The Mortgage Loophole Report.... - Tilted Forum Project - TFP - Sexuality, Philosophy and Political Discussion

Rekna · 05-05-2008, 02:12 AM

I'm trying to follow the logic of what this article (http://bankingandmortgagesecrets.com/) says about using your credit cards to pay off your mortgage early and it doesn't make sense to me. In their example a woman makes $5000 a month and spends $4000 a month. They have her borrow her maximum amount on her credit cards to make a balloon payment on her mortgage and then they pay off the credit card with the $1000 of extra cash around each month. Her credit card has a higher rate than her mortgage. Wouldn't it be smarter for her to just pay that extra $1000 each month into her mortgage and not put the debt on her credit card where she pays a higher interest rate?

Am I missing something or is this article just bad advice?

NoSoup · 05-06-2008, 03:40 AM

Coming from a mortgage broker - that guy is an idiot. Don't get me wrong, paying any extra you can on a mortgage is a good idea, but borrowing at a higher interest rate - especially one that isn't tax deductible like a mortgage - is the most ridiculous idea I've ever heard.

Quick tip - paying an additonaly monthly payment a year will knock nearly 7 years off a 30 year loan...

parched_son · 05-14-2008, 03:26 PM

Soup.... thanks for the insight. If you don't mind me probing (and since it's kind of on subject) could you explain par loans and how a borrower can get the best rates from a broker? Thanks man....

newtx · 05-14-2008, 10:18 PM

Thanks for the quick tip NoSoup. I had no idea 1 extra mortgage payment could make that much difference. I'm assuming those extra payments would be made in the early years of the loan. Since in the early years of a loan the interest is higher than the principal and in the latter years it reverses.

Xazy · 05-15-2008, 08:16 AM

Yes 1 extra payment a year takes off 7 years however most people do not live in their homes for nearly that long. Also most mortgages now have very low rates comparative to where they were overall in the past 30 years, so it still might not be worth it to end your mortgage early. My rate is 5% (actually under) and I will never make a single pre-payment unless it is at year 28 maybe, just no real point in it, financially.

A reasonable mortgage is very good for you if you are working for tax savings.

NoSoup · 05-15-2008, 10:36 PM

Quote:

Originally Posted by parched_son

Soup.... thanks for the insight. If you don't mind me probing (and since it's kind of on subject) could you explain par loans and how a borrower can get the best rates from a broker? Thanks man....

Sure thing.

If you're interested in reading a bit more, here are a couple of old threads of mine -

NoSoup's Guide to Buying a Property: The Basics
NoSoup's Guide to Obtaining and Maintaining Excellent Credit
Ask the Loan Officer

A loan that is sold at "Par" basically means that it's a loan where the lender is lending the same amount of money as the borrower recieves at a specific interest rate. I know that might be a bit confusing, but it's helpful to understand how a broker can be paid.

For instance, if you were to come to me and ask for a loan, I basically work with a variety of lenders to find you the best interest rate. Once I have established which lender will give us the best deal, I look at their pricing sheet. In essence, this sheet tells me at what interest rates they'll give allow me to chose, and the amount of yield spread included at each rate.

A simple example -

You want a $100,000 loan for a house.

I decide to work with "ABC Bank" - and the pricing is as follows

6.50% - 101%
6.25% - 100%
6.0% - 99%

(the rate sheets are generally a lot more complex than that, but for this example, that's what we'll use)

What those figures translate to is the amount of money the lender actually gives me vs. the rate that you get.

If you were to get a $100,000 loan at 6.5%, they would actually give me $101,000 - the extra $1,000 is mine to do with what I please - I can either keep it or potentially put it towards the clients closing costs.

A "Par" rate is a rate with no return at all - in this case, 6.25%. If I were to get you a $100,000 loan at 6.25%, the bank would give me (the broker) exactly that.

"Under Par" would be where I have the client pay in additional money in exchange for a lower rate. For instance, if you were to only borrow $99,000, you would have a rate of 6.00%. Over the long term, this will likely save you significantly more than $1,000 - providing, of course, that you continue to stay in the property and don't refinance. This is often also referred to as "Buying down the Interest Rate" and should be available from any broker near you.

