How do you afford your rides?

[3imo]

I don't meant to Rag on those who are in Debt.  My parents lived their whole lives in debt. its the American (middle class) way.

My point is this.

say your mortgage payment is $850/month. with a 100% loan you are most likely paying interest only and will for a good long time.

In two years your principle will have gone down ZILCH. NADA. ZERO. You have been paying RENT!!!
(you might get luky and make a buttload of equity, but most don't)

now rewind and instead of buying a house at $850/month. decide to Rent at $550/month. You would be able to put away $300/month.
After two years you have $3600 saved up. 

Not alot but more than the sucker who paid the bank to house him.

O'course it is different for everyone and if your in an area where values jump very fast then, its a different story.
MOST areas in america don't go up in value very much.

Trying to buy a house at 100% financing to make a profit of equity, is like jumping off a bridge. You might survive but why risk it.

[My Name Is Dave]

Assuming, of course, that you actually invest the extra $300 a month. Some people would just see it as disposable income and spend it, leaving them no better off.

Just sayin...

[3imo]

YUP YUP!!

the best bet is to put that extra money and the pennies you save other ways, directly against any debts you have.

KILL your debt. ASAP. even if it take 7 yrs of eating RAMEN noodles and drtinking water instead of coke.

IT is worth it.

[groff22]

This stuff would make a good infomercial...

[3imo]

it does actually.

the product is called "DEBT to WEALTH"  check it out. 
If you follow the program it will be the best money you NEVER spent.

I guarantee.

[SeriousGeorge]

My point is this.

say your mortgage payment is $850/month. with a 100% loan you are most likely paying interest only and will for a good long time.

In two years your principle will have gone down ZILCH. NADA. ZERO. You have been paying RENT!!!
(you might get luky and make a buttload of equity, but most don't)

now rewind and instead of buying a house at $850/month. decide to Rent at $550/month. You would be able to put away $300/month.
After two years you have $3600 saved up. 

Not alot but more than the sucker who paid the bank to house him.

O'course it is different for everyone and if your in an area where values jump very fast then, its a different story.
MOST areas in america don't go up in value very much.

Trying to buy a house at 100% financing to make a profit of equity, is like jumping off a bridge. You might survive but why risk it.

I'm with you on reducing debt, but I think you're off on mortgages. If you look at an amortization table you aren't paying much towards principle in the first few years, but it's never nothing. What you aren't factoring in is that all the interest you're paying is tax deductible. Even if you don't live in southern California your property values are going to go up. We live in a little town with a population of about 1500 people. We purchased a house 3 years ago for $109k. We recently had it appraised for $150k and could probably sell it for about $140k. There's nothing wrong with renting, but I don't think you'd save enough over buying to make it a default decision. Just go with whichever one you prefer.

[3imo]

ah my dear watson.

It's much more than that.

I was rushing.  but  heres the deal.  If you buy a home at $100K  at 100% financing and STAY in that house for 40yrs. then No harm done.
not to shabby. most people move around a bit.
in that case that same house you financed at $100K  paying interest only after two years you still owe $100K.  But it went up in value and is now worth $110K (interest only loans are INTEREST ONLY!!!!!) 100% financing is almost always interest only for FIVE years!!

Wow GREAT you made $10K and you have to move. cool.  money in your pocket, right?

ERRRRRRRRR.... WRONG.  a realtor takes 3%.....each realtor. the sellers and the buyer..  so thats. 6% of the current vallue $110K

you will pay the realtor $6600 to sell your house. and who will pay the closing cost of about 4%?  8 times outta ten.  The seller. $4400

if your lucky you will break even. even in todays great house market. Most of AMERICAs property values trikle up. barely above inflation.
---------------------------------------------------------------------------------------------------

My default decision is based on 100% financing.  you will always do better renting unless you keep the house for more than ten years.
ALWAYS.

If you need 100% financing to buy a house, then you cannot afford to buy a house. (unless  you will keep the house for a very long time)

[LPC2104]

say your mortgage payment is $850/month. with a 100% loan you are most likely paying interest only and will for a good long time.

In two years your principle will have gone down ZILCH. NADA. ZERO. You have been paying RENT!!!
(you might get luky and make a buttload of equity, but most don't)

now rewind and instead of buying a house at $850/month. decide to Rent at $550/month. You would be able to put away $300/month.
After two years you have $3600 saved up. 

How do you get that you don't pay any principle down on a mortgage rate?  After 2 years, your loan amount most certainly goes down.  You may have been confused by my wording that I'm in debt 100 % mortgage.  I meant, I'm in debt only because of my mortgage.  No car payments, credit card payments, school payments, bike payments.  Just mortgage.  My debt is 100% mortgage debt. 

