Refinance?

[MDH33]

Maybe the better question is Does anybody believe they will one day pay down their 30 yr mortgage to nil and be house payment free?

I know the reality is that their are other reasons to maintain a reasonable mortgage even if you could pay it off, but isn't it said that this thing we call our "biggest investment" is really just a huge interest payment that consumes 20-50% of our monthly income?

My thought has always been that if you're spending more than 25% of your monthly gross income on housing costs, you're living beyond your means.

 

[Red_Chili]

Not for a long time! I will continue to reinvest my equity into profitable ventures....it has worked very well so far! I would much rather use my deductions instead of polishing marble with my capital gains taxes!

First $500K of cap. gains is tax free dood...
if married. Federal anyway, don't recall Colorado. I'm sure a certain lurking real estate lawyer will chime in...

 

[nakman]

Or $250K if single, or MFS. you can also get out of the 2 years thing (legally) if your new house is closer to your work.

 

[SteveH]

The MSN Money columnist guy yesterday seemed to be defending a single mother with 3 kids whose income was 36K/year and bought a $350K+ house she now can't afford - as if this was 'someone else's problem - not hers. I sure the bank spun her a great story about how she really *could* afford this place. But, sheesh - use your head! Not 15 years ago, this person would have been tossed out of the bank for considering a house over 100K, and now what she's doing is suddenly the norm. The basic laws of economics haven't changed in this example, I think.

What I find hard to swallow is people whose first house is a 3500-5000 sq foot new-age mansion with a 375K mortgage and no down payment. The conventional wisdom of 20% down (or even 10%) simply disappeared. What was so wrong with putting down some real money and buying a lesser home (like all the 2200 sq foot homes around Colo Springs) and upgrading when funds or equity permit? Is it to hard to imagine that 'you can't have it all' - at least not right now? This is a simple matter of self control (in some cases), and yet the entire concept seems suddenly outmoded. I realize that a 375 house in Denver and LA is more the norm than the exception, but if you're only making 40K/year, then perhaps it's not time to buy.

The book 'Rich Dad, Poor Dad' dismisses a house as an 'investment' - and while I don't agree with the entire contents of the book, it does put a monkey-wrench into many things your father told you about money, so to speak. Good reading.

Steve

 

[RockRunner]

The MSN Money columnist guy yesterday seemed to be defending a single mother with 3 kids whose income was 36K/year and bought a $350K+ house she now can't afford - as if this was 'someone else's problem - not hers. I sure the bank spun her a great story about how she really *could* afford this place. But, sheesh - use your head! Not 15 years ago, this person would have been tossed out of the bank for considering a house over 100K, and now what she's doing is suddenly the norm. The basic laws of economics haven't changed in this example, I think.

What I find hard to swallow is people whose first house is a 3500-5000 sq foot new-age mansion with a 375K mortgage and no down payment. The conventional wisdom of 20% down (or even 10%) simply disappeared. What was so wrong with putting down some real money and buying a lesser home (like all the 2200 sq foot homes around Colo Springs) and upgrading when funds or equity permit? Is it to hard to imagine that 'you can't have it all' - at least not right now? This is a simple matter of self control (in some cases), and yet the entire concept seems suddenly outmoded. I realize that a 375 house in Denver and LA is more the norm than the exception, but if you're only making 40K/year, then perhaps it's not time to buy.

The book 'Rich Dad, Poor Dad' dismisses a house as an 'investment' - and while I don't agree with the entire contents of the book, it does put a monkey-wrench into many things your father told you about money, so to speak. Good reading.

Steve

Steve I could not agree more. It does not matter if you put 10 or 20% down as long as you are living within your means. The lady with three kids at $37k should be living in a 1000sq' town home if that

Kevin, you are right too. We took out a small loan against the house last year and bought some stock. After three months we were able to repay the loan and still have the same amount of shares we started with. I wanted to wait a little longer before selling half but my wife is real cautious. We could have made some more $$$ of the deal but so far we are 137% ahead, not to bad.

Everyone has a different style and level of comfort regarding debt and financial security. Some are more cautious while others take more risks. Neither is wrong, just a different approach. Just like Bill and me on Chinaman Gulch............. Just messing with you Bill.

