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Should I refinance or not?

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#1
My mother passed away 2 years ago, I finally got the estate closed out and got my name on the title. The mortgage I am still paying is still in my mother's name but it has a HAMP incentive, so next year it will be finally exhausted crediting $5k off the loan balance. The mortgage at the moment is 2% interest and it's a balloon type. It's suppose to increase in October 3-4%.

The house desperately needs a new roof, the church put the shingles on wrong. So high winds took a small portion off of it.I keep a tarp over for now. Also needs new siding as well. So I am trying to make the best decision.

It's either I refinance with a fix rate this year and get the roof/siding fixed or wait it out until next year, to get $5k taken off the loan. I know the interest rates are going to continue to increase as the economy is still doing good.
 

southfork

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#2
Odds are interest rates will go up over 1% in the next year, that would equate to a lot more interest over 30 years wiping out your 5k savings. JMHO
 
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You do have a point, if I hold out till next year the house could be worse and wipe out the $5k savings. Now it's just matter of finding a bank with the best interest rate? I am a vet, but my house won't pass VA inspection. I just want to refinance it up to like $70k-80k, use $20k for fixing and buy a cheap rental. Play the game of monopoly.
 

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I just want to refinance it up to like $70k-80k, use $20k for fixing
You will not be able to do a roof and siding for 20k., Well not properly unless you do all the work yourself. May run into code issues there. And yes, the FED has another quarter % planned for this year, plus a full 1% for next year. That will drive the eco into the tank, just my 2 cents.

Let's see what others think.
@stonedywankanobe
@newmisty
@andial
Hey y'all do you think ole 33percent here can do what he wants with 20k.
 

andial

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#6
Let's see what others think.
@stonedywankanobe
@newmisty
@andial
Hey y'all do you think ole 33percent here can do what he wants with 20k.
I would need pictures of the house to price it. Most times when someone says they need a roofing and siding job that means they also need new sheathing in places plus fascia and soffit repair then gutters. Replacement windows + doors might be needed also then you have the inside to deal with. Depends on how cheap you can get the work done in your area. JMHO
 

newmisty

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What he said.
 

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My mother passed away 2 years ago, I finally got the estate closed out and got my name on the title. The mortgage I am still paying is still in my mother's name but it has a HAMP incentive, so next year it will be finally exhausted crediting $5k off the loan balance. The mortgage at the moment is 2% interest and it's a balloon type. It's suppose to increase in October 3-4%.

The house desperately needs a new roof, the church put the shingles on wrong. So high winds took a small portion off of it.I keep a tarp over for now. Also needs new siding as well. So I am trying to make the best decision.

It's either I refinance with a fix rate this year and get the roof/siding fixed or wait it out until next year, to get $5k taken off the loan. I know the interest rates are going to continue to increase as the economy is still doing good.
I bought my house with a blue tarp covering a 1/3 of one roof. Under it though was newly installed architectual shingles....

https://www.goldismoney2.com/threads/workin-man.117461/page-45#post-1328460
 

Usury

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#9
A few thoughts

1) you’re gonna have a hard time getting a loan in that condition

2) who says you have to refi next year? Even if the rate will go up to 4%, that’s still better than you’re likely to get today

3) read the mod paperwork VERY carefully and title search for subordinate liens. Many of those mods include a recapture provision requiring part or all the forgiven debt to be repaid if the mortgage is paid off early

4) after figuring the above and what it will cost to fix the property, is there really any equity there? Can you sell to recover the equity ( at least break even) or rent to generate cash flow (assuming you won’t live there)? If none of the above, then why bother? It’s not your debt...
 

ErrosionOfAccord

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I know you got the house under some bad circumstances and that you weren't really prepared for the added responsibility so, this may not apply to you. The GD banks will always try to sell you a 30 year. Make sure you look at 15 years because the interest is lower and if you can afford a 30 year you can most likely afford a 15 year.
 

southfork

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#12
How Much Difference Does .25% Make in a Monthly Mortgage Payment?