Interest rates are rarely 100%.  If someone had a 100% interest, I agree with you, it's better to rent.  If you didn't pay your principle down, you're doing no better than someone who is renting.  Everytime you make a mortgage payment, a piece of it goes towards principle which lowers your loan amount.  It's like you're paying a percentage to yourself every month because you are going to see it come back when it's time to sell.  When you rent, you are paying 100% to someone else.  You don't ever see a dime back from them. 


EDIT - I just saw your post above.  I pretty much agree with that.

[3imo]

100% financing is for those who cannot afford a down payment.

It is actually two mortgages (and they can be sold to different companies)
one is 80% - what the bank will approve you for
the other is 20% - -the bank is loaning you the money to make the REQUIRED 20% down payment.

basically since you are too broke to come up with the 20% down payment, the banks puts it arm around you shoulder and say "hey we can help"
then they proceed to put one hand on each shoulder and pound away. you hardly feel it though cause they grease you up reallly well.

It might take a year or two before you realize you got f%&ked!!

[LimaXray]

I agree the if you're 20 you should probably stay away from credit unless you are responsible and don't feel the need to always go swippy swipe swipe.  I know several people who have totally screwed themselves. 

While I'm a full time student, I work all the time, right now I'm at work, on a co-op as a programmer / system administrator, I make a lot more money in a year then most 21 yr old college students.  I make sure I make more then I spend.  I owe on a car, but I need a car, I got screwed in a deal with a used car, so I just said f' it I'm getting a new one.  Got the cheapest one I could find that I fit in (I'm 6'6") and just make payments every month.  For the GS, I wanted one before I took the MSF course, and didn't have the cash right then.  I don't plan on keeping that debt for very long.

As for the Suzuki credit card, you do own it out right, there is no lean on the bike, it's the same as using your Visa or Amex or whatever to pay for it.

I do think building some credit is a good idea.  When I graduate, I need good credit because I am going to buy a house, I will never rent.  Real estate is one of the best investments you can make.  My parent's house DOUBLED in value in the past 5 years.  What other investment gives you that kinda return?  Also, around here rent is at least as expensive as morgage payments, and often more.  But maybe thats because of where I live...

[LPC2104]

100% financing is for those who cannot afford a down payment.

It is actually two mortgages (and they can be sold to different companies)
one is 80% - what the bank will approve you for
the other is 20% - -the bank is loaning you the money to make the REQUIRED 20% down payment.

basically since you are too broke to come up with the 20% down payment, the banks puts it arm around you shoulder and say "hey we can help"
then they proceed to put one hand on each shoulder and pound away. you hardly feel it though cause they grease you up reallly well.

It might take a year or two before you realize you got f%$kED!!

Now we are on the same page.   

Glad I did my research and put more than 20% down. 

[My Name Is Dave]

HSBC has my title, that's for sure. I called them when I was about to pay it off and they have it. I have no idea if our states have different laws. But I'd sure like to get it out of their grubby little grips.

[LimaXray]

the suzuki credit card might just be a new promotional thing dunno 

[lordabhi]

I work as a IT Manager and pay cash for my toys,  (always new)
Mercedes Benze ML350,
Jeep Wrangler,
GS500F,
Yamaha RD350,
Kawasaki KB100,
Yamaha RX100
and a Vespa PL170.

[3imo]

I almost got dupped on that motorcycle financing scam.

You come in they say "yeah we'll finance you".  and you end up with a credit card @ 24%APR

ah... Never fails.  I should start a loan company.

[LimaXray]

No they give you a nice low introductory 10.95% APR for 60 months, then it goes to 17.9% after that.  If you stop paying your bills it will go up to 21.9%.  I don't think I could have financed it for much less, and any differance is worth the owning it out right IMHO. 

Looking back, I should have just applied for one of those 0% APR for a year credit cards deals I see every where and used that and just paid it off within a year.  Oh well...

[3imo]

thats still an option.
you can use a 0% card to pay off the other,  but there are some dangerous pitfall to this. and you must read all the fine print.

credit cards suck.

[LimaXray]

paying one credit card with another is a 'balance transfer' and they rape you in the ass for doing that... no biggy, it will just motivate me to pay it off that much quicker

and no, credit cards are not your friend, and I've learned there is usually a catch that you have to search the fine print to find

[3imo]

paying one credit card with another is a 'balance transfer' and they rape you in the ass for doing that... no biggy, it will just motivate me to pay it off that much quicker

and no, credit cards are not your friend, and I've learned there is usually a catch that you have to search the fine print to find

some do and some don't   if you can do it just once to 0%APR that raises to less than the original APR it might turn out ok.

But danger lurks . u must read everything.  they suck.  I have a corporate card. I have no qualms using it though. I don't get the bill. hahahaha

[LimaXray]

for example, I got an offer that said "0% APR ON BALANCE TRANFERS FOR A WHOLE YEAR!!!" but when you read the little booklet thing they give you it tells you how you have to pay a 10% fee.  That's just not worth it...