NOYB wrote:
"basskisser" wrote in message
oups.com...

NOYB wrote:
"basskisser" wrote in message
oups.com...

NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......


Boy, you sure put a lot of thought into that reply. Sorry I taxed
your
brain so much.

The mortgage companies PUSH interest only loans to consumers. Care
to
venture WHY????


Because they have a non-decreasing revenue stream coming in while the

principal is outstanding. So what. It's good for the bank...but
even
better for me.

Are you smart enough to do the math on exactly how much *principle*
you're
actually paying in the first 5 years of an $800000 mortgage at 4.25%?

Yes.

I'll get you started:

No need.

Payment (principle+interest)= $3935.52
Payment (interest only)= $2833.33

(Answer= $66,131.20)

So at the end of 5 years, I'd owe $800,000...and the guy who paid
principle
owes $733, 868.80.

Keep in mind that I'm putting that $66,131.20 into my wife's and my
Simple
IRA's instead of towards the principle of the house. Because it's a

qualified plan, I saved $20k in Federal taxes over the schmuck who
used the
money to pay down the principle on his home.

At the end of 5 years, he paid an extra $20k in taxes to the Feds,
and owes
$733, 868.80 on the home.

At the end of 5 years, I put $66k into my simple IRA and paid $20k
less to
the government. Even if the house doesn't appreciate, and I get
*ZERO*
return on my investment in the Simple IRA, my net worth is ahead of
his by
$20k. If I get even a nominal 5% return on my Simple IRA per year,
I'm even
further ahead of the other guy.

Paying principle on a loan is an opportunity cost.

Again, mortgage companies are going out of their way to qualify people
for interest only loans, and they wouldn't qualify for a conventional
loan. Are you smart enough to know WHY mortgage brokers are pushing
interest only loans so hard? Is it for YOUR welfare? Hell, might as
well go one more. If you don't like paying down the equity in a home,
get a reverse mortgage! Also, you see, when you get done in five years,
you'll still have to get a mortgage for the original amount. Someone
with a decent ARM would have at least some principal paid off, so his
loan amount would be lower than yours, while his payments wouldn't be
that much different for the first five years.

John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:


John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:


NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......

basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H

No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.

My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.

There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.

I don't know NYOB's situation, other than what I've read. I *do* know
that he
has given thought to his situation. That, in itself, is more than a
lot of folks
do.

His plan makes sense.

There may be those in the universe who have a better occupation,
better place to
live, and are better able to express their point of view. From my
perspective,
you haven't shown that you are one of them. Of course, that's just my
opinion.
--
John H


So, if you pay someone to use their money, ie, a loan, it's superior to
using your OWN money, and not having to pay interest rates? The bottom
line is, if someone is taking money from you month after month, you are
losing money.

John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:


John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:


NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......

basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H

No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.

My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.

There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.

Ah, now, paying off a loan quickly is right the opposite of an interest
only loan! You are purposefully paying off the principal quicker, while
he isn't paying ANY of it off. I've got a 30 year fixed, and it will be
paid off in 17 years because of extra payments applied directly to the
principal. I don't care what anybody says, I don't like being in debt.
I don't take out car loans, I save until I have cash to buy a car,
therefore I don't pay anybody to use their money. Same principal.

On 23 Mar 2005 10:54:06 -0800, "basskisser" wrote:


John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:


John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:


NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......

basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H

No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.

My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.

There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.

I don't know NYOB's situation, other than what I've read. I *do* know
that he
has given thought to his situation. That, in itself, is more than a
lot of folks
do.

His plan makes sense.

There may be those in the universe who have a better occupation,
better place to
live, and are better able to express their point of view. From my
perspective,
you haven't shown that you are one of them. Of course, that's just my
opinion.
--
John H


So, if you pay someone to use their money, ie, a loan, it's superior to
using your OWN money, and not having to pay interest rates? The bottom
line is, if someone is taking money from you month after month, you are
losing money.