Written by Sarah McWilliams; Updated June 22, 2017

Related Articles



The interest rate is the amount of money the bank charges you for borrowing the money to pay for your home. The principal of the loan plus the interest rate determines your monthly mortgage payment. With a fixed-interest loan, your total amount is divided by the length of the loan, and then again by 12 monthly payments. Even a .25 percent difference in your interest rate can add to your monthly payment depending on your loan amount. That number increases even more over the life of the loan.
Interest Rates
A bank determines your interest rate based on current market conditions as well as your creditworthiness. The better your credit and financial situation, the lower your interest rate typically is. The interest rates on mortgages are compounded, which means that you're paying interest on the interest that has accrued every month as well as on the principal balance of the loan. Although .25 percent may seem like an insignificant number, it adds up when you consider the size and length of the loan.
The Formula
The standard formula for calculating a monthly mortgage payment is M= P[i(1+i) to the nth power] divided by [(1+i) to the nth power-1]. "M" equals your monthly payment. The “i” is your interest rate divided by 12. The "P" stands for the principal of your loan and “n” is the number of payments, which will vary depending on the length of your loan. By entering different interest rates, you can see the amount .25 percent would cost you per month.


Doing the Math
If your interest rate is 5 percent on $100,000, you can calculate your monthly payment to be $536.82 after plugging the numbers into the equation. If your interest rate is .25 percent higher, at 5.25 percent, your monthly payment becomes $552.20, a difference of about $15 a month. If you have a $200,000 15-year loan at 5 percent, your monthly payment is $1,581.59, and at 5.25 percent, it increases to $1,607.76. The .25 percent difference adds an extra $26 a month. Although that may not seem like a significant amount of money, it adds up to over $4,000 over the life of your loan.
Online Tools
If you don’t particularly care for algebra, there are online tools to help you calculate your monthly mortgage costs based on the terms of your loan. The National Association of Realtors' website offers an online tool where you can enter the terms of your loan and it automatically calculates your monthly mortgage payments for you.






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EO 11110

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#13
rates will go down if/when the stock market crashes. frbny will see to it (if history is any guide)

i'm playing a similar game with my retirement. interest rates up = i get less from megacrop. i'm betting on the crash....then i hit 'em
 

ttazzman

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........really are two basic options here......

#1....sell the house as is .....at least in our area rental fixer upper homes are lasting days on the market ...market is hot ...time to sell is now.......recently sold two homes in a combined less than 2 days from a estate

#2.......Do the math........get quotes etc........its basicly a math problem and there is no excuse for not doing the leg work...factor in the variables such as .....expected intrest increases .....etc...

personally i was offered similar options in the last 2 months due to a family death on two properties and selling the houses was by far the best option given our variables and math.

also include the value of the home as a variable .........low intrest rates are driving prices up....as intrest rates rise the market will stagnate and prices will fall ......it would be real easy to get upside down very quickly going forward
 
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#15
I am not selling the house, but plan to turn into a rental down the road. My mom worked too hard to keep the house in our family. I live in Nebraska which is why I guess cost of fixing is so low. My neighbor is selling his house, rented it out for years. He had contractors do a whole new roof and siding for $9700. I figured to have them do the same on my house. Average cost for a new roof is like $4-5k. I got a new AC/Furnace for $5,000.

I will get pics of my roof condition. I plan to get a new drive way, gutters, etc. The remaining mortgage is $40k atm, and house is tax assessed at $90k. Comps in the area are selling for $125k +. I want to take out $70k-80k; put $20k into fixing it, pay off some of my debt, estate lawyer fee and possibly buy another property as a rental. I did read it wrong, this year will be 3% interest by October, and it will increase another 1% next year and 2021 will be 4.33%
 

Goldhedge

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#16
The mortgage I am still paying is still in my mother's name but it has a HAMP incentive, so next year it will be finally exhausted crediting $5k off the loan balance. The mortgage at the moment is 2% interest and it's a balloon type. It's suppose to increase in October 3-4%.
Sounds like it's an ARM? I would talk with a lender to learn what your options are today and put yourself into a fixed mortgage. Balloons? To what and when??

Home Affordable Modification
The Home Affordable Modification Program (HAMP) was available to help homeowners at risk of default, by providing the borrower with affordable and sustainable monthly payments.​
Although the HAMP program is no longer available for new modifications, servicers should continue working with borrowers previously identified as eligible for HAMP and on any mortgage loans previously modified under HAMP.​
I still don't know what it is. Interest only? Assumable?

