@dollar_bill wrote:
@Kostya1992 wrote:
@dollar_bill
First of all I don't ever plan to and hope I never have to file a BK, I'm not saying its good either.
The point of mentioning the morgage is that you effectively become a slave to them for 30 years and pay back like 3x or more of original house value IF you have a perfect credit profile.
And banks aren't saints? These are the guys who funded and profited from endless human suffering. Countless news articles daily about massive fraud carried out by the big banks. Just look at what happened in 2008... these guys should be locked up for life with no parole.
I personally have 0 mercy for banks, especially when burned in BKs.
With the currents rates that are available you wouldn't even pay 2x the value, it would be like 1.5x or less. Regardless, nobody is forced to get a mortgage. To make it worse, the concept of a down payment is lost, and many folks go into a large mortgage and pay zero down, or less than 10%. Saving up your money will really cut into the banks take as well as eliminate the need for PMI.
It starts with people owning their own actions and doing the right thing. The rest will take care of itself.
@if you have a low rate on the mortgage though, it's a good deal. let's say your mortgage is at 3% and you estimate you can get 5% in the market (long term investments, this is pretty conservative). let's say you always make your monthly mortgage payments on time and in full. this month, you have an extra $500 to spend. if your choices are overpay the mortgage or invest that in the stock market, you should probably invest it unless you're really risk-averse. this is kind of the philosophy on mortgages. even if i have say, $300k cash and can buy a house, it might make more sense to take the low rate mortgage. then i can invest that $300k at ~5% per year but only have to pay ~3% of the earnings towards the mortgage interest, so you're earning 2% on that money. yes you are in debt for the term of the mortgage, but that doesn't always mean that it's financially unwise. an extreme example to illustrate the concept: if you could take out a loan @1% interest and were able to invest that money in a bank account earning 7% interest, that makes sense to do, right? even though you're in debt, you're earning it back elsewhere.
now, if you're the type of person who realistically is not going to invest the money as an alternative to overpaying the mortgage, then the logic falls apart. but if it's extra mortgage payment vs. extra 401k contribution, often the latter is smart.
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