I just bought a new car, financed at 3.9%. I could have paid cash for the car,
but instead chose to put the money in a five year CD paying 5%. In this case I'm
paying someone (the credit union) to use its money while it's paying me *more*
to use my money.

Yes, depending on the circumstances, it may be 'superior' to pay for the use of
someone else's money.
--
John H

"All decisions are the result of binary thinking."

On 23 Mar 2005 10:57:44 -0800, "basskisser" wrote:


John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:


John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:


NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......

basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H

No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.

My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.

There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.

Ah, now, paying off a loan quickly is right the opposite of an interest
only loan! You are purposefully paying off the principal quicker, while
he isn't paying ANY of it off. I've got a 30 year fixed, and it will be
paid off in 17 years because of extra payments applied directly to the
principal. I don't care what anybody says, I don't like being in debt.
I don't take out car loans, I save until I have cash to buy a car,
therefore I don't pay anybody to use their money. Same principal.

Well, once you read my other post you'll see why your idea isn't necessarily the
best.

If he us using the money he saved on the principle of the home loan to pay off
the business loan (with perhaps a higher interest rate) sooner, then it seems as
though he's doing a smart thing.

Wouldn't you think that he knows more about his finances than you do?
--
John H

"All decisions are the result of binary thinking."

"John H" wrote in message
...
On 23 Mar 2005 10:54:06 -0800, "basskisser" wrote:


John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:


John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:


NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......

basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H

No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.

My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.

There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.

I don't know NYOB's situation, other than what I've read. I *do* know
that he
has given thought to his situation. That, in itself, is more than a
lot of folks
do.

His plan makes sense.

There may be those in the universe who have a better occupation,
better place to
live, and are better able to express their point of view. From my
perspective,
you haven't shown that you are one of them. Of course, that's just my
opinion.
--
John H


So, if you pay someone to use their money, ie, a loan, it's superior to
using your OWN money, and not having to pay interest rates? The bottom
line is, if someone is taking money from you month after month, you are
losing money.

I just bought a new car, financed at 3.9%. I could have paid cash for the
car,
but instead chose to put the money in a five year CD paying 5%. In this
case I'm
paying someone (the credit union) to use its money while it's paying me
*more*
to use my money.

Yes, depending on the circumstances, it may be 'superior' to pay for the
use of
someone else's money.
--
John H


And in the case of those of us that are in the higher tier tax brackets,
the tax deduction for the interest on your primary residence make the
borrowed money even cheaper.

A mortgage at 5% has a net cost of 3% in the top bracket.......a point that
constantly goes over asslicker's head.


Another good reason for borrowing.........
I have clients that own many commercial properties.........they are
constantly refinancing the properties (each is an L.L.C.) pulling as much
equity as they can out of them, and distributing it to the partners. In
that way, the L.L.C. has little to no assests in the event of a lawsuit.




"All decisions are the result of binary thinking."

"John H" wrote in message
...
On 23 Mar 2005 10:57:44 -0800, "basskisser" wrote:


John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:


John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:


NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......

basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H

No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.

My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.

There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.

Ah, now, paying off a loan quickly is right the opposite of an interest
only loan! You are purposefully paying off the principal quicker, while
he isn't paying ANY of it off. I've got a 30 year fixed, and it will be
paid off in 17 years because of extra payments applied directly to the
principal. I don't care what anybody says, I don't like being in debt.
I don't take out car loans, I save until I have cash to buy a car,
therefore I don't pay anybody to use their money. Same principal.

Well, once you read my other post you'll see why your idea isn't
necessarily the
best.

If he us using the money he saved on the principle of the home loan to pay
off
the business loan (with perhaps a higher interest rate) sooner, then it
seems as
though he's doing a smart thing.

Wouldn't you think that he knows more about his finances than you do?

A tree stump knows more about finances than the "King"

Paying off the house early is like buying a 2-1/2% bond.


--
John H

"All decisions are the result of binary thinking."

