TL;DR: You guys, I just paid off my mortgage 28 years early! 

Now the boring numbers stuff:

I bought this house for $244,000 and put just over $50k down two summers ago. Over the last 18 months I sent in extra payments… sometimes a little, sometimes a lot. As some of you know, various friends have rented spare bedrooms here, including Matthew Gaydos, Zohbugg, Valerie2776, and Katy Westhoff. Instead of blowing the money they paid me in rent, every dollar was applied to paying down the mortgage early.

Then, when I sold my stake in DFTBA last year I met with my CPA a number of times to figure out my best moves financially. On paper, it made more sense to invest the money I could use to pay off the house and keep the mortgage payment, because my interest rate was so low (3.375%) and mortgage interest is tax deductible usually, lowering that rate effectively to about 2.3% in my case.

But after considering it for six months, I decided I’d prefer a paid off house over the possibility of an extra point or two in interest over the next three decades. Peace of mind can be expensive sometimes.

By paying the loan in full now vs keeping the mortgage, I saved $140,434 in interest payments. And that was a guaranteed savings vs. the speculative extra earnings of investing the difference instead.

I was so happy to log in this morning and see Quicken Loans giving me a giant thumbs up. And I hope to be just as happy on the first day of each month for the next 28 years when my mortgage payment is no longer auto-drafted. =)

2 years ago, we lost my dad to progressive early onset Alzheimer’s disease and have never been the same since. To give some background on who my dad was, he was a missionary. He went on mission trips all over the U.S., Italy, Greece, and the Dominican Republic. His acting and original stories, s…

Hi guys, I am reaching out on this wonderful site because my family and I are in desperate need of help!

We will lose our house if we do not come up with $5000 by the end of the month. We will become homeless.

So I am asking the tumblr community to please consider us and help us keep a roof over our head. I would not be asking unless it was dire.

thatsthat24, would it be at all possible if you could signal boost this?


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itiselizabeth asked:

Hey Alan! James and I are looking to get a house of our own before the end of the year and I was wondering if you have any First Time Buyer advice? :)

(Elizabeth told me in a separate Ask that it was okay to share this publicly, I asked as I thought others might benefit from this information too.)

Congrats! It’s a big step, but a smart one if you can do it right. I’m going to assume you looked at a bunch of “top five tips to buying your first home” articles on google, so I won’t waste your time with “get pre-approved, make sure you get a home inspection, blah blah blah”. Instead, these are the things that might have been passed over in those articles.

You live in England, but I only know US laws covering mortgages, so I don’t know that all of this will apply in the same way, but…

Put down as much as you can. In the US, if you put less than 20% down, you have to buy “Private Mortgage Insurance” or PMI. PMI protects the bank from you not paying and them having to sell the house at a loss. It does nothing for the buyer, but the buyer has to pay for it! PMI is typically 1% per year of the home’s value, so a $200,000 house would cost $2,000/year extra to cover with PMI.

Once you’ve paid off 20%, you can then legally cancel the PMI, but it’s a pain in the ass. You have to send a notarized letter to your bank requesting that the PMI be canceled, and you have to pay for a new formal appraisal of the home, which could take months and cost a couple hundred dollars. Meanwhile you’re still paying the PMI bill every month, and PMI expenses are not tax deductible like regular mortgage interest is. PMI is a heavy tax on those who want to buy before they’re financially ready.

Also, the more you put down, the less interest you’ll pay over time. With current interest rates (between 3.5% and 4.5% for those with good credit), even if you put down 20%, over the 30 years you have the mortgage you’ll end up paying twice for your home. $200,000 in principal, and another $200,000 in interest. In the US, the interest is tax deductible usually, so that helps. But it always hurts to see that total payment amount.

Making extra payments when you have the spare cash helps greatly too. If you make an extra payment early on of, say, $500 with your Christmas bonus or whatever, that actually reduces the total amount you pay by $2,000! (because you’re paying interest on $500 less principal over 30 years, so early extra payments are worth three to four times the actual dollar amount in the long run, it’s the easiest way I know of for you to triple your money!)

