...and you thought Tysons had traffic now.

[WRXtranceformed]

You aren't missing the discount, you're missing the point =P

You pay less interest every year dude, as you pay down the principle. That number is way higher than it should be.

Let's say it together:

A-M-O-R-T-I-Z-A-T-I-O-N

Keep reading young Padawan, maybe I'll get you into a house someday :wink:

[WRXtranceformed]

For the layperson:

[Evan]

$600,000 loan, we'll be REAL generous and say you're doing 100% financing, and let's be real conservative and say you have a 7% interest rate on that loan, locked in for 30 years. The total amount of lifetime interest that you'd pay on that loan would be $42,000.

sorry Lee, your math is way off.
You will pay $42k of interest in the first year

Total interest paid will be 837k and change. For a grand total of 1.4mil if you keep the house until its paid off.
Link
everyone should take a look at the table and the comparison of interest paid to principal paid. eye opener

[Evan]

You aren't missing the discount, you're missing the point =P

You pay less interest every year dude, as you pay down the principle. That number is way higher than it should be.

Let's say it together:

A-M-O-R-T-I-Z-A-T-I-O-N

Keep reading young Padawan, maybe I'll get you into a house someday :wink:

Everyone understands that the interest paid goes down and pricinple paid goes up, its called basic economics. What you arent seeing is that the interest goes down extremely slowly. To use your example, the interest paid goes down $3.00 and pricinple up $3.00 (as in three dollars) every month initially. Even after 5 years (the common yardstick for a first house) you are only paying off $200 more of principle (and less interest) per month than you were when you began. (but you have paid over $200k in interest in that 10 years)
The point is that first year that you pay $42k of interest payments, instead you could save most of that money and do something smarter with it (like save it for a down payment for when the market is better), since the house is not gaining equity through appreciation in this market.
Personally Im not waiting for the big crash, quite the opposite, Im waiting for the market to pick back up again. Its the only thing that makes sense.

[WRXtranceformed]

Yeah I actually spoke with one of our division managers on the phone to help clarify, because the long term total amounts of your mortgage are something that our loan officers usually talk to our customers about.

You're right, although the math and the reasons why don't really make sense to me. I'm going to pick up an amortization schedule from one of our loan officers to check it out.

What I did learn was that the best way to pay a mortgage is to do an interest only, and then pay towards the principle bimonthly. Interest is calculated on your remaining priciple on a daily basis, so this minimizes the long-term impact of interest on the amount you're paying out for your house. I also learned that if you pay just one extra monthly principle payment per year it reduces the life of your loan by like 7 years or something like that.

So, I do concede to being wrong about the interest payments. I know, I know.. even champions among men can be fallible

As far as return on investment, if you actually are paying for your house for 30 years, you can't really consider it a great investment. If you're living in it for that long, you're probably going to stay in it. It's when you live in a house for several years, build that equity, then sell it when you're going to get something in return. Which, when it all comes down to it, does not happen when you rent.

The goal is to keep doing this until you finally buy your dream house, ideally mostly in cash. Unless of course you're baller enough to do so otherwise, which I'm sure is what most of us are working towards ^_^

[.RJ]

No wonder Lee is a good salesman :lol:

The extra payment advice is pretty solid though, I didnt know it made that big of an impact :thumbup:

[Jewels]

[quote="WRXtranceformed"]Jewels I can see what you mean, and sure it's a shame that you might have to have two incomes to afford a place you want, but that's life unless one of you is making $150k+ a year and has fantastic (700+) credit... or you move somewhere where you can buy homes for ~150k and keep your mortgage payments around 1500 a month.

As far as something happening to you, I mean you don't live the rest of your life in fear of stuff like that do you? You can't be afraid of something with a remote chance of happening. Take out life insurance if it's that big of a deal. If you really can't afford the house you're living in when a significant other dies, then you sell it and downsize. There are plenty of married couples who have newborn children and still own a home too =P It just takes careful budgeting (among many other things).[/quote

Lee you are right. I'm not saying I refuse to work and therefore will never have a house, I'm saying that its unfair of you to say well if you want a house this is the way to do it. Get roommates or put your woman to work. Rex and I won't have children before a house, because we don't want to have that problem.As far as something happening to one of us, you are absolutely correct, I was just throwing that out there. Anyway, you all make good points. Rex and I will be looking for a house as soon as I get a job, cause we don't to continue paying rent on our tiny ass one bedroom apartment. For us, we are in for the long haul so it makes sense for us to sit down and start looking for options. And actually Lee we might be coming to you with a few questions as soon as we are ready to start looking.