As far as getting the best deal from a broker, there are two main things that will likely give you the best results. The first, and easiest, is competition. Work with two brokers - and let each of them know that you're potentially working with someone else. They'll likely continue to undercut each other until they are close to losing money themselves. The second, as unprofessional as it sounds, is to estabish a good relationship with your broker. They'll be likely to charge you less if they consider you a friend.

If you have any more questions, please let me know!

Cynthetiq · 05-15-2008, 10:40 PM

thanks nosoup... interesting to know that there's this extra bit. I'm trying to buy an investment property now hopefully using the equity in one property to pay the downpayment of the new one.

we'll see just how the numbers work, right now it's a bit underwater about $150/mo, but with a little change here or there, maybe we can make it $50 positive.

NoSoup · 05-16-2008, 07:02 PM

Quote:

Originally Posted by Cynthetiq

thanks nosoup... interesting to know that there's this extra bit. I'm trying to buy an investment property now hopefully using the equity in one property to pay the downpayment of the new one.

we'll see just how the numbers work, right now it's a bit underwater about $150/mo, but with a little change here or there, maybe we can make it $50 positive.

It's not necessarily just a little extra bit - the rate sheets can vary quite a bit anywhere from 90% - 108% Additonally, you can ask for a custom quote from the banks for pretty much anything - although, of course, there is a point where it's no longer in the best interest of the borrower to buy them down - a quick example would be getting a $100,000 loan at a rate of 1.00% - but it would probably cost $85,000 to buy it down that far...

Where is your next property going to be? If I remember correctly, your first one is in Vegas...

Cynthetiq · 05-16-2008, 08:07 PM

Also in vegas, the asking prices are $200k and below for 3bdrm 2 bath about $100 sq/ft.

mortgage007 · 08-08-2008, 03:15 PM

You have not understood the concept. Go to "Growmyequitytoday.com" for a real good explaination of this concept. Here they use an equity line of credit instead of credt card but either will work. The idea is that you deposit your $5000 into the equity account each month and pay your bills including mortgage from the equity account. Becasue you are writing checks for $4000 and depositing $5000,. your equity account always has a very small average balance and allow paydown fast. When it get down to a certan amount, you then make large payments to the mortgage every 4 or 5 months. In some cases, your mortgage is paid in 5 or 6 years instead of 30 and you save hundreds of thousands of dollars. The site i gae will explain.

NoSoup · 08-10-2008, 01:14 AM

Quote:

Originally Posted by mortgage007

You have not understood the concept. Go to "Growmyequitytoday.com" for a real good explaination of this concept. Here they use an equity line of credit instead of credt card but either will work. The idea is that you deposit your $5000 into the equity account each month and pay your bills including mortgage from the equity account. Becasue you are writing checks for $4000 and depositing $5000,. your equity account always has a very small average balance and allow paydown fast. When it get down to a certan amount, you then make large payments to the mortgage every 4 or 5 months. In some cases, your mortgage is paid in 5 or 6 years instead of 30 and you save hundreds of thousands of dollars. The site i gae will explain.

I understand the concept just fine - the problem is, I don't think the people selling this "system" have any idea how interest and mortgages work. In fact, they can't even convince the internet masses well enough to pay their hosting bills - both the original site linked in this thread and the one you mentioned are down.

Paying a higher interest rate vs a lower interest rate is always bad. Always.

The_Jazz · 08-10-2008, 08:12 AM

Quote:

Originally Posted by NoSoup

Paying a higher interest rate vs a lower interest rate is always bad. Always.

I tried to think of something clever to say, but there's so little wiggle room here that I'll just have to stick with my opinion that this is blindingly obvious and that I fully expect to see this thread lie dormant for a few months until someone else comes along to try to site plug their crackpot theory/scam/outright theft in a way that makes me have to ban them. Well done, NoSoup.

mortgage007 · 08-11-2008, 07:28 AM

Quote:

Originally Posted by NoSoup

I understand the concept just fine - the problem is, I don't think the people selling this "system" have any idea how interest and mortgages work. In fact, they can't even convince the internet masses well enough to pay their hosting bills - both the original site linked in this thread and the one you mentioned are down.

Paying a higher interest rate vs a lower interest rate is always bad. Always.