The house desperately needs a new roof, the church put the shingles on wrong. So high winds took a small portion off of it. I keep a tarp over for now. Also needs new siding as well. So I am trying to make the best decision.
If no water is getting in I don't see how you'll increase the damage. If water is getting in, address it pronto.

It's either I refinance with a fix rate this year and get the roof/siding fixed or wait it out until next year, to get $5k taken off the loan. I know the interest rates are going to continue to increase as the economy is still doing good.
Check with a lender as mentioned above. Have them print out an am schedule (amortization schedule) for several scenarios. Compare. You can also find an 'am' calculator online, but you'll need to know what the current interest rate is (reality). What is the mortgage tied to - i.e., what goes up or down that affects your rate?? It's tied to something. Then do the math.

I did read it wrong, this year will be 3% interest by October, and it will increase another 1% next year and 2021 will be 4.33%
An am schedule for 3%, 4%, 4.25% etc. will tell you the cost/month for each scenario.
 

GOLDBRIX

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#17
I know you got the house under some bad circumstances and that you weren't really prepared for the added responsibility so, this may not apply to you. The GD banks will always try to sell you a 30 year. Make sure you look at 15 years because the interest is lower and if you can afford a 30 year you can most likely afford a 15 year.

Agreed with EOA on this tactic. Definitely something to consider for a few more bucks a month.
OR
IF you can afford it kick in $50/$75/ $100.00 towards the principle each month on the current loan. You not only save interest you reduce months over the long haul. The more you can consistently throw at the mortgage the better.
 

ttazzman

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I am not selling the house, but plan to turn into a rental down the road. My mom worked too hard to keep the house in our family. I live in Nebraska which is why I guess cost of fixing is so low. My neighbor is selling his house, rented it out for years. He had contractors do a whole new roof and siding for $9700. I figured to have them do the same on my house. Average cost for a new roof is like $4-5k. I got a new AC/Furnace for $5,000.

I will get pics of my roof condition. I plan to get a new drive way, gutters, etc. The remaining mortgage is $40k atm, and house is tax assessed at $90k. Comps in the area are selling for $125k +. I want to take out $70k-80k; put $20k into fixing it, pay off some of my debt, estate lawyer fee and possibly buy another property as a rental. I did read it wrong, this year will be 3% interest by October, and it will increase another 1% next year and 2021 will be 4.33%

i understand your attachment to the house, my sister recently passed away and we were faced with her owning two properties and when we did the math we choose to sell ...just presenting the option

the Fed is projecting 1-2 more .25 rate hikes this year and 1% next year....usually mortgage rates are usually similarly affected....i would project a 1% increase in mortgage and a 10% relative home value decrease next year if i were doing the calculations....i would get actual quotes for the work to be done by reputable contractors so you have a real cost to work from ...then do the math.......obviously you can change figures or projections as you see fit for your area and thoughts
(that would be for a live in home)

if your wanting it to be a rental property you probably need to project the rental rates vs local.......and use at least a 20% loss for vacancy and repairs to rental rate......then i would review the property tax rates and insurance rates and project their future costs....also consider capital gains/losses and depreciation tax issues if you never plan on living in it

keep in mind ....financing/insurance can be less attractive rate and terms if the property is to be a rental

hope you can gleen some useful information from the above its not intended to be negative at all just reality

real simple math says ....1% increase would add ~600 a year to loan costs.........for the life of the loan.....so it would take 8+ years to recover the 5k loss.....if you factor in that you would need to finance 5k less after the rebate the return extends to about 20yrs.......<<<made a lot of assumptions in calculations .....but personally i would roll the dice and get the 5k rebate and refi later....
 
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Usury

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70-80% of repaired value is likely the best you’re going to be able to get on a non-owner occupied cash-out refi with a good fixed rate that fully amortizes and no balloon or ARM. Even then it’ll be tough to get it before the work is done. You might find a bank or credit union willing to do a no-appraisal HELOC now to finance the repairs and then do the perm refi when it’s repaired. CHECK TO MAKE SURE YOU WONT OWE MORE THAN $40K FIRST!!! I can’t stress this strongly enough. I’m in the business and we’ve seen many clients surprised by this that had a mod done previously that reduced principal.
 