[AlpineOverNappa]

what'll be even worse are all the apartments going up in merrifield by the multiplex

[.RJ]

what'll be even worse are all the apartments going up in merrifield by the multiplex

Worse for what? I live near there now, no problem.

[AlpineOverNappa]

The traffic will be 100x worse when the apartments and the rest of the plans for the gallows/lee highway intersection of merrifield are complete. It'll be a nightmare going through there

[.RJ]

The traffic will be 100x worse when the apartments and the rest of the plans for the gallows/lee highway intersection of merrifield are complete.

You're kidding right?

Where are these apartments going up? Because the ones by the Metro station are already done. It aint going to get any worse than it already does.

[Sijray21]

Where are these apartments going up? Because the ones by the Metro station are already done. It aint going to get any worse than it already does.

the one's right on gallows just south of rt 29 - the one's across the street from the silver diner and the shopping center.

traffic will get worse, but i'm hoping it will also stimulate business in the area.

[.RJ]

traffic will get worse, but i'm hoping it will also stimulate business in the area.

Is taco bell and staples going to do more business now? :lol:

One new apartment building is a drop in the bucket for traffic over there.

[Sijray21]

traffic will get worse, but i'm hoping it will also stimulate business in the area.

Is taco bell and staples going to do more business now? :lol:

One new apartment building is a drop in the bucket for traffic over there.

i don't think it'll be just a 'drop' in the bucket, but i doubt it'll make that much of a difference considering that some people will not likely drive due to the location of commercial business around and the fact that the metro is within walking distance.

Traffic is bad enough in that area (Rt 50 and Rt 29) during rush hours and if everyone moving into those complexes were to drive i think it would make things just that much more unbarable if a lot of the people moving into those apartments drive on a daily basis.

[.RJ]

That location is walking distance to the metro - the only reason to shell out for a slot in an overpriced filing cabinet.

[.RJ]

Our company alone is seeing solid numbers and expect a very strong spring. It is still a buyer's market, but that's disappearing quickly. Our prices have slowly been creeping back up because we can.

I know this doesnt directly apply to your job since you sell new homes - but... still not without suprise

<!-- m --><a class="postlink" href="http://biz.yahoo.com/ap/070125/economy.html?.v=14">http://biz.yahoo.com/ap/070125/economy.html?.v=14</a><!-- m -->

Sales of Existing Homes Plunge by Largest Amount in 17 Years

WASHINGTON (AP) -- Sales of existing homes fell in December, closing out a year in which demand for homes slumped by the largest amount in 17 years.

The National Association of Realtors reported that sales of existing homes were down 0.8 percent last month, a bigger decline than had been expected. For the year, sales fell by 8.4 percent, the biggest annual decline since 1989, when existing home sales fell by 14.8 percent.

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The sales figure underscored the sharp contraction that is going on in the once high-flying housing market, which before last year had set sales records for five straight years.

Even with the sharp drop in sales last year, the median price of an existing home sold in 2006 managed to rise a slight 1.1 percent. But that was far below the double-digit gains during the boom years. The median home price had risen by 12.4 percent in 2005.

After a five-year boom, housing slowed significantly last year, which has caused ripple effects throughout the economy with rising job layoffs in construction and other housing-related industries.

But economists said they believe the low point for housing has been reached and they are forecasting a slow rebound in 2007. Because of that optimism, analysts don't believe the slump in housing will drag the overall economy into a recession.

[WRXtranceformed]

Yeah, it's not surprising, for a couple of reasons:

1) People have an unrealistic expectation of how much their house is worth, especially in a buyer's market.
2) Resales simply cannot compete with builders right now. Knowing the direct profit of our homes and land costs, I can tell you that our company for example generally has a lot more leeway with price reduction than a private seller.

The community that I'm now working in has been going strong for quite a while. Just last month they sold 8 houses, and they're slated to sell even more this month. It looks like one of the clients that I've been dealing with here is going to write a contract as well. It's looking like the two sales girls here will both bang out $150k+ years. Not bad for a "down" market eh? =P

With builders across the board there have been plenty of layoffs over the past 8 months though, our company included. To help combat the negative feelings of this, we all just got basically a $20,000/year raise (for commissioned salespeople...not me for another 2 or 3 months).

[.RJ]

Thats what happened to a coworker - he bought a house, then the builders put up a new group of houses next to his, for less than what they were selling for - he couldnt sell it without taking a loss and had to rent it out.

[Apoc]

Mortgage interest moved us from a $3800 tax bill to a $300 refund. Yippee!

[.RJ]

So you spent $20k in interest to save $4000 in taxes.

Brilliant!