The site "growyourequitytoday.com" is up and running. It is good explaination of the concept. Please understand that the interest rate on the equity line, even if it is sustantiall more than the first mortgage, has very little effect on the process becasue you are going to keep the balance down to a small daily balance. In the example they use, i.e. first mortgage $200000 a 6% 30 yr am and the equity line at 8.6% the loan gets paid in 10 years following the process. Obviously, if you have more disposable income after bills and expenses, it works better. It will work with as little as $50.00/month disposable income but would take longer to pay down first mortgage. The site is for United First Financial and the concept is called "Money Merge". They have the best program although there are others. Go to the site and review the 18 minute clip. Choose the center box. As a mortgage professional, you should see how this can benefit clients. It only works if you have more income than debt. I have been in the mortgage business for 30 years and am skeptical of almost all programs I have seen of any kind. This one has me sold and I am using it!. If you talk with people who ae doing this, you will find that nearly all of them are satisfied. Go Google and put in Money Merge. Read the blogs and see what they have to say. The only people who are critical of the program are those who have not studied the program. Most common response is dealing with the difference in rate between the first mortgage and the equity line when it actually makes almost no difference. You wil see in their example that the borrower paid only a little over $800 the first year anc cancelled out over $100,000 in interest and reduce the term by 7.7 years. After 10 years the loan was paid and borrower save over $330000 in interest.

Cynthetiq · 08-11-2008, 09:09 AM

Can you show this as an example on an amortization spreadsheet? I think that will be more effective in proving your point than some blog hype and informercial clips.

mortgage007 · 08-11-2008, 09:23 AM

Quote:

Originally Posted by Cynthetiq

Can you show this as an example on an amortization spreadsheet? I think that will be more effective in proving your point than some blog hype and informercial clips.

It would take way to much time and effort to make spread sheets or a powerpoint presentation. I am not plugging anyone's site but if you spend the 18 minutes looking at the graphs and charts at the site mentioned in my post, you will clearly see what I am taling about. Please note that I am selling this to anyone. I am simply commenting that in 30 years of seeing a thousand scams, this one is actually for real and works. The basic principal is that it allows you to make periodic (every three or four months) payments of $1800 to $2700 dollars toward your first mortgage by ysing money that costs you nearly nothing compared to what you save. I was not convinced until I saw the charts and graphs which are well done.

Cynthetiq · 08-11-2008, 09:54 AM

seems like they are missing something like: "Results Not Typical" in the below disclaimer. I watched the 18 minute spot and am not convinced it works for most lifestyles. It may work for some, but again, it's a matter of discipline which many do not have.

Quote:

United First Financial, its agents and subsidiaries provide Internet web based software and support services. United First Financial does not provide accounting, tax, legal, real-estate, mortgage or investment advice. Interested parties should seek and consult with persons or entities licensed and qualified in those areas for advice relating to those matters. United First Financial is not liable or responsible for claims or representations made by any party which are not included in the Money Merge Account Limited Guarantee.

I don't understand how the depositing of my monthly expenses and then disbursing it from the HELOC is more beneficial than just paying your expenses as you normally do, and doing these cash injections on a regular basis.

mortgage007 · 08-11-2008, 11:56 AM

Please go to the referenced clip and it will explain in detail and show on graphs. It took me a while to see it but when you do, it it is obvious. By depositing $5000 and payin out $4000, ou are paying down the line faster and actually reducing the line balance. after a rew months, even after paying all you bills, your line has gone fro, say $10,000 to $8000 allowing you to draw $2000 and pay it toward your first mortgage. I had to watch the clip several times before it was clear. By taking the cash from equity line it is not coming out of your pocket directly. The concept takes some studing but trust me, when you get it, bells go off!

Cynthetiq · 08-11-2008, 12:06 PM

I did get that. I did watch all 18 minutes of the clip. I have looked at the information and still have the same question.

Which is why I'm saying, why can't you just take the $1,000 each month, and 2nd month pay $2,000 to the principal and avoid the whole HELOC all together? The only advantage that I see initially is to take the HELOC initial bump large payment. Other than that, my first question is still the same.