 

[Uncle Ben]

Here's a much better return than Interest only loans!

From: Williams and Juliet Idreen
Please dear hear our cry for help,

Dearest one ,

I am Williams Idreen the only son of late Chief PHILLIP IDREEN former Director of finance,diamond and mining corporation Sierra-Leone .
We must confess my agitation is real, and my words is my bond, in this proposal. My late father was the director of finance of Gold and diamond industry in my country, during the disastrous civil war in my country, now he has deposited the money with a security company here in Abidjan, where I am residing under political asylum with my younger sister Juliet Idreen nNow the war in our country is over with the help of ECOMOG soldiers, the present government of Sierra Leone has revoked the passport of all officers who served under the former regime and now ask countries to expel such person at the same time freeze their account and confiscate their asset, it is on this note that I am contacting you, all we needed from you is to furnish us with your particulars:

1) Full name
2) Home address, telephone and fax number For you to assist me transfer this money in your private bank account, the said amount is (ten Million Five hundred american Dollars) $10.5 Million US Dollars. we are compensating you with 15 % of the total money amount, now all my hope is banked on you and we really wants to invest this money in your country, were their is stability of Government, political and economic welfare.

Honestly we want you to believe that this transaction is real and never a joke. Our late father Chief PHILLIP IDREEN, gave me the photocopies of the certificate of deposit issued to him by the security company on the day of deposit, for you to be clarify because, We do not expose our self to anybody we see, we believe that you are able to keep this transaction secret for me because this money is the hope of our life, it is important to us. Please call us immediately after you must have gone through my message feel free and make it urgent. That is the reason why we offered you 15 % of the total money amount, and in case of any other necessary expenses you might come acrossduring this transaction.

N.B Try and negotiate for us some profitable blue chip investment opportunities which is risk free which we can invest with this money when it is transferred to your account, personally I am interested in estate management and hotel business, please advise me. mail us back at immediately you receive this message for more explanation.And promise me and my younger sister to be a guidian considering our situation and not to betray us.

Thanks and God bless.

Best regards,

Williams and Juliet Idreen

 

[nakman]

The book 'Rich Dad, Poor Dad' dismisses a house as an 'investment' ...

IIRC, that's because Kiyosaki defines investments & liabilities in terms of cash flow. So your house with a $2500/mo mortgage payment is a $2500/month liability, but your stock porfolio is an asset since it pays a dividend. He would be more in favor of buying a duplex or condo building where you can get tenants to pay your share of the monthly bill, than he would be for just buying a single family home. Agreed though, great reading as is the next book, Rich Dad Secrets.

 

[treerootCO]

You can invest in your house though. The equity is not really liquid but you can borrow against it using the house at collateral. That is know as the "rich Uncle" equity feed. You would, of course, use your rich Uncle if you had one. I have about 4,000 into the kitchen and the return, if I sell, is around 20,000+. This is a conservative estimate if I had hired someone to do the same work.

 

[Inukshuk]

First $500K of cap. gains is tax free dood... if married. Federal anyway, don't recall Colorado. I'm sure a certain lurking real estate lawyer will chime in...

I checked with a CPA because I never considered Colorado capitial gains and I'm not just satifsied with answers, I want to know reasons. (But I did guess right! )

Question: Is there a Colorado tax on capital gains from the sale of a personal residence? I think the answer is that since Colorado tax is based on Federal, the Federal exemption results in no tax on the first 250/500 (single/married).
Answer: You’ve got it correct – Colorado piggybacks the feds so whatever is exempt for federal purposes is also exempt for Colorado.

I have to say that this is an impressive thread. We might have to rename this the "Rising Sun Four Wheel Drive and Investment Club." I read the thread and plan to re-read it for ideas. Frankly, I really like the conservative approches written here. I believe that for most people a home should be a home, a place to live, and not a piggy bank. If you are in the real estate business or like to fix and flip your own place, that's different.

I know we are in the club for fun and not business, but has there ever been a list of what members do (other than our great 4x4 business members), because given a choice I'd certainly like to consider fellow members first if they do something I need. I could also certainly understand not doing that.