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recordsclerk
ParticipantSave for a down payment. It will put you in a better cash position in case rates go up. It’s better to buy a home at a lower price and higher interest rate then a home at a higher price with lower interest rate, even if the monthly payment is the same. If rates go down you can refi, but your purchase price will stay the same. Also only your interest payment is higher, not your principal payment. Your taxes will be lower also. It’s also better when you go to sell. You don’t want to sell a home that cost you 600K for 500K even if your montly payment is low. Your cost basis is a lot more important than your monthly obligation.
ParticipantSave for a down payment. It will put you in a better cash position in case rates go up. It’s better to buy a home at a lower price and higher interest rate then a home at a higher price with lower interest rate, even if the monthly payment is the same. If rates go down you can refi, but your purchase price will stay the same. Also only your interest payment is higher, not your principal payment. Your taxes will be lower also. It’s also better when you go to sell. You don’t want to sell a home that cost you 600K for 500K even if your montly payment is low. Your cost basis is a lot more important than your monthly obligation.
Participant“If someone sold in 2005 for a great profit (say 300k) after 2+ years of ownership, are there any tax issues with waiting? In other words, would they need to buy again in a certain amount of time to avoid the 15% + 9% state tax on the profit?”
If you are a married couple and this was your primary residence you would not have to pay any taxes. If you are a single person, the first 250K profit would not be taxed, but the 50K would.
Participant“If someone sold in 2005 for a great profit (say 300k) after 2+ years of ownership, are there any tax issues with waiting? In other words, would they need to buy again in a certain amount of time to avoid the 15% + 9% state tax on the profit?”
If you are a married couple and this was your primary residence you would not have to pay any taxes. If you are a single person, the first 250K profit would not be taxed, but the 50K would.
ParticipantI did not sell my investment property because it is cash-positive rental and I’m in it for the long term.
I didn’t sell my primary residence because of cost to sell and buy, plus monthly payment cheaper then renting. Able to save more money for future move-up home.ParticipantI did not sell my investment property because it is cash-positive rental and I’m in it for the long term.
I didn’t sell my primary residence because of cost to sell and buy, plus monthly payment cheaper then renting. Able to save more money for future move-up home.Participant“Thank you guys for proving to me that my idea doesn’t work with today numbers. I guess if one would have done it 2 years ago, one would be sitting pretty right now. Considering 30 year fixed back then was around low 5% and savings rate now is low to mid 5%. But obviously, past return is no guarantee for future earning, so we’ll just have to wait another 2 years to see if it would have worked or not.”
asianautica,
There’s nothing wrong with you idea. It can work, just not with the numbers you were using. We discussed this in an earlier post. I currently have loans from ’03’, ’04’ that are 3.75%(IO adj.), 4.75%(15yr fixed) and I’m currently paying the minimun and putting money aside into a CD. The 3.75% IO loan will reset in 2 years, which at that point I will put a large chunk of the CD money into the principal.Participant“Thank you guys for proving to me that my idea doesn’t work with today numbers. I guess if one would have done it 2 years ago, one would be sitting pretty right now. Considering 30 year fixed back then was around low 5% and savings rate now is low to mid 5%. But obviously, past return is no guarantee for future earning, so we’ll just have to wait another 2 years to see if it would have worked or not.”
asianautica,
There’s nothing wrong with you idea. It can work, just not with the numbers you were using. We discussed this in an earlier post. I currently have loans from ’03’, ’04’ that are 3.75%(IO adj.), 4.75%(15yr fixed) and I’m currently paying the minimun and putting money aside into a CD. The 3.75% IO loan will reset in 2 years, which at that point I will put a large chunk of the CD money into the principal.Participantgraduated from Madison. High not University.
Records clerk doesn’t mean I like to keep records. I’m actually a clerk (very limited income) good benefits, retirement program, goverment job.Participantgraduated from Madison. High not University.
Records clerk doesn’t mean I like to keep records. I’m actually a clerk (very limited income) good benefits, retirement program, goverment job.ParticipantI understand that concept of keeping money liquid, but paying $3900 a year to do so just doesn’t make since. If you could invest that money into a higher yield investment Ok, but why make a point about losing money. Also why would you pay $3900 annually just to continue to owe the 400K. If you are paying principal of that 400K it would be more like -$7000 annually for 30 years. All this wasted money just to keep money liquid. Like SDR said you could just simply open a HELOC and not draw the money and just pay the annual fee. There are also mortgage insurance programs in case of job loss or illness that are a lot cheaper. Why does everyone want to prolong paying off a home. Owning a home outright comes with many rewards. You could sell it and keep all the proceeds. You could rent it out for income. You could live rent free (minus tax, insurance, maintanence, etc). With all the money you save from not paying mortages you could invest. If it wasn’t for the fact that my home is almost paid off and actually cheaper monthly then renting, I wouldn’t have any money to invest. Owning a home and having it almost paid off allows me to save money for a down payment on a move-up home. When I decied to pull the trigger, I could sell my home and put the proceeds into the new home or just rent it out for extra income. I don’t feel like my money is in some kind of equity trap, to me I feel that my equity allows me to do things that I couldn’t do with my (very)limited income.
ParticipantI understand that concept of keeping money liquid, but paying $3900 a year to do so just doesn’t make since. If you could invest that money into a higher yield investment Ok, but why make a point about losing money. Also why would you pay $3900 annually just to continue to owe the 400K. If you are paying principal of that 400K it would be more like -$7000 annually for 30 years. All this wasted money just to keep money liquid. Like SDR said you could just simply open a HELOC and not draw the money and just pay the annual fee. There are also mortgage insurance programs in case of job loss or illness that are a lot cheaper. Why does everyone want to prolong paying off a home. Owning a home outright comes with many rewards. You could sell it and keep all the proceeds. You could rent it out for income. You could live rent free (minus tax, insurance, maintanence, etc). With all the money you save from not paying mortages you could invest. If it wasn’t for the fact that my home is almost paid off and actually cheaper monthly then renting, I wouldn’t have any money to invest. Owning a home and having it almost paid off allows me to save money for a down payment on a move-up home. When I decied to pull the trigger, I could sell my home and put the proceeds into the new home or just rent it out for extra income. I don’t feel like my money is in some kind of equity trap, to me I feel that my equity allows me to do things that I couldn’t do with my (very)limited income.
ParticipantIs the interest from a CD capital gain at 15% or taxed as income? Any tax experts want to answer this.
ParticipantIs the interest from a CD capital gain at 15% or taxed as income? Any tax experts want to answer this.
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