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mortgage payments... wow!(12 posts)

mortgage payments... wow!Gall
Jul 24, 2002 10:12 PM
hello,

I am looking to buy my first home. I was given a monthly payment of about 1,000 for a 130,000 home. this is for 30 years at 6.5%. I am using the VA loan because you dont need money down, mortgage insurance and you can roll the closing costs.

anyhows... when i was advised of the payment i gave the lady the "who crapped in the easter basket" look. i couldnt believe that the payment would be that high and they expected me to pay that. LOL

SO... I dont have the nerve to ask my friends and co workers what they are paying for their mortgage. so i thought i d ask my friends on this site if they think 1000 a month is way too much for a mortage payment.

thanks in advance for your feedback and any other tips and suggestions you can provide.

Gall
re: mortgage payments... wow!cp123
Jul 24, 2002 11:32 PM
Hi Gall - i bit the bullet and bought my place about 12 months ago. I was scraping the bottom of the barrell to avoid mortgage insurance etc because i was close to the borrowing limit - and my place certainly isn't posh. Perhaps it was the house i bought, but i seemed to run into heaps of unexpected expenses. I should add that its what people might call "a renovator's delight" - ie its cosmetically challenged! I needed to replace some external doors to make it secure - you could have put your fist through them. I bought a new tv - not realising that the aerial on the roof didn't suit it - so that was more money to replace it so i could at least watch it. I recently just spent nearly five thousand to put in heating as there was none in the house. I don't know how people survived in this climate in winter without heating, but i since found out the previous owner moved to Germany every winter. It also cost money to pay for changeovers with various people like the gas company, rates people etc.

I've become a lot more frugal with money. I haven't been to the movies in ages, because i'm scared that if something crops up I'll be stuck. I still gulp when things like annual rates, car rego, car insurance, house insurance and other bills all come in. But i figure if you can go 12 months, you will be fine.

Things will break down and at least if you've got a little bit of spare cash, it won't be such a drama. Just plan ahead on all the non-negotiable bills so it won't hit you like a brick wall.

I don't know what you mean by a VA loan or rolling costs, but my mortgate is $1050 per month (australian). For 25 years. If you can pay off any extra - even another $20 per week - that will take thousands off the overall price - in both interest and years.

I just keep thinking my debt will be over in another 24 years....

Seriously, if the time is right - just do it! I don't mean to sound depressing, but you just have to be organised. DO IT!
sounds about right to me--houses are expensive (nm)ColnagoFE
Jul 25, 2002 6:34 AM
Sweet jesus,TJeanloz
Jul 25, 2002 6:41 AM
If I could pay $1,000 a month on a mortgage, I would be loving life.

I suppose it has mostly to do with cost of living and whatnot, but in my fair city, $1,000 a month will get you a tiny (or shall I say, "charming") garden level studio. It all depends on how much you make, but I would jump at the opportunity to pay $1,000 a month.
You're lucky...but I'm luckierSilverback
Jul 25, 2002 7:20 AM
You don't say where you live, but anywhere in the western U.S, and I think most of the country, $1000 is rock bottom. Most people I know who've bought homes in the last 10 years or so are paying at least half again as much.
It's relative, though. When we bought our house in 1979, we didn't know how we'd swing those huge payments. It was a real struggle the first few years.
Not so hard now, though: It's $502 a month. My son pays more than that for a studio apartment.
Your numbersPaulCL
Jul 25, 2002 7:31 AM
$130,000 house
30 year loan
6.5% interest
@ 0 down : $821/month plus escrowed insurance and taxes
@ 20% down: $657 plus...above
@ 10% down: $739 plus above

If you are borrowing $130k, the number is about right. Not to be specific about my mortgage, but I pay about $500 extra per month in insurance and taxes escrowed. But, my mortgage loan is higher than yours by over a 2:1 ratio. Call another mortgage broker for a second opinion. Paul
live in rural PA /we only make approx 50,000 a year (nm)Gall
Jul 25, 2002 8:34 AM
dsfdsa
then you probably could find a smaller house thenColnagoFE
Jul 25, 2002 11:35 AM
What do you pay for rent now? You must be able to get quite a house for $150k where you live if it is truly in a rural area and not some fancy resort community. Then again if you lived where I did (Boulder, CO) you probably couldn't buy a small townhome for that much. Median home price here is about $350k.
Don't forget the role of tax deductionsjtolleson
Jul 25, 2002 9:13 AM
The lion's share of that payment will be mortgage interest, which will be deductible at tax time. That converts a $1000 mortgage payment into, say, $800 real-life dollars depending on your tax bracket. Not to mention that you are buying equity (not paying rent).

If you can adjust your witholding at work to give you a little more cash each month, it may help. I know it is a strain (and there's no landlord to call when you need a plumber at 2 am on a holiday) financially, but if you can swing it, it beats renting by a longshot. And interest rates will not always be this low.

Think of it. If you are paying $500, say, in rent you are getting nothing. If you are paying $1000 in mortgage, you are buying a home (not only paying the loan down but also gaining appreciation in value), getting a HEFTY tax deduction, etc.

Good luck.
True, at first. After a while the interest is paid down, andrwbadley
Jul 26, 2002 7:39 AM
then the deduction dissappears. WE are scrambling to find deductions. The kid is about grown. The house is paid down.

So I started a business. That helped alot. A good way to spend 10,000 to get 2,500 back at tax time!!

RW
refinanceDougSloan
Jul 26, 2002 9:16 AM
You can refinance at 7%, then stick all the money in the stock market. Your "real" cost of the money is around 5%. You'll make a fortune, and have a tax deduction.

Well, this theory was pretty good several years ago.

Doug
Hopefully by then...jtolleson
Jul 26, 2002 12:16 PM
income will have gone up (and no doubt rents will have) so that it is still a financially manageable arrangement.

But you are surely right on the math.