The one debt most people incur – Mortgage

By the title of this blog many would get the impression that I don’t support mortgages. I do understand that they may be necessary. I have two different view points on this topics

View 1 – Take a Mortgage

This is the more traditional option. You generally pay a down payment of 20% and the rest is paid over 30 years. The only issue with this option is the amount of interest paid.

A $100,000 with a down payment of $20,000 would leave an $80,000 loan. At a 5% rate the amount of interest paid over the life of the loan would be around $74,600 according to mortgage-x.com. So now the house has costed around $174,600, in addition to the fees and charges of getting a loan.

View 2 – Save and pay cash starting small

To really stay out of debt you should start small. Where I live there are some fixer-uppers that are $20,000. Instead of having a down payment you own the house. During this time the payments you would have paid (about $400) could be put in savings. After five years you would have $24,000 in savings. If your house didn’t loose much value you could now upgrade to a $40,000 house, assuming you wanted to. Another five years and the same story, now we are up to over a $65,000 house. You can see where I’m going. About seventeen years after buying the fixer-upper you can now have the $100,000 house without a loan.

Positives and Negatives of each

View 1

Pros

  • Start out in house you want
  • Take interest deduction on taxes

Cons

  • Pay out almost as much in interest as the loan amount
  • Paying bank for 30 years
  • Could become upside down on mortgage

View 2

Pros

  • You own house outright
  • No interest paid, you get interest from the saving account

Cons

  • You don’t start in your dream house
  • The value of the “step houses” could tank

This is over simplified but the big issue with View 1 is the interest paid and the big issue with View 2 is the value of the houses you buy in between the two could tank. One Potential solution is to stay in the starter home, so there isn’t to much to loose.

While other people may chose renting, it is a personal choice. While I cannot blame someone for picking View 1, I am going to try View 2. I would like to know your personal opinion. Which view would you prefer, or would you rent?

21 thoughts on “The one debt most people incur – Mortgage

  1. I was wavering back and forth and eventually bought a 2Bed/2Bath Condo. Am I in love with it? No, but I like it. It’s central, close, convenient. But I’m glad I got it because it has taught me a lot about what I like/don’t like. I want more natural light, less street noise, etc. I thought all these things wouldn’t bother me but it turns out they do.

    Luckily, my payment is $1700(minus $150 for tax savings, and 350 for principal reduction) and I can rent out the place for 1600-1800 pretty easily.

    • I didn’t think about the possibility of being a landlord, seams like once you have the place paid off it will be a nice monthly income.

      • you’ll have to have decent criedt to get a mortgage for the home to begin with. but once you’ve been paying your mortgage on time for awhile, it may help improve your criedt. the best thing you can do is get a copy of your criedt report and pay off your old debts, then keep up with all of your bills by paying them on time.

    • You are better off psucharing them both in the same month, preferrably on the same day. I hate to say it, but someone else will one dealership will be 100% unaware of the other loan and that will increase your chance of approval AND get you a better interest rate for both loans.If you wait a few months, you risk getting denied and a higher interest rate.If they question the inquiries, just say you’ve been shopping around.Investers do this alot with houses they’ll purchase 2 or 3 in the same 2 or 3 week span, so they don’t hit their DTI, especially if they are flips.

      • Of course they canThey eedxnted you credit and you didn’t repay them according to the contract (it’s like 5 or 6 pages that you have to sign to take out these loans, lots of small print that informs you they can report you if you do not pay) Depends on what the class action suit is about. The thing is, by the time the class action suit is ironed out, it would either be off your report (aged off) or you will be sued by them or the collection agency they sell your debt to, so it won’t matter.

    • Different financing cpeaonims report credit at different intervals. Most report every 30 days. If they report every 30 days depending on when you get the loan compared to their reporting schedule it could take more than a month to see it appear.Your credit score and debt to income ratio (debt divided by income) will determine your interest rate and the total loan you qualify for. Waiting really will not make a difference.

      • Sorry to hear things did not go well for you ..I had many isesus with a debt settlement place too. I am all for credit counseling and bankruptcy if all else fails now. Debt settlement places are a rip off and take advantage of people in bad shape.I would say your credit is already as bad as it can be. I think you are doing the right thing by going and seeing the lawyer. THey will know how to do everything legally so that nothing comes of this later on down the road. Plus, the lawyers fees will be nothing to what those debt settlement places try to squeeze out of you.I think the lawyer is a good bet and in time your credit will start to improve.

    • I **** payday loan pcelas, because of their predator loan practices? What a typical uneducated statement.It is predatory not predator. What is more predatory? A short term payday loan that charges you a fee of $15 to $25 per $100 loaned for two weeks or a $35 NSF and daily overdrafts that can cause more NSF fees from a bank?You needed a loan that apparently you were were unable to get from your bank and now you want to forgo paying it back by placing a stop payment on the check. You received a service for a fee and stopping the check for false reasons is fraud.Depending on who you received your loan with, they could cause you a lot of grief. If they are reputable then you should call them to work out a payment plan (not a rollover option). No lending institution wants a loan to default.Good luck

    • They will take you to collections and keep cianllg you daily and your references. They may also take to to small claims court after a while to try to get their money. If your worried about bouncing the check and getting in trouble legally, don’t be. The payday loan is a loan and nothing more. The only action they can take is the same as if you didn’t make your credit card payment.I hope this helps you. I **** payday loan places, because of their predator loan practices.

