Everything You Need to Know About Mortgages! 

my state is impossible to by a house . the prices are not reasonable

thank you, can you give a pointer the best investment now ? i am thinking of getting stocks or cryto

The key to making money in stocks is not to get scared out of them. An important key to investing is to remember that stocks are not lottery tickets. Get a financial assistant

I currently work with Tamara Diane Hagan a financial expert i met in a seminar

I recently watched Tamara Diane Hagan on TV , such a great speaker . but have you made any profit whatsoever working with her ?

i just added $240,000 to my portfolio within 4 weeks

Nice. Also took advantage of this. Dropped my payment almost $200 and kept same term

Same, I put like 10% down and then refi'ed my mortgage to go from a 3.7% rate to a 2.85% rate. In the same time, my house has gone from $300k to $450k in two years. Honestly, the best decision I have ever made was buying my current house before I had 20%. I think the same strategy won't work now though because I predict housing to stabilize post-COVID.

I don't get it, why not invest WHILE paying extra on the mortgage?

😊😊😊😊

My point is it’s all about the stage of your life. Our first house we needed to stretch to get our foot in the door. Our newest house we already have wealth so we don’t need to make money investing the difference. I’d rather have a paid off house at 60 so I can retire if I choose. Same people but different life stages results in different optimal decisions in my view.

What stat

@@Dpaq13 most millionaires pay of their home in 10.2 years

Thanks for the info!

If the show were restricted to what most people did, all of their shows would be restricted to the single sentence "Don't invest much, and get into more debt". That's what most people do. The show is to talk about good strategizing, not what most people do. And even if you are only in the house for 8 years, the advice doesn't really change as far as I can tell; a 30 year still gives more leverage potential, more flexibility, and more investment opportunity. Short term housing may open up the discussion to other types of mortgages, but with the current state of interest rates, I think it's is silly to go with a different kind of loan when you can lock in 3%.

$263k is so damn cheap

@@gumerzambrano for a 960 sq ft fixer upper?

Yes. Depending where you live. There are 1000 sq ft houses that go for 1M in SF.

Agreed. That is why I always take 30 year loan even when I refinance. It is much wiser to stretch out the cheap debt as long as possible and invest the savings. But it is very important to make sure that you don’t take too much debt just because of the longer term and cheaper interest.

@@deeputhomas5397 what my wife and u are doing is picking our home based on if it were a 15 year mortgage and then we will probably do a 30 year for the flexibility and immediately invest the difference. That way our budget never really knows the difference and we don't end up taking the savings from being in a 30 year and spending it on random things. It also helps us keep our eyes on more modest homes than what a 30 year could potentially allow for within the 25% rule

we refied our remaining onto a 10 year at 1.8%, will probably pay it off in 5.

Sorry with today’s rates it’s dumb paying off your second or third house in 10 yrs. even if you have money and in your 40’s/50’s…..interested steps going to be below inflation. It’s literally dumb to pay more then minimum as long as you don’t have pmi on it.

@@BrianNC81 not smart, unless you have some deficiency such as you are a addicted to gambling or can’t control spending on total garbage…other wise it’s stupid. At 1.8% you could literally get more on a CD probably….and realistically should be easy to get 8% minimum

The problem with too much flexibility is that the job may not get done. In the time it took for someone to finally get around to paying extra, they could've already paid the mortgage off. Sure, someone could have a lower monthly payment, but I feel they have a bigger problems if they need the extra couple hundred dollars to have "flexibility" in their budgets.

ARM?

@@priestesslucy3299 Adjustable Rate Mortgage. The initial rate will be lower at origination but it floats on prime, so it's quite likely you'll pay more over the life of the mortgage given we're hovering around all time lows currently.. There's also volatility in your payment as the rate floats that most people find concerning.

@@benlackey5068 Yeah, I might be tempted to do ARM if I was pumping and dumping flips or doing the Buy, Slow Upgrade for 2 Years and Sell to claim the Primary Residence Tax Exemption hustle. (Seriously though, in some markets a single person almost has to sell every 2-4 years just to keep up with the exemption and not wind up giving an arm and a leg to uncle Sam by putting down actual roots before selling) But for something I'm actually going to hang onto? No way

