[sdcellar]

Real Buyer– Another way to think about it is this:

One might infer from your example that it seems like the higher the interest rate of the HELOC, the better your return. I mean why not shoot for a 12% HELOC and get $10 a month!

Of course, as you so rightly mentioned, the higher interest is actually a deal killer. It could possibly work if the margins worked out just right, but I suspect for most consumers, they would simply never pay off this HELOC. How cool is that!

[sdcellar]

I can only speak for myself, but I’m not missing the savings based on compound interest. I’m just saying that you won’t realize near the benefit by managing this through a HELOC and some silly software.

Even if you wanted to keep an open zero-balance HELOC in case of emergency (like the purchase of a plasma television), you’d do better to put all your paychecks in a money-market account, establish a low-water mark for that account and pay all your expenses out of there including everything you can against your mortgage until it’s down to the low-water mark. Then rinse and repeat (i.e. re-fill and pay down).

The scheme hawked here is actually taking advantage of people’s lack of understanding regarding loan amortization and compound interest, making it seem like it’s the scheme that saves you money rather than simply choosing to pay down your mortgage (and instead the scheme costs you more).

[sdcellar]

On the MSN article, how would like being the ONE guy that defaulted in Vermont? Fellow residents probably took away his Subaru too.

and yes, I’d agree the worst seems far from over.

[sdcellar]

With regard to 11825 Westview Parkway, that sale does not show up at sdlookup.com or the county assessor’s property sales search. I suspect that’s the transfer to the lender.

Someone mentioned on some thread here, that those are a different kind of “sale” (trustee vs. trust deed?) and I’m starting to think that Zillow lists them along with ordinary sales. This certainly presents the possibility for confusion, however I’m guessing that appraiser’s do make different considerations for these types of transaction (i.e. they probably don’t affect comps in the same way).

I do know I’m starting to see more of these, so I would like to understand it better.

[sdcellar]

Okay, so I finally got off my butt and checked out the link that svferris provided. I see now that you first convert your conventional mortgage to a HELOC.

I ran the simulator and the thing that stuck out to me (beyond the dubious claim of projected savings) was the full 1-percent increase in the interest rate that will be applied to my effective mortgage. Brilliant! Let’s pay more interest. That should help me pay off my house sooner! STU-PID.

…and svferris, I’m not knocking you for providing the link. I know you where just trying to be helpful.

[sdcellar]

You are paying interest on the balance in the HELOC (whose interest rate is higher than the 1st mortgage interest rate). Why in the world would you want to do that? Paying money to save money? They’re getting you coming and going (cost of the software and HELOC interest). Why wouldn’t you put your money in money market account, earn interest on that and pay your mortgage down?

I just don’t get it. I’d say banks are dying for you to know. Perhaps someone can explain this to simple old me.

[sdcellar]

Right. It also seems like right now, if nothing else, absolutely don’t “settle”. If a property doesn’t offer exactly what you need (or you can’t make it that way while preserving the economics of the deal), keep looking.

[sdcellar]

Poway strikes me as slightly unusual in general (not meaning that as bad as it sounds). They just have a very diverse range of properties–townhomes, large acreage and horse properties, multimillion dollar homes. It seems very subject to the mix of what they sell that year.

An interesting metric might be the degree of variability in normalized median by zip. Anybody up for that?! Yearly is fine…

[sdcellar]

sdr- I should have included a winkey smiley with my comment as I figured that was just your assessment of where Chris might be. I knew you weren’t contradicting yourself.

I am interested in your 50% won’t versus 50% planning perspective though. I guess I’m technically in the planning stage myself, but I truly do intend to buy again. I feel like the only thing that would stop that from happening would be for us to leave San Diego.

Do you have other reasons why you think planners might not become buyers? I mean if it’s the leap thing, I agree with you, but that’s always been the case.

[sdcellar]

Could be my myopic perspective, but I don’t see how using a HELOC as a checking account could provide you any benefit whatsoever. HELOCs take your money, most checking accounts earn you at least a little money.

The only way this would seem to make sense was if you had a HELOC already, then yes, it makes sense to try to pay it down as quickly as possible (all the while not really making a dent in your first mortgage). When it’s paid off, close it.

So, Next in Line, is the gist of this thing that you obtain a HELOC to get it going? If so, then I would consider it a bad idea.

[sdcellar]

I’m in that 50% as well, so now there’s at least two of us. So far we’re at 100% with a score of 2-0.

Also, I wouldn’t fault Chris (or anyone for that matter) for buying property in the near term. Just because it doesn’t make sense for most people to buy now (at least according to most of us here), doesn’t mean that it’s not right for some depending upon their personal circumstances.

I mean, heck sdr, I think you’re one of the big believers in that premise anyway.

[sdcellar]

and now I see that Perry has indeed divulged what he chooses to divulge. Simple, eh?

[sdcellar]

I’d give somebody my ZIP code before I published my email address (well, I’ll actually do neither), but nobody’s putting a gun to Perry’s head. He’s welcome to decline.

lk– There’s just a slight difference between politely asking somebody the general area where they live and badgering them into submission about their real estate transaction history.

[sdcellar]

oops. I realize now that you said feet^2 and not price as your criteria. Even so, I think you can just adjust the price range to find what you need. $1 per square foot is a fairly decent estimate of expected rent anyway. You’ll just find that the newer it is, the higher this number will be.

Do be careful though, as there are some folks out there who are trying to fetch way too much for their place. For example, a new 3000 feet^2 (I like that) home for $4000 or more. These are just people who are trying to get you to pay their mortgage for them–don’t do it!

[sdcellar]

Well, this would be a good query to start with:

Poway, 3 beds+, Under $2200

Using “poway” as the search text is a good one as most of the areas you seem to be interested in feed the Poway Unified School District and they will tend to include that fact in their listings. You can also swap it out for the other areas you mentioned to pick up others. Using “bernardo” rather than “rancho bernardo” will give you better results. You should also try “4s” (West RB).

The query above spat out a good number of results, so I’m sure you should be able to find something that suits you.

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