It has to come out of your pocket directly at some point, it doesn't matter if it comes out of the left pocket, right pocket, rear pocket. Ultimately it comes from your income.

mortgage007 · 08-11-2008, 12:53 PM

If you notice they do take the large bump initially of $11,000 and then periodically take drawa of more than the thousand extra you are putting in. In fact all of the extra payments are in excess of $1000.

Cynthetiq · 08-11-2008, 01:01 PM

correct, that's what I've seen and understand.

So again, why go through a system, instead of just paying the $2,000 every so often? The advantage so far is that the HELOC gives you the initial bump to pay out without using any out of pocket.

NoSoup · 08-11-2008, 06:18 PM

Although I didn't spend the time to review the 18 minute clip, I can say that for as long as I've been in the industry this "system" has been around.

Unless magical money is coming from somewhere, it's better long term simply to pay down your mortage with out of pocket money. Taking out a lump sum on a second mortgage nets you exactly nothing - well actually, that's not completely true. You'll still owe the same amount but you'll be paying a higher interest rate, so it actually nets you down.

For some, this "system" might work - but if it does, it's only because it causes the user of the system to discipine themselves and pay extra on their mortage however often the particular "system" requires.

You'd be better off paying directly out of pocket any extra you can as soon as you can. Over the course of the loan, it'll save* you more than any "system" involving the use of borrowing money at a higher interest rate.

*I say save, but in essentially your house is simply costing you closer to the amount you agreed to purchase it for. A minor difference, but in my opinion a very important one.
-----Added 11/8/2008 at 09 : 23 : 24-----
So here's the scoop - and the math to back it up.

***EDIT****

I watched the video, and the figures they use are ridiculous. There are so many problems with their calculations it's unbelieveable.

Case in point - the video assumes that both individual are paid on the 1st of the month, once a month (calculated from the average daily balance of their credit line)

Additionally, it also assumes that they spend exactly $0 of their discretionary income on anything non home related.

Even providing both of these insane assumptions are true, here's the math that shatters the "system."

So, here's what we assume -

For all scenarios, $5,000/month net income
$200,000 in debt (only mortgage debt)
"Household expenses" of $4,000
Discretionary Income of $1,000

Mortgage specifics -
$200,000 is at 6.0% fixed for 30 years

Home Equity Line of Credit is at 8.6% Variable - for the example, we'll say it's fixed, but know that it will more than likely substantially increase over the next 30 years - and the vast majority of HELOCs have an annual fee ranging from $75.00 - $200 a year.

Scenario 1 - you pay minimum amount on your mortage for 30 years

$200,000 Principal
$231,676 Interest

$431,676 Total Repayed

Scenario 2 -

You follow that garbage system on the website.

It doesn't specify what the average daily balance over the life of the loan for the HELOC is, so I'll utilize the specific interest payed over the life of the loan that it did state. Supposedly the system uses sophisticated algorithams to determine the optimal time to "balance" your account. Riiiiiight.

According to the video, you'll pay $71,000 in Interest that has accrued on both the Home Equity Line of Credit and 1st mortgage combined after following the system.

To summarize: Scenario 2

$200,000 Principal
$71,005 Interest

$271,005 Total Repaid.

Scenario 3: Real Life

The ultra mega secret system basically assumes that since you aren't using any of your $1000.00 discretionary pay, you're putting it towards your mortgage. I'll assume the same.

$200,000 Principal
$67,384.23 Interest

$267,384.23 Total Repaid (winner!)

So... to sum it up, if you're borrowing at a higher interest rate to pay off a lower interest rate with the goal of saving money long term, you're an idiot.

These are the most basic assumptions, with everything tipped towards having the maximum impact shown in "the system's" *savings*

Still, common sense prevails.

Of course, once you consider adding the complexities of using "the system" - like not getting both yours and your spouse's total monthly income directly deposited into your account the 1st of the month, or taking into account the actual cost they charge you for "the system" - or taking into account the fees associated with having a home equity line of credit - not just the annual fee, but the nearly certain increase of a variable rate, it simply would add to amount of money you net using common sense rather than "the system"

What blows my mind even further is that it suggests the use of a personal line of credit instead of a HELOC. Um... Personal line of credit interst rates are substantially higher than HELOC rates - and there is no tax deductibilty, like there is with a HELOC.