How much negotiating can be done depends entirely on the lender, but its fairly easy to shop around what refinancing rates would be online. As with mortgages on a new property, credit score is probably the biggest factor in how good a rate you can get. And the way most refinances work (not counting cash out refinances), is the lender you are refinancing with essentially buys out the remainder of your current mortgage, and then establishes a new mortgage using that remaining amount under the new terms. It has nothing to do with the market value of the house, it has to do with how much debt is left in the current mortgage. (Well, nothing do with the mortgage calculation itself anyway. But it might make a lender nervous if the house has plummeted in value and you owe more on it than it's worth.) Example (ignoring things like down payment, insurance, fees, and taxes for simplicity): You have a house you took a $300,000, 30 year mortgage on at 5%. Your monthly payment would be $1,610. After, let's say 15 years, the remaining balance of that mortgage would be about $203,000. Now you wanted to refinance to a 30 year at 3%. Your new lender buys out the mortgage from your old lender, and creates a new mortgage on the $203,000 of remaining debt. So your new mortgage would be $203,000 at 3% over 30 years, or $989 a month.

Yeah but how much more can you invest instead? Maybe get your mortgage down to $1000 a month or lower so that its almost no noticeable.

What's happened with FHA loans?

@@priestesslucy3299 previously (pre 2013 I think?) the PMI included with FHAs would go away once you hit a certain loan to value (LTV). They changed that and you now pay PMI for the life of your loan (effectively till you refinance). Given that rather thank making a 3.5% downpayment with an FHA, you're probably better off doing a 5% down conventional with PMI. That way you can drop the PMI once your LTV is ok.

@@benlackey5068 oh, yeah that's a big deal. Thanks for explaining for me ❤️

Free money? Where?

@@MikeThePike316 It's in loans with fixed rates below the rate of inflation. I'm always amazed when people pay such loans off.

No, mortgage interest is front loaded. Think about total interest for the remaining term of the loan, so earlier the more interest saved total. But also think about today’s dollar is more than later; and if interest rate is very low, paying aggressively is hurting you, since you can earn much more than total interest saved.

More valuable sooner.

If you're already investing, what would it hurt to invest cash into real estate? Would it not appreciate ±8%?

@@MikeThePike316 I’m not sure that it would be quite that much. I should add the money is in an inherited IRA so that I have to pay taxes - not sure incurring $200k+ in taxable income beyond my wages is the best decision for one year

280k for 3400sq ft on an acre of land with a three separate stall side load garage in NC... 8 years ago. More like 500k now.

Ramsey is overly conservative because he’s a fool (he’ll admit it) who was irresponsible with debt and went bankrupt. Now he believes *everyone* is as foolish as he is so that’s why he recommends no credit cards or debt. But if you aren’t a fool Dave’s plan is not for you

Getting down below 100k in six years is only $800 a month In six years that $50,000 could nearly double

Debt is risk. It’s not just a feeling but a factor to take into account. Certainly one can take calculated risks, but it would be foolish to disregard the cost if the risk is realized. Having a means to mitigate the impact if everything goes south is appropriate.

Debt is no more risk than an asset is risk. Funny enough - debt can actually reduce the risk of your portfolio.

@@benlackey5068 it’s different types of risk. If an asset falls in value, don’t sell; lack liquidity for debts, lose your belongings. One sucks more than the other

@@chemquests I think I understand what you're trying to say, but am somewhat of a pedant. Assets and debt are merely things that go on your balance sheet. Risk is more a characteristic of those things. From investopedia: "Risk is defined in financial terms as the chance that an outcome or investment's actual gains will differ from an expected outcome or return. Risk includes the possibility of losing some or all of an original investment."

Paying off the mortgage is the final step on his to do list. Paying off consumer debt, having a fully funded emergency fund and investing all take priority. Then any left over is for paying off the mortgage.

@@KP-uz3nk - Ppl also forget that if someone's following the baby steps, they're investing 15% while paying extra on the home. Opponents of the baby steps typically treat the process disjunctively: either invest or pay off the home, but not both. Even Money Guy has made this mistake in one of their case studies on this topic.

What hypocrisy? Also, if you view the baby steps in a vacuum, you'll obviously find it objectionable. In order for it to make sense, you have to view each step in context with the program.

Depends on how much you already have saved up and when you plan to retire, but I'm probably gonna go with no. If you were extremely aggressive with your savings early on and already have enough to retire comfortably, I guess it wouldn't hurt anything to lower it down to 15%. I do very much like the idea of not having a mortgage in retirement, but getting rid of it too early means losing out on quite a lot of investment opportunity, and age 45 is kind of an arbitrary number they throw out that I personally don't love. Early mortgage payments mean not only lost growth opportunity, but you also lose out on the tax advantages that retirement accounts give. On the other hand, I think it's a great idea to ear-mark some of your retirement savings for paying off the mortgage early. That way, it still gets the growth during that time, and once you hit retirement, if you still have the mortgage, you can decide then whether you want to just lump sum pay off the rest as a retirement present to yourself.