Because this is your first house, you should be buying a starter home. Keep your expectations realistic. House Hunters and other HGTV shows make the $600,000 homes look like the minimum starting point. They are not. That is super luxury in most areas. Those houses make good TV, but not so great starter homes. My first house, the starter home, was a $135,000 townhouse. When I sold that, I used the equity plus a couple years of great appreciation, to buy a much nicer $245,000 single-family home. And in five to ten years I’ll probably roll this house and its appreciation over into a $400,000-ish forever home. But I didn’t start in the forever home! There are mortgage calculators online, they are all free, use them to figure out what kind of housing costs you can easily afford. Don’t stretch. All-in, your housing payments (principal, interest, property taxes, and insurance) should be less than 30% of your take-home pay.

Don’t forget about maintenance. A quick rule of thumb is 1% of the cost of the house per year budgeted for maintenance. So again, a $200,000 house would require an average of $2,000 per year in maintenance costs. Most years will probably be less, but then bam, you’re hit with replacing the roof or something and you need every penny of that annual $2,000 you didn’t spend in earlier years. This is also a good time to mention having a healthy emergency fund. A house is a huge purchase, and you don’t want to default on that because your car breaks down and you can’t balance the books at the end of the month and make your mortgage payment. I’d recommend a minimum of 3-6 months of expenses in cash.

….Some of that might have been discouraging, and the earlier years will probably be a little tight, but remember that with inflation, after ten years or so your house payment will look like a joke. Your income will rise while your mortgage payment is locked in. Rent costs for everyone else will continue to go up every year while your mortgage payment is locked in. Basically the first two or three years will typically be the hardest, and then inflation catches up and housing costs will be less and less of your take-home pay every year (as your take-home pay should rise and, say it with me, your mortgage payment is locked in).

And the absolute best part is - after the mortgage is paid off, you never have another housing payment, ever (aside from property taxes of course, no one can escape those… but your renting friends will be paying property taxes too, it’s just bundled into their rent price, so they pretend they’re not paying ‘em).

I hope that helps a little. I was kind of firing into the dark as I don’t know which area you might be looking for specific help with. Feel free to hit me up again as you have other questions. Have fun and good luck! =)

tomtomtiptom asked:

I want to buy a 1980s bus and convert it into a tiny home. The asking price is 1,500$ but I'm thinking I could get them down to 1,000$. I'm thinking I will need to spend about 5,000$ for general maintenance and conversion costs. Is this a bad investment? How would a loan work? What are your thoughts?

That sounds like a great/huge project. I… I don’t know anything about that kind of stuff. Is it a good investment? I guess it depends on how long you could live in this “tiny home”. If you’re all in at $6k, and that saves you from paying rent of $500 a month for 13 months or more, then yes, it is a good investment. So long as your quality of life is not less than it would have been in a “normal” apartment or house, you’ve saved money and have not decreased your standard of living.

If living in a bus turns off your friends or romantic partners, or you have to explain why your mail is sent to a PO Box when applying for a job (and some places like online banks won’t deal with PO Boxes at all) - then maybe it does a little more harm than good in the long run?

Also keep in mind you’ll probably need to rent a space to park, like mobile homes in trailer parks pay for gas and water hook-ups and the land they occupy, you can’t just park on the side of the road and stay there for a year. So that’s added cost, and ongoing cost, on top of your initial renovation budget.

Also there will be maintenance to the bus if you plan on driving it at all, gas, oil, tires, normal wear-and-tear, etc.

As for the loan, you could try taking a personal loan, explain your plans and put the bus up as collateral. I honestly have no idea if that would work. It would probably depend on your credit score, history with the bank, and whether the loan officer can share in your vision at all. You could also try a personal loan from family members or try a GoFundMe or something to see if friends would pitch in.

Personally, I wouldn’t do it. If you want to build a tiny home, that’s great, but I’d build a legit tiny home, not convert a bus. But personally, I don’t think I could do a tiny house… I just have too much shit. But I’m more of the problem there than a solution and I think if you can live in the reduced square footage, that’s admirable.

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A new home very much like this one is currently under construction in the beautiful, gated, quiet, new home community of Dinner Lake Shores in Lake Wales and can be yours with $0 down for about $1224 per month.

The beautiful hardwood cabinets with the bump up over the range and crown molding have just been installed and can be seen in this picture, as well as the extra deep, corner soaking tub in the master bathroom.

This home will be ready for closing in March and is available today at preconstruction pricing with $0 in closing costs. If you know anyone looking for a great new home in this part of the county please let them know about this one.

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