To all homeowners out there - there isn't a magic answer. Pay as much as you can towards your mortgage as often as you can, and it'll be paid down faster and you'll pay less in interest overall. Unless you're able to borrow some money at a lower interest rate (take into account tax considerations) it's a bad idea.

And no offense mortgage007, but I'm ashamed that you've been in the industry for 30 years and buy into this garbage.

Also, I just googled the price - wowzers! What a scam!

Quote:

Here’s the catch: to get into this program, it’ll cost you. I examined several money merge account options online and the rates varied from $1,800 to $4,500, with the average coming in around $3,000 to get started. This is added to the principal of the loan.

From http://www.thesimpledollar.com/2007/...ome-borrowers/

Not only are you charged ridiculous fee, you get to pay interest on it to "accelerate your payments"

mortgage007 · 08-12-2008, 07:33 AM

Quote:

Originally Posted by NoSoup

Although I didn't spend the time to review the 18 minute clip, I can say that for as long as I've been in the industry this "system" has been around.

Unless magical money is coming from somewhere, it's better long term simply to pay down your mortage with out of pocket money. Taking out a lump sum on a second mortgage nets you exactly nothing - well actually, that's not completely true. You'll still owe the same amount but you'll be paying a higher interest rate, so it actually nets you down.

For some, this "system" might work - but if it does, it's only because it causes the user of the system to discipine themselves and pay extra on their mortage however often the particular "system" requires.

You'd be better off paying directly out of pocket any extra you can as soon as you can. Over the course of the loan, it'll save* you more than any "system" involving the use of borrowing money at a higher interest rate.

*I say save, but in essentially your house is simply costing you closer to the amount you agreed to purchase it for. A minor difference, but in my opinion a very important one.
-----Added 11/8/2008 at 09 : 23 : 24-----
So here's the scoop - and the math to back it up.

***EDIT****

I watched the video, and the figures they use are ridiculous. There are so many problems with their calculations it's unbelieveable.

Case in point - the video assumes that both individual are paid on the 1st of the month, once a month (calculated from the average daily balance of their credit line)

Additionally, it also assumes that they spend exactly $0 of their discretionary income on anything non home related.

Even providing both of these insane assumptions are true, here's the math that shatters the "system."

So, here's what we assume -

For all scenarios, $5,000/month net income
$200,000 in debt (only mortgage debt)
"Household expenses" of $4,000
Discretionary Income of $1,000

Mortgage specifics -
$200,000 is at 6.0% fixed for 30 years

Home Equity Line of Credit is at 8.6% Variable - for the example, we'll say it's fixed, but know that it will more than likely substantially increase over the next 30 years - and the vast majority of HELOCs have an annual fee ranging from $75.00 - $200 a year.

Scenario 1 - you pay minimum amount on your mortage for 30 years

$200,000 Principal
$231,676 Interest

$431,676 Total Repayed

Scenario 2 -

You follow that garbage system on the website.

It doesn't specify what the average daily balance over the life of the loan for the HELOC is, so I'll utilize the specific interest payed over the life of the loan that it did state. Supposedly the system uses sophisticated algorithams to determine the optimal time to "balance" your account. Riiiiiight.

According to the video, you'll pay $71,000 in Interest that has accrued on both the Home Equity Line of Credit and 1st mortgage combined after following the system.

To summarize: Scenario 2

$200,000 Principal
$71,005 Interest

$271,005 Total Repaid.

Scenario 3: Real Life

The ultra mega secret system basically assumes that since you aren't using any of your $1000.00 discretionary pay, you're putting it towards your mortgage. I'll assume the same.

$200,000 Principal
$67,384.23 Interest

$267,384.23 Total Repaid (winner!)

So... to sum it up, if you're borrowing at a higher interest rate to pay off a lower interest rate with the goal of saving money long term, you're an idiot.

These are the most basic assumptions, with everything tipped towards having the maximum impact shown in "the system's" *savings*

Still, common sense prevails.

Of course, once you consider adding the complexities of using "the system" - like not getting both yours and your spouse's total monthly income directly deposited into your account the 1st of the month, or taking into account the actual cost they charge you for "the system" - or taking into account the fees associated with having a home equity line of credit - not just the annual fee, but the nearly certain increase of a variable rate, it simply would add to amount of money you net using common sense rather than "the system"

What blows my mind even further is that it suggests the use of a personal line of credit instead of a HELOC. Um... Personal line of credit interst rates are substantially higher than HELOC rates - and there is no tax deductibilty, like there is with a HELOC.