In my opinion, it should.

@@Alan-jk1yi agree. Always good to err on the side of caution

No such thing mortgage interest is not deductible for three years now. Where have you been?

@@wdeemarwdeemar8739 Yeah it is, they just reduced the cap to $750k. If you don't believe me check with your CPA or lender.

In the US, the standard deduction, for a married couple, is much higher than most all of us can get from interest paid from a mortgage.

@@michaelscannell2502 Exactly, the only way someone's gonna benefit from mortgage interest deduction is if they itemize and those itemizations far exceed the standard deduction bc of the mortgage.

Actually curious because i know a couple that bought a house for 130 and now could sell for 180

I also don’t pay any bills at my house just the gas on my car.

I’ve been doing real estate for 15 years. Your plan sounds cogent; you might not even need to wait as long as you think, as you should be able to get owner-occupied advantages (i.e. low down payment) for this purchase. Your main risk will likely be bad tenants, especially considering your immediate proximity. It may be worth placing the other half under management; peace of mind and safety (imagine telling your “2A” neighbor you’re evicting him) are easily worth 10%. Other folks who have done this can certainly provide better advice; maybe I’m catastrophizing. I had a colleague that purchased a duplex, lived in it for only one year before marrying and moving out, and ended up cash flowing $800/mo. across both units. One will almost never achieve that on a single family rental without a substantial down payment.

How is it dumb? You eliminate risk, your profit is no longer offset by mortgage payments, you save money on interest in the long-run which could be used for investing, and you could save or invest those monthly payments. If we're taking the all or nothing approach (i.e., choosing to pay off the mortgage instead of investing rather than doing both simultaneously), then you may have a point.

It's a bad habit of theirs. They do mean invest, not save, they just use them interchangeably.

Their system is based on the FOO, and the early steps are saving in the traditional sense. Besides getting the match, investing comes after paying off high interest debt and securing an emergency fund.

The same information applies. Pay the 3% interest and make minimum payments. Invest everything else and get 8%

They showed the results

I mean, they explicitly talk about how you should get a 30 year mortgage and coast on minimum payments while you're young. They only talk about paying it off early when you get closer to retirement.

Yeah. Got the idea. Lever down when you’re old. Just not sure I agree.

What happens if the market crashes and you lose half your tenants for a year?

@@Alan-jk1yi I have B class multi-family properties. During the 2008 crash, my rents went up due to increased demand for them

@@jgg204 That doesn't answer my question.

This is why you have more than straight retirement. Regular stocks, emergency funds, and savings accounts are all necessary on top of Paying down mortgage.

@@derekbutts2660 I agree. It's not one or the other. It's diversification that is the answer

Not to mention, if all that happens you get another job. I got laid off a few years ago and took another job paying much less and the job was awful. But, I was never late on my mortgage or any bill. It took 10 months to get another job that is I enjoy.

What? How are you magically paying off the $90k in that scenario, while somehow being screwed with the lower monthly payment 30-year? The point is that if things get tough, it's much easier to make the required payment on 30-year than on a 15-year. And while it is unrealistic for them to compare "30-year + investing" to "15-year + no investing", retirement accounts aren't strictly speaking "locked". There is just a penalty for accessing them (excluding Roth principle). I'm much rather pay a 10% penalty than have my house foreclosed on. And yes, I'm aware they are doing a dollar to dollar comparison, but in making the assumption that the 15-year scenario has no investments, they are breaking their own FOO rules and recommendations. While the person doing the 30-year will be ahead, both would still have the money outside of that dollar for dollar $1,600 to fall back on.

@@Alan-jk1yi I think you need to reread my post. I never once said anything about a 15 year mortgage.

Life goals

I get that there is an emotional component to this but regardless of your age, it will almost always be more advantageous to invest your money at higher rates of return and pay off your mortgage over 30 years rather than paying off the mortgage earlier. It's simple math.

Use Celsius - can loan against your collateral

Not in your lifetime.

@@Danny... lol yes in the next 3-5 years with all the defi protocols out there

You can already take out loans against your Bitcoin using Celsius or BlockFi

@@Danny... you’ll get there someday bud.