On Wed, 23 Mar 2005 14:22:04 -0500, "P.Fritz"
wrote:


"John H" wrote in message
.. .
On 23 Mar 2005 10:57:44 -0800, "basskisser" wrote:


John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:


John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:


NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......

basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H

No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.

My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.

There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.

Ah, now, paying off a loan quickly is right the opposite of an interest
only loan! You are purposefully paying off the principal quicker, while
he isn't paying ANY of it off. I've got a 30 year fixed, and it will be
paid off in 17 years because of extra payments applied directly to the
principal. I don't care what anybody says, I don't like being in debt.
I don't take out car loans, I save until I have cash to buy a car,
therefore I don't pay anybody to use their money. Same principal.

Well, once you read my other post you'll see why your idea isn't
necessarily the
best.

If he us using the money he saved on the principle of the home loan to pay
off
the business loan (with perhaps a higher interest rate) sooner, then it
seems as
though he's doing a smart thing.

Wouldn't you think that he knows more about his finances than you do?

A tree stump knows more about finances than the "King"

Paying off the house early is like buying a 2-1/2% bond.


I expect he'll get very mum on this subject shortly.
--
John H

"All decisions are the result of binary thinking."

"John H" wrote in message
...
On Wed, 23 Mar 2005 14:22:04 -0500, "P.Fritz"

wrote:


"John H" wrote in message
. ..
On 23 Mar 2005 10:57:44 -0800, "basskisser" wrote:


John H wrote:
On 23 Mar 2005 09:44:18 -0800, "basskisser"
wrote:


John H wrote:
On 23 Mar 2005 05:01:54 -0800, "basskisser"
wrote:


NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......

basskisser, is that the best you can do when you see a good idea
put
in place?
--
John H

No, but you know how NOYB is, no sense in trying to make him think
anything other than what he does, says, where he lives, his
occupation,
his thoughts, and on and on, are anything less than superior to
anyone
else in the universe. Just ask him! Now, as far as a "good idea",
he's
admitted himself that he is financially stretched tight.

My daughter has commented to me about having a negative balance, on
occasion, in
my checkbook. To her, who has bounced a check to me, this was really
something
to 'catch her dad' with.

There are times when it is beneficial to one's longer term interests
to be
somewhat 'stretched tight'. That is not, necessarily, a sign of bad
financial
management. I financed my house for 15 years instead of 30. The
additional
payment amount stretched me a little more than I had been, but I
think that the
long term benefits will be worth the stretch.

Ah, now, paying off a loan quickly is right the opposite of an interest
only loan! You are purposefully paying off the principal quicker, while
he isn't paying ANY of it off. I've got a 30 year fixed, and it will be
paid off in 17 years because of extra payments applied directly to the
principal. I don't care what anybody says, I don't like being in debt.
I don't take out car loans, I save until I have cash to buy a car,
therefore I don't pay anybody to use their money. Same principal.

Well, once you read my other post you'll see why your idea isn't
necessarily the
best.

If he us using the money he saved on the principle of the home loan to
pay
off
the business loan (with perhaps a higher interest rate) sooner, then it
seems as
though he's doing a smart thing.

Wouldn't you think that he knows more about his finances than you do?

A tree stump knows more about finances than the "King"

Paying off the house early is like buying a 2-1/2% bond.


I expect he'll get very mum on this subject shortly.

I doubt it, he has been beating his head against the wall about this for
months. I think the basic problem (besides him being the "King of the NG
idiots") is that if you are in the low end tax bracket, it may not make
economic sense. Those in the highest brackets can see the economic
benefits clearly.


Add to the above.........the choice of paying an extra 200 a month to your
mortgage (money taken as income) or to your 401k (pretax).........you take
the 200 a month as income, at 33% and you netting 130 to the
principal..(likely less than that because of medicare tax and and state and
local income tax) .....saving you 2-1/2% of that amount..........in the
meantime you could have taken the entire 200 pretax in a 401 or SEP even at
a modest return of 5% a year.....you are going to be even further ahead.