Usury

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Also like Tazz says...figure what your projected cash flow will be after the refi, considering market rents and expenses. A good rule of thumb IMO is that your payment (with escrows) should only be half the gross rent. Otherwise you may end up regretting the decision down the road.
 
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#21
FYI I live in the house. It's been my childhood home pretty much all my life. Here are the numbers.

Monthly income: $4k/month
Expenses: $2k-2500/month
Mortgage amount owed: $42,932.32 including interest.
PITI: $710.67/nxt month in Sep (I'm going to start paying taxes next month, mother was disabled)
Tax Assessed $90k
If sold $100k-125k
Interest rate atm: 2%(It will increase to 3% in November)
3 Bed/1 Bath- Split level house with a patio in the back.
Possible Rent- $850 to $1,200/month.

Next month I'll be getting $1k taken off the loan balance because of HAMP. I have around $9k in savings but a $6k auto loan that I am thinking to wipe out because it's draining me $434 a month. My credit was extremely bad when I got the loan 4 years ago, paying 9% interest. Now it's near the 800's.
 

Goldhedge

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#22
Pay off the car loan!!

3% still is better than what's available. How many months remain? I wouldn't refi, but I would use the car payment to bump your principle each month to pay that down. An online Am schedule will let you play with the numbers. $500 more principle per month and you'd be out in about 5 years and less interest payment.

PITI is @ 17% of income which is very reasonable.

For comparison, I bought my first house in 1982. $58K and 13.25% interest with a 3, 2, 1, buydown ARM. Started at $525/mo. It went up to $650 heading for $750 (what an ARM does) and then I refied in 1984 for 10% fixed $525/mo which was still better than the alternative.

Rates have been dropping since then.
 

ttazzman

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Pay off the car loan!!

3% still is better than what's available. How many months remain? I wouldn't refi, but I would use the car payment to bump your principle each month to pay that down. An online Am schedule will let you play with the numbers. $500 more principle per month and you'd be out in about 5 years and less interest payment.
^^^^^^^^ not sure how i can express how strongly i agree with the above^^^^^^^^^^^^
 
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#24
If I pay off the auto loan, could save $5k+remaining interest. I could use line of credit to repair the siding/roof for a better appraisal. Then REFI on my moms mortgage into my name next year. I wanted to use the money for other investments, like stocks, real estate,gold, guns/ammo etc.
 
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#25
Well the longer the wait even next year, even if I am paying 3% the interest rate. The national interest rate will be higher when I REFI. Do I REFI this year to save $ on interest long term?
 

Goldhedge

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If I pay off the auto loan, could save $5k+remaining interest. I could use line of credit to repair the siding/roof for a better appraisal. Then REFI on my moms mortgage into my name next year. I wanted to use the money for other investments, like stocks, real estate,gold, guns/ammo etc.
Saving $5K+ interest on a car is a good thing.

"Line of credit?" the debtor is slave to the lender.

Why do you need "a better" appraisal...? Isn't a 'line of credit' (debt) based upon your signature?

Would painting the siding give you a margin of safety? Cheaper than replacing. Do it yourself.
Can the roof be repaired rather than replaced? What about home insurance? Does it cover roof damage?


If you refi I would simply refi for the Principle, $43K and NOTHING more. Don't use your property as a piggy bank. I saw this happen just before the 2007 crash. Folks would 'refi' pay down that credit card debt (and never cut up the card habit), turn around and buy a Winnebago, and a boat and ... - because 'hey, we want things'... (want to live like rich folks and beyond our means!). Then, when the job falls through BOOM! They inherited and owned the home free and clear before that!! Fools!!!

Unless you are clairvoyant and can predict the future...? Otherwise, avoid lines of credit, investments etc. Silver and gold - perhaps 15% of your net worth as INSURANCE against unpredictable times. Investments will be there when the time comes.


Well the longer the wait even next year, even if I am paying 3% the interest rate. The national interest rate will be higher when I REFI. Do I REFI this year to save $ on interest long term?
Do you know the interest rate today for an FHA loan? Or a conventional loan?

This is why you need to crunch the numbers! If it is 4 or 5% an AM schedule will show you exactly what your cost on a $43K loan is. You also need to learn about the HAMP.

What is it tied to?
How does it affect your loan?
If conventional loans go up to 6% how will your HAMP loan change? It could be the better deal.