To all homeowners out there - there isn't a magic answer. Pay as much as you can towards your mortgage as often as you can, and it'll be paid down faster and you'll pay less in interest overall. Unless you're able to borrow some money at a lower interest rate (take into account tax considerations) it's a bad idea.

And no offense mortgage007, but I'm ashamed that you've been in the industry for 30 years and buy into this garbage.

Also, I just googled the price - wowzers! What a scam!

From The Simple Dollar Money Merge Accounts: Are They A Good Deal For Home Borrowers?

Not only are you charged ridiculous fee, you get to pay interest on it to "accelerate your payments"

You do make some good points regarding spending of the discretionary income. However, this will work with as litle as $50 in discretionary income. It will just take longer. The only system that I have found that works is the one from United FIrst Financial. You should go to the frequently asked quetions and every point you make is answered. Discipline is a factor of course. To take your thinking to the extreme, why not just pay cash in the first place? Obviously it is because cash is not available. The expamle in the clip does take into account all debts and expenses. $4000 is what thiis example uses for all debts including mortgage. The interest paid over the ten years in this example for the equity line (it is an equity line not a personal line) is about $8400 but but you are depositing $1000 monthly extra. YOu have made so many incorrect assumptions in you prvious post. The system tells you to pay bills when they are due. You deposit your income as you received once per week, twice per month or however you are paid. It makes littel difference. YOu are still missing the interest rate concept of higher rate vs. lower rate on mortgage. Because you average balance is kept low, your actual interst paid on the line is very small. Even a high rate personal card will work alsmots as good. Also, the initial $3500 fee is not financed and no interst is paid on it.

You are so far off base in your understanding of the program. If you have seen the clip and still don't understand, then obviously this is not for you. Thank you for your responses. Would love to meet you if you are in the Palm Beach County area. Gotta go, I lucked out with jury duty this week and will be out of touch.
-----Added 12/8/2008 at 11 : 01 : 56-----
How ca

05-05-2008, 02:12 AM	#1 (permalink)
Rekna Junkie Join Date: Nov 2003	The Mortgage Loophole Report.... I'm trying to follow the logic of what this article (http://bankingandmortgagesecrets.com/) says about using your credit cards to pay off your mortgage early and it doesn't make sense to me. In their example a woman makes $5000 a month and spends $4000 a month. They have her borrow her maximum amount on her credit cards to make a balloon payment on her mortgage and then they pay off the credit card with the $1000 of extra cash around each month. Her credit card has a higher rate than her mortgage. Wouldn't it be smarter for her to just pay that extra $1000 each month into her mortgage and not put the debt on her credit card where she pays a higher interest rate? Am I missing something or is this article just bad advice?

05-06-2008, 03:40 AM	#2 (permalink)
NoSoup Non-Rookie Join Date: May 2003 Location: Green Bay, WI	Coming from a mortgage broker - that guy is an idiot. Don't get me wrong, paying any extra you can on a mortgage is a good idea, but borrowing at a higher interest rate - especially one that isn't tax deductible like a mortgage - is the most ridiculous idea I've ever heard. Quick tip - paying an additonaly monthly payment a year will knock nearly 7 years off a 30 year loan... __________________ I have an aura of reliability and good judgement. Just in case you were wondering...

05-14-2008, 03:26 PM	#3 (permalink)
parched_son Upright Join Date: Jun 2004 Location: Portland, Oregon	Soup.... thanks for the insight. If you don't mind me probing (and since it's kind of on subject) could you explain par loans and how a borrower can get the best rates from a broker? Thanks man.... __________________ '06 Yamaha 700 SE No More Street Bikes-

05-15-2008, 10:40 PM	#7 (permalink)
Cynthetiq Tilted Cat Head Administrator Join Date: Apr 2003 Location: Manhattan, NY	thanks nosoup... interesting to know that there's this extra bit. I'm trying to buy an investment property now hopefully using the equity in one property to pay the downpayment of the new one. we'll see just how the numbers work, right now it's a bit underwater about $150/mo, but with a little change here or there, maybe we can make it $50 positive. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, Indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Independent, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