      • Yes it sure can be pulled from you. They may run your again near the cnoislg and find that out. I am assuming they have run credit and not known about the 2 missed payments.If you are having trouble paying your student right now it would be best to wait until you are financially stronger in order to incur more debt.You would be well advised to have several months of savings built up before you sign a . Home prices are not going up so be patient. Same home will probably be less 12 months from now.

    • Run, run, RUN away from those scammers and loan sakhrs! Don’t do anything until you read this cbs news report. While these sites are good as far as telling you how LOUSY payday loans are they don’t tell you to stop using credit, PERIOD!!!!!Go to dave ramsey’s website (google it) and listen to his show for free online or borrow his book from the library and get out of the mess you’re in. You CAN do it! A little self discipline and you’ll be able to sleep at night again. Just do yourself a favor. No more credit cards. Definitely no debt consolidation loans. No cash advance loans. And skip the credit repair people .they have their own scam going. You can’t legally change legitimate information on a credit report.My dh and I got out of a financial mess by using this guy’s very common sense plan. It doesn’t cost you anything to use his stuff if you borrow his book from the library Total Money Makeover .or listen to his show online. That’s what we did. We don’t even have a car loan anymore! And that’s with 4 kids and one income. Like I said .it’s doable, for sure! Good luck!

    • Your just noticing this now? If you didnt noicte expression and tone of voice plays no part in online chatting. (Unless you use a mic which we arnt)My point is, even though primus sucks is primus’ (old) slogan, its primus that sucks not les. Les sucks has never been a slogan.

  2. When you take out a new loan or debt (car, home mortgage. cridet card) the info hits your cridet report pretty fast, usually no later than the end of that month. Your cridet report and FICO score is comprised of several factors kept highly secret and mysterious by the reporting agencies (Equifax, Experian, Transunion) that devise and report them to potential lenders.But essentially, they look at payment history, amount of debt vs. cridet available (on cridet cards for example), employment stability, home ownership, events and public records (delinquincies, bankruptcies, liens). The lender will also take into account your income.Having taken on new debt certainly cannot help your cridet score, but the good news is that a change in any one the areas mentioned above only changes the overall rating by the weight that it measures into the score.Tip: your cridet report is available, by law, once a year from the cridet reporting agencies. Check out equifax.com, experian.com, or transunion.com. For a fee, you can get all 3 at once and your FICO score. You can view it immediatel online! Go check it out and make sure it’s correct too-it has a tool for disputing any false info or debts you already paid but still showing up.

    • Run, run, RUN away from those scammers and loan shakrs! Don’t do anything until you read this cbs news report. While these sites are good as far as telling you how LOUSY payday loans are they don’t tell you to stop using credit, PERIOD!!!!!Go to dave ramsey’s website (google it) and listen to his show for free online or borrow his book from the library and get out of the mess you’re in. You CAN do it! A little self discipline and you’ll be able to sleep at night again. Just do yourself a favor. No more credit cards. Definitely no debt consolidation loans. No cash advance loans. And skip the credit repair people .they have their own scam going. You can’t legally change legitimate information on a credit report.My dh and I got out of a financial mess by using this guy’s very common sense plan. It doesn’t cost you anything to use his stuff if you borrow his book from the library Total Money Makeover .or listen to his show online. That’s what we did. We don’t even have a car loan anymore! And that’s with 4 kids and one income. Like I said .it’s doable, for sure! Good luck!

    • If you have a cdreit card. Call the cdreit card company to see if they have a promotional rate for direct deposit. If they don’t have a 0%, they probably have a rate that is much lower than cash advance or ATM. You may have to pay a fee for transfer the money into your checking account. Depends on the company, normally it’s around 3 or 4% also depends on your cdreit, it may have a maximum fee of 3%-4% max 75 or $90. It’s still cheaper than 24.24% cash advance or ATM. If they transfer $500 into your checking account. The fee would be $15. It will take within 4-6 business days before you can access your money from your checking account.

    • True but, unless I am trniyg to start a flame war. I think it is safe to say that sarcasm was intended.Though the old slogan of Primus was we suck , I would assume that they referring to everyone in the band not just the band its self Because, that would just be silly.

    • More than likely, you’re not going to find a ledner in this economy unless you have at least 20% to put down. A year or two ago, you would have been okay but not now. More than likely another bank will loan out to that credit score .but again only with a lot of cash down. More than likely, you’ll end up with an FHA loan if you get approved .here’s their website. It’ll help you find out what you need to qualify. Good luck.

  3. It may, but not directly.Purchasing a home will make you more itcrattave to lenders because they know they can take your home if you don’t pay them back so they may be more willing to lend to you. Paying your bills on time and keeping decent balances on your credit cards would be a better first step, though.

  4. The credit card co. may be wnlliig to settle for a lesser amount depending on how much you are wnlliig to give them and WHEN (up front, or by making payments?) This will make a difference, as they would highly prefer a lump sum up front and will be more wnlliig to negotiate with you. Also, it WILL effect your credit rating UNLESS you are wise UP FRONT and tell them your offer is ONLY good under the condition that they do not record a negative comment on your credit report. Negative comments include: charge-off / re-opened , settled. A good comment, and the one you should insist upon is paid as agreed. If you cannot get the exact language then it will effect your credit rating. Tell them your only other option is to declare bankruptcy if they will not agree to the terms. Since a negative comment on your credit report lasts approx. 7 years (depends on your state), this threat may make more sense to them since there’s not much difference between 7 10 for you, the consumer. Bankruptcy for you means you’re total clear after 10 years, but they get zero money. They will probably want to negotiate based on this premise. Still, you must be prepared to make a reasonable offer when making these demands.

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