[hrothgar]

Al_U_Card, on Aug 22 2009, 11:28 PM, said:

Phil, on Aug 22 2009, 11:58 AM, said:

Frankly what Richard did shows the system isn't broken.

You buy a house to own and to occupy. You don't buy a house to escrow, and try to flip to the next sucker. You don't buy a house to scam a bank claiming that you are living in it, and have twelve other owner-occupied loans simultaneously.

Here's to a(n) (eventual) recovery.

And neither is the yoke.

You just need a good job for 30 years.

And a solvent bank for 30 years.

And no natural disasters for 30 years.

And no unnatural (government imposed) disasters for 30 years.

Did I mention good health for 30 years?

Piece of (low cholesterol) cake.

Al, you don't know jack ***** about me, my finances, or - from what I can tell - anything else. Please rest assured that:

1. The reason that I got a 30 year fixed mortgage was as an inflation hedge. If I couldn't pay the mortgage off (considerably) faster than this, I wouldn't be buying the apartment.

2. Coupled with this, the 30 year fixed mortgage is actually insurance in case I were to lose my job. I could have gotten even better financing with a 15 year fixed mortgage. They payments would be hefty, but I could handle them without too much trouble. The problem is that IF I were to lose my job, the size of the mortgage payments would burn through my reserve funds MUCH more quickly.

It makes MUCH more sense to get a 30 year fixed but to pay it off using a 15 year schedule. You pay a bit more in interest, but its MUCH more secure.

[kenberg]

On every mortgage I have ever had (I have had five of them) the rate was fixed in the sense of not changing ever. On one of them I renegotiated the interest rate downward but that required an active intervention on my part. As long as I took no action, the rate remained the same.

A story I just heard today: A couple had a fixed rate mortgage, renegotiated to a lower rate, initialed various sheets of paper that were put in from of them, one of the papers made it an ARM. She tells me that neither she nor her husband realized this and had no intention of getting such a change. When the rates went up after a couple of years they went elsewhere and got a new fixed rate mortgage.

I mention this as a buyer beware story. When you are buying, you get quite a large number of pieces of paper shoved in front of you for your signature. It's best to read them carefully.

I agree with Gerben's general view that the length of a mortgage is at least partly a matter of personality. I am a "get the damned thing paid off and forget it" person. A tax preparer explained I should buy a vacation home with a big mortgage. I don't want a vacation home and I don't want a big mortgage. Besides, the government needs my tax dollars. Whatever the pluses and minuses of mortgages are, I like not owing any money to anyone. Definitely this has more to do with my personality than with any careful financial analysis. Fortunately my wife sees this matter exactly the same way.


But this is all down the road a ways for the op. Enjoy your new digs, worry about the merits and demerits of paying off the mortgage some time in the future.

[Phil]

Al_U_Card, on Aug 22 2009, 03:28 PM, said:

Quote

You just need a good job for 30 years.

No. You need the ability to pay, which is no different than renting.

Quote

And a solvent bank for 30 years.

Why?

Quote

And no natural disasters for 30 years.

This is what insurance is for.

Quote

And no unnatural (government imposed) disasters for 30 years.

Ownership of a home is not dependent on the stability of the government, although I would argue that if my property was nationalized, that I doubt I have an obligation to pay my mortgage.

[Al_U_Card]

Despite Richard's disdain, the important thing is to inform yourself and choose an option that suits your current situation best. Subject to all the above-mentioned provisos, which are just some of the things that I have seen in my 30 odd years of home "ownership" through renting, buying, building and sharing.

Did I mention divorce? Another fun situation to navigate through.

As Ken mentioned, anyone can sign anything, but reading and understanding the contract is key. Sometimes you can even come out on top. Takes some luck, but it does happen.

p.s. They stopped having long-term, fixed rate mortgages here in Canada a few years before I purchased my first home. Of course, those at 6 1/2% or 10 3/4% or more were always "renegotiable" for a penalty. It's all just part of the game.

p.p.s. You did say you were purchasing a condo, Richard?

[skjaeran]

Here in Norway fixing for 3 or 5 years is normal, though most people don't fix interest rates at all.

I fixed the rate for five year on the loan on my apartment half a year ago. This far it's been a not-so-good idea. But over five years I'd never lose much, if anything on my decision, I believe. Anyway, that's moot now, since I'm moving together with my girlfriend to a bigger place in mid-November. And I'm putting my apartment on sale as soon as I return from Sao Paulo.

Fixing for 30 years at that rate seems a very good decision IMO.

[kenberg]

skaeran, on Aug 23 2009, 03:06 PM, said:

Fixing for 30 years at that rate seems a very good decision IMO.

Absolutely.

[Fluffy]

First of all, congrats Richard!

4% for 30 years, what is the inflation expetacion for next 30 years?, the last rates will be a piece of cake.