05-16-2008, 08:07 PM	#9 (permalink)
Cynthetiq Tilted Cat Head Administrator Join Date: Apr 2003 Location: Manhattan, NY	Also in vegas, the asking prices are $200k and below for 3bdrm 2 bath about $100 sq/ft. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, Indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Independent, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

05-14-2008, 10:18 PM	#4 (permalink)
newtx Psycho Join Date: Mar 2006	Thanks for the quick tip NoSoup. I had no idea 1 extra mortgage payment could make that much difference. I'm assuming those extra payments would be made in the early years of the loan. Since in the early years of a loan the interest is higher than the principal and in the latter years it reverses.

05-15-2008, 08:16 AM	#5 (permalink)
Xazy Junkie Join Date: Jul 2005 Location: NYC	Yes 1 extra payment a year takes off 7 years however most people do not live in their homes for nearly that long. Also most mortgages now have very low rates comparative to where they were overall in the past 30 years, so it still might not be worth it to end your mortgage early. My rate is 5% (actually under) and I will never make a single pre-payment unless it is at year 28 maybe, just no real point in it, financially. A reasonable mortgage is very good for you if you are working for tax savings.

08-08-2008, 03:15 PM	#10 (permalink)
mortgage007 Upright Join Date: Apr 2003	You have not understood the concept. Go to "Growmyequitytoday.com" for a real good explaination of this concept. Here they use an equity line of credit instead of credt card but either will work. The idea is that you deposit your $5000 into the equity account each month and pay your bills including mortgage from the equity account. Becasue you are writing checks for $4000 and depositing $5000,. your equity account always has a very small average balance and allow paydown fast. When it get down to a certan amount, you then make large payments to the mortgage every 4 or 5 months. In some cases, your mortgage is paid in 5 or 6 years instead of 30 and you save hundreds of thousands of dollars. The site i gae will explain.

08-11-2008, 09:09 AM	#14 (permalink)
Cynthetiq Tilted Cat Head Administrator Join Date: Apr 2003 Location: Manhattan, NY	Can you show this as an example on an amortization spreadsheet? I think that will be more effective in proving your point than some blog hype and informercial clips. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, Indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Independent, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

08-11-2008, 11:56 AM	#17 (permalink)
mortgage007 Upright Join Date: Apr 2003	Please go to the referenced clip and it will explain in detail and show on graphs. It took me a while to see it but when you do, it it is obvious. By depositing $5000 and payin out $4000, ou are paying down the line faster and actually reducing the line balance. after a rew months, even after paying all you bills, your line has gone fro, say $10,000 to $8000 allowing you to draw $2000 and pay it toward your first mortgage. I had to watch the clip several times before it was clear. By taking the cash from equity line it is not coming out of your pocket directly. The concept takes some studing but trust me, when you get it, bells go off!

08-11-2008, 12:06 PM	#18 (permalink)
Cynthetiq Tilted Cat Head Administrator Join Date: Apr 2003 Location: Manhattan, NY	I did get that. I did watch all 18 minutes of the clip. I have looked at the information and still have the same question. Which is why I'm saying, why can't you just take the $1,000 each month, and 2nd month pay $2,000 to the principal and avoid the whole HELOC all together? The only advantage that I see initially is to take the HELOC initial bump large payment. Other than that, my first question is still the same. It has to come out of your pocket directly at some point, it doesn't matter if it comes out of the left pocket, right pocket, rear pocket. Ultimately it comes from your income. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, Indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Independent, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

08-11-2008, 12:53 PM	#19 (permalink)
mortgage007 Upright Join Date: Apr 2003	If you notice they do take the large bump initially of $11,000 and then periodically take drawa of more than the thousand extra you are putting in. In fact all of the extra payments are in excess of $1000.

08-11-2008, 01:01 PM	#20 (permalink)
Cynthetiq Tilted Cat Head Administrator Join Date: Apr 2003 Location: Manhattan, NY	correct, that's what I've seen and understand. So again, why go through a system, instead of just paying the $2,000 every so often? The advantage so far is that the HELOC gives you the initial bump to pay out without using any out of pocket. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, Indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Independent, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!