Another question is how much will the bank lend you? I've seen where they give a favorable rate for $100K+. Not so for less (this is going back 10 years and it may have changed?).

"The mortgage at the moment is 2% interest and it's a balloon type." What does that mean?

Again: "The mortgage at the moment is 2% interest and it's a balloon type." What does that mean? Balloons when and to what?

This is the most important question to answer. Get that and then you can move forward!


Another thing. If you do as I suggested - pay off the car and apply $500 toward the $43K you will then know (Using an AM schedule) how long it will take you to pay it off! I guessed 5 years. Then, when you are debt free THEN start investing in 'stuff'.

You said you could rent it out for "Possible Rent- $850 to $1,200/month." I would use that 'income' as a hedge for investing.


That's the only way I would do it. If you can afford to put even more down on the principle - I would do that as well.


And at the risk of being redundant: DON'T USE THE HOME AS A PIGGY BANK!
 
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#27
Saving $5K+ interest on a car is a good thing.

"Line of credit?" the debtor is slave to the lender.

Why do you need "a better" appraisal...? Isn't a 'line of credit' (debt) based upon your signature?

Would painting the siding give you a margin of safety? Cheaper than replacing. Do it yourself.
Can the roof be repaired rather than replaced? What about home insurance? Does it cover roof damage?


If you refi I would simply refi for the Principle, $43K and NOTHING more. Don't use your property as a piggy bank. I saw this happen just before the 2007 crash. Folks would 'refi' pay down that credit card debt (and never cut up the card habit), turn around and buy a Winnebago, and a boat and ... - because 'hey, we want things'... (want to live like rich folks and beyond our means!). Then, when the job falls through BOOM! They inherited and owned the home free and clear before that!! Fools!!!

Unless you are clairvoyant and can predict the future...? Otherwise, avoid lines of credit, investments etc. Silver and gold - perhaps 15% of your net worth as INSURANCE against unpredictable times. Investments will be there when the time comes.




Do you know the interest rate today for an FHA loan? Or a conventional loan?

This is why you need to crunch the numbers! If it is 4 or 5% an AM schedule will show you exactly what your cost on a $43K loan is. You also need to learn about the HAMP.

What is it tied to?
How does it affect your loan?
If conventional loans go up to 6% how will your HAMP loan change? It could be the better deal.

Another question is how much will the bank lend you? I've seen where they give a favorable rate for $100K+. Not so for less (this is going back 10 years and it may have changed?).

"The mortgage at the moment is 2% interest and it's a balloon type." What does that mean?

Again: "The mortgage at the moment is 2% interest and it's a balloon type." What does that mean? Balloons when and to what?

This is the most important question to answer. Get that and then you can move forward!


Another thing. If you do as I suggested - pay off the car and apply $500 toward the $43K you will then know (Using an AM schedule) how long it will take you to pay it off! I guessed 5 years. Then, when you are debt free THEN start investing in 'stuff'.

You said you could rent it out for "Possible Rent- $850 to $1,200/month." I would use that 'income' as a hedge for investing.


That's the only way I would do it. If you can afford to put even more down on the principle - I would do that as well.


And at the risk of being redundant: DON'T USE THE HOME AS A PIGGY BANK!
Well, my parents made the same mistake using the house as an ATM while growing up. Over the years, the house was neglected because of it. I won't make the same mistake again. I have a $3600 Estate Lawyer fee, and a new $2k AC unit(no interest for 18 months) to pay off. So by REFI I can get things fixed and pay off the old debt, consolidating and start over.

The church put the shingles on wrong, which is why the high winds took off a small portion of the roof. Also, both sides have different shingles as well FYI. Only reason I would like to REFI up to $80k, so around $15k to fix what is needed; new Roof/Siding, Drive way, garage door, Gutters.

The other remaining amount will be used to acquire another rental property. In my small town, I have wholesaled properties for $5k-15k worth. Plus I would like use $2k-5k to purchase a tax liens, and they don't pay, well I acquire the property.

As for the Balloon mortgage, the pay off will be around $6k interest towards last payments of the loan. The interest rates will be 2018-3%, 2019-4% and 2020- 4.33%. Next September, the HAMP will be exhausted and 6th year anniversary will award $5k deduction off the loan amount. So this upcoming September will be $1k deducted.
The slight problem I face, if I wait next year to REFI the interest rates may be even higher basically wiping out the $5k savings.

