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Housing Point of View

March 21st, 2008 at 02:13 pm

Text is http://www.freemoneyfinance.com/2008/03/live-like-a-new.html and Link is
http://www.freemoneyfinance.com/2008/03/live-like-a-new.html

Good article, primarily for those who live in more expensive areas though. I know the whole expensive thing really skews my point of view on rents.

But the last line of the article says, "the joy of paying a 2008 price in 2028 dollars"

I am personally enjoying the joy of 1999 prices in 2008 dollars. LOL. I mean we've owned a little over 8 years and the monetary advantage is phenomenal.

I have often said we have friends come over and are a little intimidated by our house. They are completely clueless that our mortgage payment is the same as theirs, for twice the space, or the same as their rents in their crappy apartments. Just clueless.

You can drop the hints, but they just don't "get" it.

OF course this is precisely why we bought so young. To control our housing prices. Which were frankly, insane.

Our mortgage is $1300 monthly and we may get it down to $1200 this year with a refi and lower interest rates.

Plus I guess lowering interest rates has been the other big thing for us. I have mentioned before our first mortgage, in 1999, was about the same but our payments were $1500. Our payments for this house used to be $1500. When we both worked we had a $1800 monthly mortgage for a time as we had a 15-year loan. So to go down to $1300 was like getting a "rent decrease" which of course is quite RARE. & we might be able to pull it off once again.

Anyway, the reason I shared was because I thought it was a very well written article that kind of showed my point of view.

Anyway, reminds me, as far as the refi front. We are in line with a broker (recommended by a friend) who will call us to lock in 5% if it ever materializes. Likewise, my credit union said they wouldn't keep our application on file for more than 30 days, and seemed less willing to work for us (and more expensive anyway). Well, they called me yesterday and said rates were coming down, and they wanted to lock me in. (It's been more than 30 days - for sure!) OF course, not near where I needed to be, but nice to see they came down a bit again. So it's just on the back burner. This other guy obviously wants our business and will call us if he can lock us in. Even 5.25% would be an improvement. Not counting on it, but if it materializes, we're all set to jump.

I had kind of given up in the interim, so was excited when the CU called. In the meantime we paid a good grand off of our mortgage since we started the process. Just with regular payments. The more we pay off the lower our payments will be if this materializes. Woohoo.

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As far as the great mortgage debate, as with anything, I am very in the MIDDLE. Call me the Middle Monkey. LOL.

I just wanted to be clear, that personally I would rather fund my retirement than prepay the mortgage right now (though I may throw an extra $30/month at the mortgage rather than have it sit in my checking account and get spent. The small dollars I do think can really add up).

The reason is being young and having the tax deferred advantage, I really think retirement is the best bet for my money.

Of course, being young, I expect more income down the road. & so, once the retirement is maxed? Any excess is going to the mortgage. When it comes to having more money than I really need, and the mortgage, I rather just pay off the mortgage. It is certainly the easier solution than figuring out how to invest any excess, and worrying about taxes.

Likewise, our long term strategy is very middle of the road. On one income, max out retirement and then pay down the mortgage ($300/month max - if that), then on to taxable investments.

With a second income? We would save up cash for a year or 2 (maybe invest) because the second income can come or go. Then we would divide the income, after year 1 or 2, to mortgage and taxable investments. split 50/50. That's our plan for now. No clear winner so we figured we'd do both. We maybe even split it 33/33/33 Fun/mortgage/invest. But we just figured we'd save a bit first, then split, and then go from there...

We'd prefer to use the windfalls/second income to pay off the mortgage so that we could live on a much lower salary. Sure, you could invest, but the taxes get complicated, and investing is just not a sure thing.

No right answer here, just my own thought process. My very middle of the road thought process. Kind of the best of all. (Why not do it ALL?) I mean I would really love a well funded retirement and a paid off mortgage by 45. Not either/or. Just going for both.

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