Funny shit. At best, you’re tripping over dollars on the way to nickels because you run scared.
Essential Economics for Politicians
- Thread starter Bruddah IZ
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- finance too
If that means loan to value, one house has about 20% as a loan and 80% as equity.
The other is about 65% loan/35% equity.
Yes, massive appreciation.
Bruddah IZ
DA
Lol! I love your insults. They are substitutes for knowledge.
Bruddah IZ
DA
So youʻre not paying off the 20% or 65% for tax purposes? Are they rentals or domicile?
Bruddah IZ
DA
Actually I’ll make a payment on Monday that will eliminate 65k in amortized interest and replace it with 14k in simple interest. You can do the math. That’s a lot of nickels!!
How mi
See how to analyze it?
And again I’m not in real estate. I make my money at my day job.
that tells me nothing unless how tell me how much the payment is, what the new rate is compared to the old rate and whether it’s deductible (as is the mortgage interest).
See how to analyze it?
And again I’m not in real estate. I make my money at my day job.
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.
Bruddah IZ
DA
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.
Bruddah IZ
DA
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.
Bruddah IZ
DA
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.
Hüsker Dü
DA
You support t right?
An accurate statement! Huzzah!
#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.
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.
Hüsker Dü
DA
Yes sir, makes me smile three times over!
Bruddah IZ
DA
Amortized Int. 3.75, simple int. 3.99, loan amount 2.5 million. Get to work “self proclaimed”
Bruddah IZ
DA
Not in your case Mr. “Why would I pay it off”
Bruddah IZ
DA
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.
Bruddah IZ
DA
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.