Question: I’d tell them to stick that loan up their ass. If you waste your money > paying all that interest and fees you’ll never be able to afford a “Real > House”. > Anyway after the economy implodes everything in California will be 20-50% > cheaper.
> On Fri, 31 May 2002 16:16:11 -0500, Chad wrote:
> > Thanks for all of your input.
> > I talked with a different lender that deals specifically with “B-C” type > > loans. They said with the CCC on my Credit Report I could get a loan > > for 170,000 @ 8.75%.
Answer: I think that’s pretty shortsighted advice.
When I bought my present house twelve years ago, 8.75% would have been an unobtainably low low low rate. Rates have gone down since, but every time I look into refinancing, after closing costs and fees my total payment would be higher than it is now. Not only that, but the term on a new loan would be longer than the time remaining on my present mortgage. That rate is livable if you can afford the payment.
Meanwhile, while waiting for the economy to “implode”, you have to live somewhere. If you’re not paying on a mortgage, presumably you’re paying rent. So how does the payment on that loan compare to your rent? Forget if part of your housing cost is labelled “interest” or “fees” or “principal”. How many bucks a month is it going to cost, and how does that compare to your rent now, and the rent you expect to be paying in a couple of years? You want the best rate you can get, of course, but once you’ve found that, forget what it is.
I’d be real leery of counting on market appreciation on a condo. Around here (New Jersey) condos don’t appreciate anywhere near the rate of single family detached houses. Two friends of ours *lost* money on nice condos – when they sold, they didn’t get enough money from the sale to pay off the mortgage and had to kick in more money at settlement. That being said, the overall housing cost for the years they were in their condos, counting closing costs at both ends, monthly payments, and the mortgage payoff, was still less than it would have been if they had rented instead. That probably wouldn’t have been the case if they had lived in their places only a couple of years though. If you’re counting on appreciation to give you a leg up, do your figuring with a very sharp pencil.
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