Home ownership thread

Hey so I hear interest rates are real low right now, like in the 2s or something if you want to buy a house. Assuming you have one of these mortgages, do you make more than the minimum payment? I would think with such a low rate your money will go further if you make the minimum payment and then invest whatever other money you might have in something else. Then again, debt sucks so it might feel good to pay it off sooner than the scheduled 30 years.

What to do? Asking for a friend who might be in debt and hates debt.

You can do a 15 year mortgage too, but I don’t think paying extra is that uncommon. You can pay it off entirely after a year or so if you want to and have the means.

I can do a 15 I guess. But then again I still want to be able to quit my job and do nothing if I need to but not get whacked with a higher monthly payment during time off. On the other hand it’s not like I plan on doing that all the time so…but having the freedom and peace of mind would be nice.

Depending on how likely that is you could always just refinance, especially if you were paying at a rate of 15 year loan you’d build equity a lot faster than with a 30 year making the minimum payment

Yeah, but if he refinances from a 15 year at 2% to a 30 year at 8% his payment might actually go UP (depending on how much equity he’s built in the meantime.)

I recall being thrilled to get 7.25% when I bought my first house. My father recalls being thrilled to get 19 (point something) % when we moved in 1984.

The Fed has promised that we needn’t worry about inflation though

When we refi-ed we decided on a 15-year. Got a lower rate and don’t have to bother with figuring out how much ‘extra’ to pay each month. Just easier this way.

1 Like

One thing you can often do if you’ve been paying off extra is to recast the loan.

Recast = recalculate the payment based on your fixed interest rate, your actual loan balance plus a modest fee (maybe $500), and the term that would be remaining if you’d been making the minimum payments all along.

Like if you’re 6.5 years into a 30 year 3.5% mortgage and you’ve been paying extra, recalc based on 3.5%, 23.5 years, and your actual loan balance plus $500.

You preserve the low interest rate you locked in, but lower your monthly payment.


With interest rates at ridiculously low levels, why would you shorten your term to only 15 or do something silly like pay back extra principal?

By owing money at a low low FIXED interest rate you give yourself huge protection against any inflation that happens in the future. Most lay people don’t understand that fact. Actuaries should understand it.


The fixed rate is protection against higher interest rates (which don’t always go hand with high inflation).

The underlying asset is protection against inflation since the home value should increase with inflation.

To get an even lower rate than a longer term loan.

Because you don’t think you can invest the principal at a higher risk-adjusted rate. Or you get utility from having less/no debt.

I am not convinced the marginal interest rate discount on a 15 year loan vs a 30 year loan is enough to compensate for the extra interest rate risk protection offered by the longer Macaulay Duration on a 30 year loan.

I am not at all invested in risk bombs like options portfolios, crypto, or FOREX and I am not advocating them. But you don’t think that a balanced, diverse ETF portfolio can beat 3% long term?

There are exceptions to the rule, but I think a fixed rate mortgage is good for most people, most of the time.

homeownership is for suckers.

1 Like

Consider it a leveraged investment.
Also note that unless you’re paying a lot of interest (or wasting a lot of money donating), it’s not tax-deductible anymore. (Thanks for screwing the Middle Class, Trump!)

We make the minimum payment, because that’s all we can (allegedly) afford. No other reason. In fact, we are looking to re-fi, make our payments the same, and pull out some hard-earned equity to make some necessary improvements that might hit six figures (it’s an old house with an old pool).

Why does debt suck?

Similarly to how “money you don’t spend is never yours”, “debt that you don’t repay is never yours”.

Rack up the debt, then die before you need to pay it off. it’s basically free money (if the debt can’t get passed on, cuz gay and not married).

Gloves are off


I set up my direct withdrawal with a fixed amount extra principal monthly so the monthly payment was a round figure. Then they recalculated my escrow amount and changed the PITI amount that I paid but kept the fixed extra principal so instead of paying xx00 monthly now I pay xx17.30 monthly. Yes, I could go in and change the extra principal amount but it kinda ticked me off that they wouldn’t fix the payment amount.

What does Macaulay Culkin have to do with this?

It wouldn’t be, if we actually got to own our homes. But with property tax payments being due to the government, you’re really just renting always.

I just couch surf.