--
John H

"All decisions are the result of binary thinking."

"basskisser" wrote in message
oups.com...

NOYB wrote:
"basskisser" wrote in message
oups.com...

NOYB wrote:
"basskisser" wrote in message
oups.com...

NOYB wrote:
wrote in message
oups.com...
But, I thought that you had to get an interest only loan?????


The bank was offering me either loan...conventional, or
interest-only.

I chose the interest only loan over the conventional 30-year
fixed,
because
it gives me the option to pay principal on the loan (but only
if
*I
*decide
to do so). Right now, it makes more sense for me to put
$25-30k
per
year
away in a qualified pension plan than to pay principal on a
home
mortgage.
In 4 1/2 years, I'll only be 38...and I'll have an extra
$6000/mo
(before
taxes) to put towards principal and/or retirement savings. At
that
time, I
can get a 20 year conventional fixed mortgage, and pay the home
off
before
I'm 60.


Yeah, sure, whatever.......


Boy, you sure put a lot of thought into that reply. Sorry I taxed
your
brain so much.

The mortgage companies PUSH interest only loans to consumers. Care
to
venture WHY????


Because they have a non-decreasing revenue stream coming in while the

principal is outstanding. So what. It's good for the bank...but
even
better for me.

Are you smart enough to do the math on exactly how much *principle*
you're
actually paying in the first 5 years of an $800000 mortgage at 4.25%?

Yes.

I'll get you started:

No need.

Payment (principle+interest)= $3935.52
Payment (interest only)= $2833.33

(Answer= $66,131.20)

So at the end of 5 years, I'd owe $800,000...and the guy who paid
principle
owes $733, 868.80.

Keep in mind that I'm putting that $66,131.20 into my wife's and my
Simple
IRA's instead of towards the principle of the house. Because it's a

qualified plan, I saved $20k in Federal taxes over the schmuck who
used the
money to pay down the principle on his home.

At the end of 5 years, he paid an extra $20k in taxes to the Feds,
and owes
$733, 868.80 on the home.

At the end of 5 years, I put $66k into my simple IRA and paid $20k
less to
the government. Even if the house doesn't appreciate, and I get
*ZERO*
return on my investment in the Simple IRA, my net worth is ahead of
his by
$20k. If I get even a nominal 5% return on my Simple IRA per year,
I'm even
further ahead of the other guy.

Paying principle on a loan is an opportunity cost.

Again, mortgage companies are going out of their way to qualify people
for interest only loans, and they wouldn't qualify for a conventional
loan.

That's bull****. The lenders use different debt-to-income ratios for
interest only loans, but all of the other lending requirements are the same.


Are you smart enough to know WHY mortgage brokers are pushing
interest only loans so hard? Is it for YOUR welfare?

Banks are willing to offer interest-only loans for this reason: they can
lend more principle, which means they can collect more interest.

If a customer can afford a $3000/month payment, the bank prefers that he
spend all $3000 in interest. They make more profit than if the customer
spends $2200 on interest and $800 on principle. The customer benefits by
living in more house than he might be able to afford if he had to pay
interest *and* principle. So both parties win.






Hell, might as
well go one more. If you don't like paying down the equity in a home,
get a reverse mortgage!

Eventually, when I retire, I will. Why die with a couple of million in
equity tied up in a house?



Also, you see, when you get done in five years,
you'll still have to get a mortgage for the original amount.

And the house will be worth $1.5 million. So I'll go secure a 20 year fixed
mortgage for $800k...which means that I have more than a 45% equity position
in my home.


If I waited 5 years to buy the same house, I would have had to borrow $1.2
million...and I only would have had 20% equity in the same home.

That means that my method will increase my net worth by $400k over your
method.


Someone
with a decent ARM would have at least some principal paid off, so his
loan amount would be lower than yours, while his payments wouldn't be
that much different for the first five years.

You're trying to tell me that there are better ARMs than a 5-year fixed at
4.25% for a jumbo non-conforming? LOL. You *are* the king!