As for $500 more of a month, I want to put that towards other investments like stocks, cds, etc. Start building up assets to create passive income. Basically follow the "rich dad,poor dad" philosophy.
 

Goldhedge

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#28
Ok. Well, I told you what I would do.

Risk you take depends on your age. I’m in my 60’s and experience is my guide.

I follow Dave Ramsey’s “Total Money Makeover” and he avoids debt like the plague.

“Live like no one else, so you can live like no one else.”

I’d consider rent payments a “passive” income. Safer too IMO.

As for stocks... spend some time reading here. The market is in a huge bubble and the world economy is hanging by a thread. It won’t take much to tip the scales.

Give this a listen. These two are very experienced in the market.

 

ttazzman

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#29
from what i have seen ......first i would pay off car with the cash in bank (9% is horrible) or sell it and buy a car that doesnt require a loan..........2nd i would hang with the "hamp" whatever that is and use the low intrest rates and principle deductions at least till their rates caught up with standard rates......3rd i would use the lack of car payment to fund first off roof repairs.....secondly siding repairs (would probably do this myself)(or if i didnt have the skills i would get a second job to fund the repairs) ........4th i would forget about "stocks,cds, etc" untill you have real unleveraged funds in hand they are risky and pie in the sky the house is REAL and done right will be a much better investment of money.........avoid taking on more debt like the plague.........(grin) this is my final opinion and this is the advice i would give my children...

personally i cant believe your considering ....adding debt..at over twice the intrest rate you currently paying...losing the hamp incentives....all to do a few repairs and INVEST????....thats like stepping over a dollar to pickup a penny...you could easily own that house free and clear in 3yrs with no debt <<<thats a real investment
 
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#30
I am 30, so most of my income atm is BAH, disability, and my job. I work and attend college full time, on top of that I am doing acting on the side and also studying for my RE test. My time is very limited. I have novice skills when it comes to home construction especially fixing roofs or siding. I am trying to sell my Mud grappler tires for $1k atm too. I am considering to pay off my truck loan and enjoy $434/month back in my pocket, save a $1k in interest. Plus it will push my credit over 800.

I didn't really go over some back story. My mom passed away in the house, the insurance company only paid for a demo but not reconstruction. I filed a lawsuit which took a year to settle. I already paid a contractor $700 to paint my ceiling(wish I did it myself TBH but I am painting the walls). I am sick of taping baseboards atm. I am going to start painting the walls tomorrow. So with carpet and paint, it will cost $3k so I'll have $9k remaining.

I do take in consideration of what you guys are saying. I don't want to go into debt but if I can utilize the debt to make me money why not? I am not buying new boats, cars. I've read real estate strategies where people use their equity to acquire real estate. I know the market is doing too hot atm, the market will correct itself by either crashing like 08 or FED will increase rates to slow it down. That's why I am waiting on the sidelines before I invest stocks.

This is my only opportunity to start over. I am in Nebraska and winter is coming around the corner, even if I pay off my auto loan. It will take a year to accumulate for a new roof. I either spend $400 patching up the roof portion or get a whole new roof which is needed. I see it's a waste to piss away $400 when I'm going to get a whole new roof anyway? The siding is wood from the 70's and eroding so bad it's just the stud boards atm. I can hold off till next year to get the $5k deduction but will it be worth it if the FED raises the rates by 1%?
 

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#31
Only 30 sir i would take on the debt and shoot for a successfull outcome be carefull make sure you find good people to do the work one hint when they pull up with their work truck take a look and see how they manage themselves. Take a look at the dash board if they have a bunch of crap piled up and are chain smoking tell them to take off and find another candidate.
 
