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Started By
Message
15 or 30 year loan for a home? Pros and Cons?
Posted on 12/5/07 at 10:30 pm
Posted on 12/5/07 at 10:30 pm
.......
This post was edited on 1/21/11 at 4:14 pm
9
Posted on 12/5/07 at 11:21 pm to Afreaux
Go with the 30 loan. Your REQUIRED payment would be lower, pay the extra each match the 15 yr amortization schedule. You have your house paid off in 15, but if hard times hit you only have to make the lower 30 yr payment. You only pay interest for the time that you are using the other persons money.
make sure to go an independent title attorney that can advise of any potential pitfalls of this type of transaction. I use Lane Bennett of Title2Land in Baton Rouge
make sure to go an independent title attorney that can advise of any potential pitfalls of this type of transaction. I use Lane Bennett of Title2Land in Baton Rouge
Posted on 12/5/07 at 11:45 pm to Afreaux
15 year loan paid every other week, knocks it down to a 10 year 8 month loan. Might want to look into this. 
Posted on 12/6/07 at 8:20 am to Afreaux
quote:
Someone is willing to sell me a home owner finance for 100k. He mentioned the monthly payment would be between $600-$700 a month (before we knew exactly what the sale price would be), so I assume he's talking a 30-year loan.
Using an online calculator, it looks like a 100k loan at 6% for 30 years would have $600/month payments, which is pretty easy for me to swing (216k total will have been paid in 30 years). At 15 years at 6% its about $840 a month (151k total paid in 15 years). I could probably swing $840, but I'd have to pay other fees and taxes which obviously can really add up.
What's the best thing for me to do? If I have the money to pay off the balance in 10 years, does that mean I still have to pay the same amount total that I would have in 30 with interest?
Go with the 15 year. If you can't find 240 extra dollars in your budget, you've got other financial problems and probably shouldn't buy at all. MANY people get 30 year mortgages and say, "I'll just pay extra"...rarely do they ever do so. Think about it.
Posted on 12/6/07 at 10:21 am to novabill
Richard Derbes is very good.
and a Tiger.
and a Tiger.
Posted on 12/6/07 at 10:31 am to Afreaux
What's your personal cost of capital?
Posted on 12/6/07 at 1:14 pm to Colonel Hapablap
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This post was edited on 1/21/11 at 4:14 pm
Posted on 12/6/07 at 1:32 pm to Afreaux
Student loans never go away, and if a judgment is filed, you won't be able to buy the house you are in without paying the loan off. Rates may be higher later, but if your credit is that bad now, you won't get close to that rate.
Here is what I would recommend.
Take the deal and have it recorded. Pay him for a year minimum with money orders or checks, and keep track of all of them. Make sure you pay on time and have a record of all payments. Cash receipts won't work. Money order receipts or canceled checks only.
If you do that, after a year you can do the loan as a refinance as opposed to a purchase. A lot easier to do.
Work on the student loans, and see if they can put you on a plan and basically start from scratch. That is the criteria you set up with the Agency you owe it to. You want it started over, so you can show proof that it was consolidated into one loan to the credit bureau, and you can make one payment.
Also, apply for your CRP to all 3 bureaus, and dispute everything. It will clear up any erroneous listings and duplications. You make get lucky and they could drop some legitimate things.
If you do that, your score should rise enough to refi after a year or more.
Here is what I would recommend.
Take the deal and have it recorded. Pay him for a year minimum with money orders or checks, and keep track of all of them. Make sure you pay on time and have a record of all payments. Cash receipts won't work. Money order receipts or canceled checks only.
If you do that, after a year you can do the loan as a refinance as opposed to a purchase. A lot easier to do.
Work on the student loans, and see if they can put you on a plan and basically start from scratch. That is the criteria you set up with the Agency you owe it to. You want it started over, so you can show proof that it was consolidated into one loan to the credit bureau, and you can make one payment.
Also, apply for your CRP to all 3 bureaus, and dispute everything. It will clear up any erroneous listings and duplications. You make get lucky and they could drop some legitimate things.
If you do that, your score should rise enough to refi after a year or more.
Posted on 12/6/07 at 2:03 pm to tiger94gop
.......
This post was edited on 1/21/11 at 4:15 pm
Posted on 12/6/07 at 2:41 pm to Afreaux
quote:
Sallie Mae sold my student loan debt to an unrelated collection agency (not one of their own) a couple years back because I hadn't made payments in at least five years. The collection agency wants a huge chunk of money, I'm in the process of looking for an attorney that specializes in debt so I can get all the advice on my credit report.
Why are you even looking to buy a house given all that mess?
