Did I ever mention the craziest mortgage I ever had? I had a home equity line of credit as our first mortgage back in 2003. It was literally a free standing check book where we had to pay maybe $100/month just the interest on the balance of our HELOC. We owed at the time I think $130k and by paying it off with snowflakes by the time we sold in 2005 it was down to $120k. We used the flexible payments and low interest, the interest on the HELOC was floating and changed monthly. This allowed us to pay as much as we could on good months, and draw on the home equity on bad months.
Looking back I cannot believe the bank let us do this with no assets and no savings. All they had was the home. Insanity. Of course this in turn allowed us to gain equity and turn it into 20% on our next home. But it was a lot of risk and a lot of discipline to pay down our debt instead of taking advantage of spending the excess.
I say this because I was chatting with a realtor recently when I mentioned bubble and froth, he said that don't worry as long as you have a job you'll get approved with good credit. I said it was a bit overextending if we went any higher and his response, most people have no trouble refinancing and affording payments since rates are so low and the houses are appreciating 15% year over year. Um okay.
I said great thanks. I decided I'm getting more nervous buying a house and putting my neck on the chopping blog.
My craziest mortgage
February 4th, 2016 at 01:45 am
February 4th, 2016 at 03:08 am 1454555327
Just don't do anything stupid. I think that you are wary at all is 99% of the battle.
February 4th, 2016 at 04:17 am 1454559423
February 4th, 2016 at 11:01 am 1454583693
Stick to your guns, you didn't get to where you are now by over-extending, fall back on the financial knowledge you've spent years accumulating.
February 4th, 2016 at 04:25 pm 1454603119
February 4th, 2016 at 04:41 pm 1454604098
This is not what I would recommend for most people and very risky probably for most, but I think we're honestly in a small % of people who are very fiscally (as are those on this site) responsible and can honestly say we have a general budget and stick to it. Also we dictate what we can afford over the bank always. I have a generalized plan of our spending and saving for the next 10 years and I think that only putting down 20% is fine.
The target may move a bit and be 55 but our goal is financial independence as soon as possible. And mortgaging any house we buy is essential to free up the most cash flow. The house we are buying is our house for probably 20 years. Once the kids are gone we will probably downsize and buy or something smaller.