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#32
Well, I went to the bank, even the loan officers even told me to hold on the loan till next year. Since paying on low interest rates and having the $5k HAMP incentive. Basically, take out a line of credit for 1st 6-12 months will be .99%. It will be like a credit card. She said too, for entire year IF I max out $20k I would pay $1,500 interest. Which is $125/month. Until I refinanced till next year and still get my roof/siding fixed.

https://www.centrisfcu.org/rates/

6 Month Introductory Rate APR LTV 0-80Variable* as low as .99%LTV 81-90Variable* as low as .99%LTV 91-100Variable* as low as .99%

I went to Lowe's, I was about to pay it out right for putting new carpet in my house around $2k. Since it was labor day, they had a 24 month- non interest. So I could save some $ on interest by putting the $2k into another project in the house like a new drive way for example or store it in a savings or use the $2k investing in stocks/CDs to make more money.
 

ttazzman

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#33
.....carpet used to be a expensive luxury.....when i was your age several times in my life while living in houses i was "fixing up" i lived without carpet or floor coverings other things took priority......

these days with youtube and the internet to provide information there is no excuse for not doing repairs and upgrades yourself .....most people learn by doing
 
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#34
.....carpet used to be a expensive luxury.....when i was your age several times in my life while living in houses i was "fixing up" i lived without carpet or floor coverings other things took priority......

these days with youtube and the internet to provide information there is no excuse for not doing repairs and upgrades yourself .....most people learn by doing
I just got done painting all the walls in my house and barely had time to do that. I'm going to college full time and working. I wouldn't mind doing the carpet just I don't have time. Plus I rather observe how they do it and done right. I got so many projects in my house. For almost two years I've been in living in my house with just floorboards atm.
 
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#35
The credit union, wouldn't do a home equity with me because my mother's name is on the mortgage. They saw it as too much risk because they can't monitor the loan. Offering me a credit card of 6 months of .99% then jumps to 9.99% or a unsecured personal loan. Then cover the remaining with a personal loan of 8.75%. I see this wiping out my $5k savings and kinda pointless.
 
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#36
Ok. Well, I told you what I would do.

Risk you take depends on your age. I’m in my 60’s and experience is my guide.

I follow Dave Ramsey’s “Total Money Makeover” and he avoids debt like the plague.

“Live like no one else, so you can live like no one else.”

I’d consider rent payments a “passive” income. Safer too IMO.

As for stocks... spend some time reading here. The market is in a huge bubble and the world economy is hanging by a thread. It won’t take much to tip the scales.

Give this a listen. These two are very experienced in the market.

Just doing some basic calculations on mortgage I would be paying $10k more in interest if I would be paying 5% vs 4.5% rate if I would lock in now? On a 30 year mortgage loan.

http://www.interest.com/mortgage/calculators/mortg...

I financed some projects on my house like carpet, roof, AC/Furnace for 18 months with no interest to buy me some time until I REFI. I just want to REFI up to $80k. Use $20k to pay off projects I financed, estate cost and other $20k for a down payment for a rental. I plan to REFI using a VA home loan. This is my first house I'm dealing with on financing or using equity to invest in another rental property. So just want to make sure I'm doing this right.
 

Goldhedge

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#37
Don't worry about paying $10K more in interest. You might not have the home in 30 years.

If you want to reduce your interest pay ONE extra principal payment per year and your 30 year loan becomes a 21 year loan. It really is that simple.

Do the numbers on that!

but if I can utilize the debt to make me money why not?
That is a fool's errand. The one piece of this equation you haven't 'figured' into the solution is what if you DON'T make any money???


A real estate license is a great idea. You'll learn important information about realty and contracts. I highly recommend it.


As for a 'job'. It's not a 'job' where you get paid regularly. You better have some savings to get you started - at least a year.
You've had a job before and they paid you each week or 2 weeks etc, but were you the rainmaker?? Or was the company reputation well known and brought in the people?

A rainmaker goes out and 'gets' the meat, i.e., you find the seller or buyer and put them under contract. You might take a month or 3 and still haven't been paid a dime! Try sales, any kind of sales. Market the product (yourself) and get people interested enough to 'buy'.

Also, check into where you will 'work'. What agency? What's the split? How will you get leads and turn them into sales?

If you work for ReMax you'll pay THEM $700/mo to use their office and work from home. If you have an office $1200 shared with another agent. $1700 if you want your own private space there. These numbers are 10 yrs old, so it may have changed. BUT I'll bet you had no idea that's how ReMax works!

Other agencies have splits. 50/50, 45/55 etc. of the commission.


Reality sucks some times.
 
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#38
Don't worry about paying $10K more in interest. You might not have the home in 30 years.