Posted on 12/6/07 at 2:47 pm to Afreaux
quote:
Not sure what that means.
quote:
I don't really understand what amortization is, or how good of a deal this is.
then you shouldn't buy a house.
quote:
I'll have no choice but to keep renting an apartment for a few years
:omg:
Seriously, renting is not the end of the world. Taking everything into account, it's most likely break even with buying.
Posted on 12/6/07 at 3:51 pm to Colonel Hapablap
I guess if I have a choice between paying someone $600-$800 a month that's going into a black hole, or paying $700 a month that would actually go towards an investment, I'd rather make an investment.
From what I understand, debt collectors wouldn't be able to touch my home, the most they can do is garnish my wages.
From what I understand, debt collectors wouldn't be able to touch my home, the most they can do is garnish my wages.
Posted on 12/6/07 at 3:53 pm to Afreaux
quote:
I guess if I have a choice between paying someone $600-$800 a month that's going into a black hole, or paying $700 a month that would actually go towards an investment, I'd rather make an investment.
From what I understand, debt collectors wouldn't be able to touch my home, the most they can do is garnish my wages.
Better add in maintenance costs (A/C breaks you gotta fix it, need a new diswasher that's on you).
When you add all that together and figure out that out of a 700 a month mortgage payment <100 goes to principle..you'll do good just to break even.
Rent and start investing 100-200 a month. It'll be about the same thing.
Posted on 12/6/07 at 3:56 pm to Afreaux
Don't forget about insurance/taxes. Although taxes shouldn't be much with the homestead exemption.
Posted on 12/6/07 at 4:23 pm to Ric Flair
Based on certain circumstances, I wouldn't have to pay for maintenance and repairs, stuff like that.
Posted on 12/6/07 at 5:02 pm to Afreaux
quote:
I guess if I have a choice between paying someone $600-$800 a month that's going into a black hole, or paying $700 a month that would actually go towards an investment, I'd rather make an investment.
You definitely shouldn't buy a house since you don't seem to understand the rudiments of "investing." Start ignoring talking points from your parents and the media and start listening more to people like the Colonel, and you'll come up the curve pretty quick, though.
Posted on 12/6/07 at 5:56 pm to LSUDad
quote:
15 year loan paid every other week, knocks it down to a 10 year 8 month loan. Might want to look into this.
If he got a 30 year note he would still have the OPTION to pay that same amount every other week and the loan would still be paid off in 10 years 8 months. Since there is no prepayment penalty in LA it is smarter to go with the longer loan time just in case something happens and you can't afford the larger 15 year note's payment b/c of unforeseen circumstances.
If you are in a state where there is a prepayment penalty then that is a different story since he will actually be be fined for overpaying each month.
Posted on 12/6/07 at 6:03 pm to MikeBRLA
quote:
Since there is no prepayment penalty in LA it is smarter to go with the longer loan time just in case something happens and you can't afford the larger 15 year note's payment b/c of unforeseen circumstances.
In other words, always take the cheapest, longest-term leverage you can find.
Posted on 12/6/07 at 8:43 pm to Afreaux
You are basically doing a lease purchase then, not an owner finance. If you do an lease purchase, he holds owns the property, and you are paying him rent that will be used toward the purchase price. You have no ownership interest until the terms are met. Also, you can't file homestead if you don't own it. So you will be paying the taxes but to him.
Also, if there is a lien against you, you can't get title insurance, so you will never be able to own the property. A judgment against you is a mortgage, and will attach to any and all property you own or inherit while it is viable.
If that guy sells you the house and doesn't record your lien, or if you have equity in the house they can foreclose on you, basically force you to sell it.
Also, student loans do not go away with BK, neither do IRS liens. The liens will be there and if you show up on someones radar, they could take everything you have.
That is why they file judgments, it is a big deal, and I hate to say it, but something you should take a lot more serious. Also a wage garnishment, is not something you want either, the sheriff could tack on fees that will equal half of the payment, and once their money is taken, plus you tax refund, it will cost you far more than you could imagine.
Also, if there is a lien against you, you can't get title insurance, so you will never be able to own the property. A judgment against you is a mortgage, and will attach to any and all property you own or inherit while it is viable.
If that guy sells you the house and doesn't record your lien, or if you have equity in the house they can foreclose on you, basically force you to sell it.
Also, student loans do not go away with BK, neither do IRS liens. The liens will be there and if you show up on someones radar, they could take everything you have.
That is why they file judgments, it is a big deal, and I hate to say it, but something you should take a lot more serious. Also a wage garnishment, is not something you want either, the sheriff could tack on fees that will equal half of the payment, and once their money is taken, plus you tax refund, it will cost you far more than you could imagine.
This post was edited on 12/7/07 at 12:03 am
Posted on 12/6/07 at 9:05 pm to tiger94gop
quote:
tiger94gop
Well said
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