Interest rates. WTF? Why are we getting almost free money?

[BigRedChief]

I put a contract on a house yesterday. Locked in a rate and loan. Got 3.625 and they gave me $8,800 towards closing costs. Which is obviously more than it costs.

We were able to lower the purchase price because we didn't have any closing costs.

Last time we bought a house we got 5.25% which at the time our loan guy said was the lowest rate since WWII.

So my question for the board is why is the public getting home loans that are maybe 1%-2% above inflation? Where's the money being made or lost?

[DaKCMan AP]

pete clearly doesn't understand opportunity cost.

Terrible advice.

[petegz28]

Originally Posted by 2bikemike

Not often I will agree with some of the more liberal posters on here but in this circumstance I will.

Mortgage money is cheap money. I would much rather have $300K or $400K invested somewhere intead of tied up in equity in my home.

One of the reason the rich get richer is because they have capital to take advantage of opportunities. Even the very wealthy carry mortgages because they know they can make a greater return on the money that would otherwise be tied up into a property.

I was able to take some of the over inflated pre bubble bust equity from my home and purchased a 4 plex in Olathe that has a decent return. I then took some of my earnings from my investment and the remaining cash I had left over from the initial equity draw and purchased a duplex in Calif on a Short Sale. This Duplex is the real money maker. It was purchased after the bubble burst and prices plummeted. An opportunity that was there because I had capital.

My initial property value did drop to about what I owe or maybe even a little less. But those prices are on the rebound and I still own the home. In fact I converted it to a rental and bought another house.

All of this by leveraging that equity instead of leaving it locked in to the house.

leveraging equity for additional investment is not is not quite what I am talking about...simply because you have equity in the first place in order to leverage it

[BigRedChief]

Originally Posted by petegz28

I have posted chart after chart for the last several years with the US$ overlayed with the price of oil. FFS, FD just posted one thinking he was going to disprove me and all he did was prove me right.

Whats FD's point have to do with my point? Totally separate points.

[petegz28]

Originally Posted by BigRedChief

Whats FD's point have to do with my point? Totally separate points.

ok, you're right, ecnomics has nothing to do with it. It's all conspiracy and monoply stuff

[petegz28]

Originally Posted by 2bikemike

Not often I will agree with some of the more liberal posters on here but in this circumstance I will.

Mortgage money is cheap money. I would much rather have $300K or $400K invested somewhere intead of tied up in equity in my home.

One of the reason the rich get richer is because they have capital to take advantage of opportunities. Even the very wealthy carry mortgages because they know they can make a greater return on the money that would otherwise be tied up into a property.

I was able to take some of the over inflated pre bubble bust equity from my home and purchased a 4 plex in Olathe that has a decent return. I then took some of my earnings from my investment and the remaining cash I had left over from the initial equity draw and purchased a duplex in Calif on a Short Sale. This Duplex is the real money maker. It was purchased after the bubble burst and prices plummeted. An opportunity that was there because I had capital.

My initial property value did drop to about what I owe or maybe even a little less. But those prices are on the rebound and I still own the home. In fact I converted it to a rental and bought another house.

All of this by leveraging that equity instead of leaving it locked in to the house.

I should add that if my home was 100% paid for, the equity is there to be leveraged whenever I choose.

[petegz28]

Everyone has their own opinions but I will say this, we paid cash for our rental property and carry no note on it. So when the renter doesn't come up with the rent on time I am not pulling money out of my pocket to cover a mortgage. If the renter moves and I don't have any income from the property, I am not pulling any money out of my pocket to cover a mortgage.

And I still have 100% of the equity of the home to borrow against should I wish to do that to purchase another property as 2bike is talking about.

[BigRedChief]

Originally Posted by petegz28

ok, you're right, ecnomics has nothing to do with it. It's all conspiracy and monoply stuff

I'm no conspiracy wacko. But you know that. You are just trying to discount my analysis.

However, I can see facts that are as clear as they could be and you are not disputing those facts, just my conclusion. You have no vision for geopolitical analytic's. And thats okay, I don't shit about guns.

[petegz28]

Originally Posted by BigRedChief

I'm no conspiracy wacko. But you know that. You are just trying to discount my analysis.

However, I can see facts that are as clear as they could be and you are not disputing those facts, just my conclusion. You have no vision for geopolitical analytic's. And thats okay, I don't shit about guns.

So you contend the $ has nothing to do with gas prices?

[BigRedChief]

Originally Posted by petegz28

So you contend the $ has nothing to do with gas prices?

I said no such thing.

[petegz28]

Originally Posted by BigRedChief

I said no such thing.

http://www.chiefsplanet.com/BB/showp...2&postcount=56

Yes, you did

[Comrade Crapski]

Originally Posted by 2bikemike

Mortgage money is cheap money. I would much rather have $300K or $400K invested somewhere intead of tied up in equity in my home.

That's a sound strategy assuming all of your investments do well. But what if they don't? You've lost everything.

[BigRedChief]

Originally Posted by petegz28

http://www.chiefsplanet.com/BB/showp...2&postcount=56

Yes, you did

I said the majority of the reason. Not the whole reason. And I said nothing about the $. You just want to argue, argue with FD.

[petegz28]

Originally Posted by BigRedChief

I said the majority of the reason. Not the whole reason. And I said nothing about the $. You just want to argue, argue with FD.

Ah, ok....like I said, your tinfoil hat ideas are probably the right reason

[2bikemike]

Originally Posted by Comrade Crapski

That's a sound strategy assuming all of your investments do well. But what if they don't? You've lost everything.

Unless your investing in the options market or throwing all your eggs in one basket your chances of losing everything is pretty remote if your paying attention to your investments. I would never invest in anything without an exit strategy.

Even the richest people have mortgages, because they know they can make more money on the cash than tying it up in a property.

I haven't really looked into it but I read when Mark Zuckerberg bought his house he got around a 1% mortgage because he had the cash to pay it off. The article went on to say that anybody who could back there mortgage could do the same thing.

[La literatura]

Originally Posted by Comrade Crapski

That's a sound strategy assuming all of your investments do well. But what if they don't? You've lost everything.

Which is why you diversify in a broad portfolio. It's not like you put the 300K into Apple.