If you want to reduce your interest pay ONE extra principal payment per year and your 30 year loan becomes a 21 year loan. It really is that simple.

Do the numbers on that!



That is a fool's errand. The one piece of this equation you haven't 'figured' into the solution is what if you DON'T make any money???


A real estate license is a great idea. You'll learn important information about realty and contracts. I highly recommend it.


As for a 'job'. It's not a 'job' where you get paid regularly. You better have some savings to get you started - at least a year.
You've had a job before and they paid you each week or 2 weeks etc, but were you the rainmaker?? Or was the company reputation well known and brought in the people?

A rainmaker goes out and 'gets' the meat, i.e., you find the seller or buyer and put them under contract. You might take a month or 3 and still haven't been paid a dime! Try sales, any kind of sales. Market the product (yourself) and get people interested enough to 'buy'.

Also, check into where you will 'work'. What agency? What's the split? How will you get leads and turn them into sales?

If you work for ReMax you'll pay THEM $700/mo to use their office and work from home. If you have an office $1200 shared with another agent. $1700 if you want your own private space there. These numbers are 10 yrs old, so it may have changed. BUT I'll bet you had no idea that's how ReMax works!

Other agencies have splits. 50/50, 45/55 etc. of the commission.


Reality sucks some times.
I paid off my Truck loan of $5k going to enjoy the $434/month in my pocket. I took a 20 point hit on my credit for paying off debt. Makes no sense to me. Anyways, I want to get a Duplex or Triplex which is my main goal long term and use the equity in my mom's house to acquire another property to create passive income.

Thanks for the tip on paying one extra mortgage payment once a year to get it reduced down to 21 years. I'll take a note of that. I'm not using the debt for a car, boat or another liability. I'm just doing the "Rich Dad/Poor Dad" Approach strategy. Simply play the game of monopoly. As for becoming a RE agent, I just got to pass the dang test. I got all the required hours out of the way but I've taken the damn test 4 times already. I want to get my license before I purchase a property.

It's just I'm on the two way street of weighing the pros and cons of REFI this year or next year. If I wait, even paying low interest now and getting a $5k savings on the loan. I'll be paying way more in interest next year basically contradicting what I was trying to save.
 

ttazzman

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#39
Wanted to clarify ......what GoldHedge said........one extra PRINCIPLE payment....you always have to specify when you make the extra payment is to be applied to principle only........if you dont specify they will apply it as they see best which will not be in your favor

a REFI will never "math" out with the stated parameters you have put out........

we have a real estate agent in the family ....only reason she got her liscense was so we in the family can see opportunities before they hit the open market (were looking at farm and development land/sold all the rental houses as they were not money makers)......the saving of commission etc really is lucky to pay her annual fees etc....part time RE agent rarely is a money maker in itself
 
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Goldhedge

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#40
Thanks for the tip on paying one extra mortgage payment once a year to get it reduced down to 21 years.
an "AmSchedule" is your friend! (note the 'Extra Pmt' button)

and Tazz is correct about stating exactly where the principal payment goes. I learned that the hard way. They were reducing the 'interest' payment! Meaning I still borrowed all that money, when logically, I wanted to pay off the principal which would naturally REDUCE the interest payment over time.


we have a real estate agent in the family ....only reason she got her liscense was so we in the family can see opportunities before they hit the open market (were looking at farm and development land/sold all the rental houses as they were not money makers)......the saving of commission etc really is lucky to pay her annual fees etc....part time RE agent rarely is a money maker in itself

The only downside to having a license is paying the monthly MLS fees to the local board. One of the 'expenses' that you have to consider as well as continuing education costs per year. Around here it's $2K/yr thereabouts...

Selling a house every now and then is a good idea, just to keep your feet wet.

You don't have to be a Realtor™. Realtors are a professional organization dedicated to keeping the members ethically above board. Not a bad idea, but they also have membership dues.


Real estate is so easy, anyone can do it... (NOT!)

It's a good idea to work as an agent for a year or two under a broker just to 'see' what goes on behind the scenes. What it takes to 'sell'.


You'll learn these two rules:
1. If you don't list, you don't last.
2. Buyers, are liars.


You'll also learn these 3 rules are the most important in real estate:
1. Location
2. Location
3. Location