Essential Economics for Politicians

messy said:
Why would I pay them off? I explained already that I make money on the spread and paying them off is what smart people call “a bad investment.”
I get my loan at just over 3% and it’s deductible.
I invest my money at around 7%.
I get the appreciation on the houses anyway. Why would I use valuable money to pay off my mortgages early?
That’s twice now that I’ve explained this to you.
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BTW, money is made less valuable over time. It’s called inflation. Amortized loans are designed to get more of your money up front while it is more powerful and less of it when it is least valuable 20 to 30 years later due to inflation....you know? The whole QE thing.
 
Bruddah IZ said:
BTW, money is made less valuable over time. It’s called inflation. Amortized loans are designed to get more of your money up front while it is more powerful and less of it when it is least valuable 20 to 30 years later due to inflation....you know? The whole QE thing.
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You support t right?
 
Bruddah IZ said:
Do the analytics. Take an amortization schedule. Plug in all your numbers from the loan start date, interest, loan amount and calculate, then amortize. Then take a portion of your equity. Say 40k. Pay 40k to your amortized loan, on paper by subtracting the 40k from your current amortized balance. Find the number of the month that is associated with the new balance you calculated. Sum the total of the interest only between your old balance and new. Then take the 40k and multiply it by the simple interest rate for the HELOC. You’ll arrive at an annual rate that you’ll divide by 12 to get your monthly interest payment to the HELOC. The difference between the amortized int. you are scheduled to pay and the simple int. that you pay will be substantial enough to off set whatever tax benefits you perceive to be more beneficial.
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This is hilarious.

Enough handwaving. Plug in some numbers.
 
Bruddah IZ said:
BTW, money is made less valuable over time. It’s called inflation. Amortized loans are designed to get more of your money up front while it is more powerful and less of it when it is least valuable 20 to 30 years later due to inflation....you know? The whole QE thing.
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An accurate statement! Huzzah!
 
Bruddah IZ said:
Do the analytics. Take an amortization schedule. Plug in all your numbers from the loan start date, interest, loan amount and calculate, then amortize. Then take a portion of your equity. Say 40k. Pay 40k to your amortized loan, on paper by subtracting the 40k from your current amortized balance. Find the number of the month that is associated with the new balance you calculated. Sum the total of the interest only between your old balance and new. Then take the 40k and multiply it by the simple interest rate for the HELOC. You’ll arrive at an annual rate that you’ll divide by 12 to get your monthly interest payment to the HELOC. The difference between the amortized int. you are scheduled to pay and the simple int. that you pay will be substantial enough to off set whatever tax benefits you perceive to be more beneficial.
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#1. I’m not aware of 30-year HELOCs. #2. I believe the deductibility of the interest overcomes the amortization front-loading. You have more to deduct in those early stages as well.
 
Bruddah IZ said:
The current rate is 3.75% amortized. The new rate is 3.99% simple interest. The payment doesn’t matter as much as the method of interest calculation. Interest is not deductible but you don’t really care about that if you’re netting a substantial reduction in interest payments.
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Your analysis works for a deal that has like a 5-year window. The point of a mortgage is that you can buy something expensive and take a really long time to pay it off. Yes the bank wins but so does the buyer, if he buys in a good area or a rising area. Nothing like real estate appreciation.
 
messy said:
#1. I’m not aware of 30-year HELOCs. #2. I believe the deductibility of the interest overcomes the amortization front-loading. You have more to deduct in those early stages as well.
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oh boy. Just when I thought You couldn’t do better than “collateralized debt is an asset” you come up with the above. There is no amortization in a HELOC. Not that fries u teaches you that. No wonder you don’t enjoy the return on equity that I do without selling.
 
messy said:
Your analysis works for a deal that has like a 5-year window. The point of a mortgage is that you can buy something expensive and take a really long time to pay it off. Yes the bank wins but so does the buyer, if he buys in a good area or a rising area. Nothing like real estate appreciation.
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Show me how you benefit from not using your equity to pay off your 30 in less than 1/3rd the time, while paying double digit interest until your 320th payment.
 
messy said:
Your analysis works for a deal that has like a 5-year window. The point of a mortgage is that you can buy something expensive and take a really long time to pay it off. Yes the bank wins but so does the buyer, if he buys in a good area or a rising area. Nothing like real estate appreciation.
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5 year window? Show me.
 
Bruddah IZ said:
Show me how you benefit from not using your equity to pay off your 30 in less than 1/3rd the time, while paying double digit interest until your 320th payment.
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1. The taxpayers bear half my interest, so that money costs me 50% of what I pay.
2. The money I am not spending on my house earns me about 7% per year, compounded., whereas the house appreciates less than that BUT I KEEP 100% OF THE APPRECIATION ANYWAY.
3. So why on earth would I take all that money and put it into my house? I would get poorer.
 
Bruddah IZ said:
oh boy. Just when I thought You couldn’t do better than “collateralized debt is an asset” you come up with the above. There is no amortization in a HELOC. Not that fries u teaches you that. No wonder you don’t enjoy the return on equity that I do without selling.
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So there is a 30-year time frame to pay off a HELOC? In that case, yes it’s a better deal than a mortgage. But check your premise...I don’t think there’s a 30-year HELOC.
 
messy said:
1. The taxpayers bear half my interest, so that money costs me 50% of what I pay.
2. The money I am not spending on my house earns me about 7% per year, compounded., whereas the house appreciates less than that BUT I KEEP 100% OF THE APPRECIATION ANYWAY.
3. So why on earth would I take all that money and put it into my house? I would get poorer.
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messy said:
So there is a 30-year time frame to pay off a HELOC? In that case, yes it’s a better deal than a mortgage. But check your premise...I don’t think there’s a 30-year HELOC.
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Man are you an Idiot....

I'll bet you pay your mortgage with " Borrowed " money like the
Creepy Porn Lawyer was doing too.....
 
messy said:
1. The taxpayers bear half my interest, so that money costs me 50% of what I pay.
2. The money I am not spending on my house earns me about 7% per year, compounded., whereas the house appreciates less than that BUT I KEEP 100% OF THE APPRECIATION ANYWAY.
3. So why on earth would I take all that money and put it into my house? I would get poorer.
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Lmao!
1. No, they don’t bear your interest. Your interest is a deduction not a tax credit.

2. The money that you are spending on your interest alone is easily in the double digits which cancels out your 7% per year. You don’t get to keep 100% of the the appreciation because of interest and inflation over the life of the loan.

3. Because an amortized loan is for suckers.
 
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