% Net Income goes to rent/house payment

posted by gut

To each their own, but why are you guys doing 15-20 year mortgages?  You're just accelerating paying down the principal which is returning a lousy 2-2.5% after taxes.

You can debate paying a little more to lock-in a rate for 30 years, but when you crunch the numbers it's hard to beat the savings on a 5 or 7-yr ARM.  Rates have been low for 10+ years, and I don't see that changing significantly over the next 10 years.

Care to explain a little better to a gym teacher? We had a 30 year mortgage to buy our house, refinanced 1x and have 7 years left. Been here 17 years.

posted by gut

To each their own, but why are you guys doing 15-20 year mortgages?  You're just accelerating paying down the principal which is returning a lousy 2-2.5% after taxes.

You can debate paying a little more to lock-in a rate for 30 years, but when you crunch the numbers it's hard to beat the savings on a 5 or 7-yr ARM.  Rates have been low for 10+ years, and I don't see that changing significantly over the next 10 years.

Care to explain a little better to a gym teacher? We had a 30 year mortgage to buy our house, refinanced 1x and have 7 years left. Been here 17 years.

We are fortunate in this regard.  No house payment.

We had a 15 mortage that we paid off around 9 years agao.

Our house is paid off that is one of the benefits of being old and married for a long time.

posted by Ironman92

Care to explain a little better to a gym teacher? We had a 30 year mortgage to buy our house, refinanced 1x and have 7 years left. Been here 17 years.

It's mainly a savings vehicle.  On your taxes, only the interest is deductible.  A house generally appreciates at about 2.5-3% per year.  And there currently is an exemption of up to $500k capital gain for a married couple - meaning the gain is completely tax free.  So you borrow money to buy the house at about 2% after tax, meanwhile it's appreciating at about 3% per year after tax.

So when you pay down the loan, you're only saving the after-tax interest.  That means putting money into your house will yield a fixed 2% after-tax return.  I would sincerely hope we could all beat that in the market over the long term, even with conservative investments.

Taking out a 15-yr fixed rate loan right now when 10-yr ARM's are available at 2.75% makes no sense to me.  The slightly higher fixed rate loan will cost you thousands of dollars over 10 years, and saddle you with a larger payment with an ROI of 2%. But it's a great idea for people who can't save/invest their money.

15%. 

Was 29% in Boston for a few years, renting. 

posted by Ironman92

36%...whoa

Indeed. I suspect there's a lot of people who are buried in debt out there. I just looked up the median home selling price in my old zip. 483k.

No thanks.

posted by MontyBrunswick

Indeed. I suspect there's a lot of people who are buried in debt out there. I just looked up the median home selling price in my old zip. 483k.

No thanks.

Indeed lol

posted by gut

To each their own, but why are you guys doing 15-20 year mortgages?  You're just accelerating paying down the principal which is returning a lousy 2-2.5% after taxes.

You can debate paying a little more to lock-in a rate for 30 years, but when you crunch the numbers it's hard to beat the savings on a 5 or 7-yr ARM.  Rates have been low for 10+ years, and I don't see that changing significantly over the next 10 years.

The 15 year rate was a point below the 30 year rate and I can afford it, a house should be a risk adverse investment

posted by gut

Rates have been low for 10+ years, and I don't see that changing significantly over the next 10 years.

Should be paid off before 2025

No house payment here. But damn!, property taxes are more than making up for it.

Paid off house in March of this year.  I’ve done a lot of things wrong in life.  But one right thing was never buying too much house.  

posted by gut

To each their own, but why are you guys doing 15-20 year mortgages?  You're just accelerating paying down the principal which is returning a lousy 2-2.5% after taxes.

You can debate paying a little more to lock-in a rate for 30 years, but when you crunch the numbers it's hard to beat the savings on a 5 or 7-yr ARM.  Rates have been low for 10+ years, and I don't see that changing significantly over the next 10 years.

Oof, this didn't age well.

posted by Dr Winston O'Boogie

Paid off house in March of this year.  I’ve done a lot of things wrong in life.  But one right thing was never buying too much house.  

Congratulations, I can't wait for that day to come.

Down to around 8% of "net" (gross minus taxes), 11% if based on actual deposit (401k, insurance, etc taken out as well). Income gone up a lot, taxes have as well, my monthly mortgage has gone up from about $150-200 since 2020 in both taxes and insurance premiums going up.

about 7 ish years left on the mortgage.

Just sold in December of '22 and bought in February '23. Our old house went for almost 70% more from what we bought it for in 2018. Crazy.

We're sitting at roughly 28%-29%. A little higher than we'd like, but this is most definitely the place where we will be at for the next 20-25 years. Almost tripled our square footage, have a basement and two car garage now, kids have a huge backyard to play in, and closer to work for my wife.

We did go with a 5 year ARM through our local credit union and got it at 5% for years 1 and 2, then can only go up half a percentage after that. Will look to refinance around year 4 or so.

posted by jmog

Oof, this didn't age well.

LMAO, even at 6%, it's still a lower after-tax return than conservative investments have been yielding.  And mortgage rates have been below 6% for 20 straight years (while ARMs are even lower).  It will probably temporarily bump above with a couple more rate increases coming. 

Aged just fine, some people's math on the other hand...Bottom line is if you've been building equity in your home over the years, you've lost a significant amount of money with an inferior return. Everyone mocked Boatshoes for investing in treasuries...

Nevermind the next recession will send rates back down.  There's another issue most people aren't aware of, which is the difficulty (if not impossibility) of getting a mortgage in retirement.  And so the only way to tap that equity without selling is to do the uber-stupid "reverse mortgage".

I'm still paying 3.0%, but it begins adjusting up at the end of the year .  I could pay off my mortgage, but I'll give you one guess why I don't.  My neighbor, a former equity analyst, refi'd last year...give you one guess why he took equity out when he did that.  Only reason I didn't do the same is I plan to sell in a year or two, and when I do I'll be looking at interest-only mortgages.

posted by birddog23

We did go with a 5 year ARM through our local credit union and got it at 5% for years 1 and 2, then can only go up half a percentage after that. Will look to refinance around year 4 or so.

The 28% is a very generalized rule.  People with higher incomes can certainly go above, though lenders seem to use that, maybe up to 36%, as a pretty universal rule now.

But, yeah, a 5-yr ARM right now was probably a good move.  I'm sure rates will be back down in a few years, probably not historic lows, but I think the 30-yr will get back down to around 4%.

posted by birddog23

Just sold in December of '22 and bought in February '23. Our old house went for almost 70% more from what we bought it for in 2018. Crazy.

We're sitting at roughly 28%-29%. A little higher than we'd like, but this is most definitely the place where we will be at for the next 20-25 years. Almost tripled our square footage, have a basement and two car garage now, kids have a huge backyard to play in, and closer to work for my wife.

We did go with a 5 year ARM through our local credit union and got it at 5% for years 1 and 2, then can only go up half a percentage after that. Will look to refinance around year 4 or so.