that. Why not prolong the tax write off indefinitely if your equity can make better return for you, especially if you can do it in a savings account. You always have the comfort in knowing that you can pay off your house at any moment in time. But you’re making your money work harder for you w/out any risk. You’re also taking advantage of compound interest as well.
ParticipantI plugged the number in the excel sheet I created that calculate these # w/ the input I put in. I use my own tax bracket of 28% fed and 9% state. That’s 37% tax. That’s where I got the #. The tax deduction would be around 900-1000/month. I don’t get what you mean by the additional 400k will not fall into the highest tax bracket, can you explain? Lets assume my number is a little off and you’re only getting 600/month in tax deduction, that would still bring you to 1700/month after tax deduction. That’s close enough for me to take comfort in having the $ liquid still just in case. Also, there’s now talk about fed raising rates again. If that happen, my 5.3% saving would go up as well. Also, as bob2007 mentioned, jumbo 30 year fixed rate right now w/ great credit is in the low 6% and that’s what I was quoted as well. If you want a little higher rates in savings, you can go w/ a CD that pay around 5.5% instead. That narrow the difference to less than 1%. So if mortgage rate is 6.5% w/ 37% tax write off, the effective rate would be 4.1%. With a CD @ 5.5% and long term cap gain of 15%, the effective rate would be 4.6%. So your advantage would be .5% a year and your $ liquid. That’s how I see it. If I messed up my numbers, please correct me.
Regarding to a house paid free and clear, I don’t really see the point in that. Why not prolong the tax write off indefinitely if your equity can make better return for you, especially if you can do it in a savings account. You always have the comfort in knowing that you can pay off your house at any moment in time. But you’re making your money work harder for you w/out any risk. You’re also taking advantage of compound interest as well.
ParticipantWateridge to me is very safe. I had no reason to think otherwise while I was living there. It’s extremely quiet during the weekend and at night. We usually go walking at night after I get out of work and it’s quite nice not having cars zooming by. You should just go there at night one day and see if you like what you see, or not see for that matter. Most people are in their condo, but there are some people walking around, getting their exercise in after work.
SD R, I totally agree w/ you that the one w/ the backyard that back right into Calle Cristobal would that that problem. I don’t really care for those too much either since those lots tend to be smaller, around 5k. You probably need to upgrade to double pain windows to block out the noise. I did walk by the Cheryl Ridge house that you lived in. I do like the homes off in the feeder roads w/ the backyard back to the canyon. When I walk around there, I didn’t notice any noise at all from the street so it’s definitely quiet in the house.
My wife works @ Scripps in La Jolla, so the commute from Wateridge to La Jolla/UCSD would be around 5-10 minutes depending on lights. I never it any traffic when I live there at any time of the day.
ParticipantWateridge to me is very safe. I had no reason to think otherwise while I was living there. It’s extremely quiet during the weekend and at night. We usually go walking at night after I get out of work and it’s quite nice not having cars zooming by. You should just go there at night one day and see if you like what you see, or not see for that matter. Most people are in their condo, but there are some people walking around, getting their exercise in after work.
SD R, I totally agree w/ you that the one w/ the backyard that back right into Calle Cristobal would that that problem. I don’t really care for those too much either since those lots tend to be smaller, around 5k. You probably need to upgrade to double pain windows to block out the noise. I did walk by the Cheryl Ridge house that you lived in. I do like the homes off in the feeder roads w/ the backyard back to the canyon. When I walk around there, I didn’t notice any noise at all from the street so it’s definitely quiet in the house.
My wife works @ Scripps in La Jolla, so the commute from Wateridge to La Jolla/UCSD would be around 5-10 minutes depending on lights. I never it any traffic when I live there at any time of the day.
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