Good Lord, 97 month car loans introduced

[BellePrincessBelle]

Google it. 15 year mortgages weren't common until the mid-1930's, then 20.year after WWII, and 30 year in the late 1950s.

DW and my parents were of the mind set if you couldn't pay cash for a house, you either needed to save more money, or buy a smaller house. We were the first generation to even have a mortgage.

Of course, here in SAcramento one third of all home sales in 2012 were cash....and I have a friend in Pennsylvannia who is a realtor and she says half her home sales these days are cash.

What you are failing to mention is how many of those cash home purchases are being done by investors. The majority I'd bet since that is currently big business.

 

[angierae]

It's Michigan, I was telling my insurance agent we were moving to Toledo and my wife was from Michigan. Her exact words were "never move over the line your rates will quadruple." Something about how much medical you have to carry.

Michigan is a no-fault state, which is one of the things that drives up rates, but I'm still only paying $90 a month for full coverage on a 2008.

 

[JakeJenna]

Michigan is a no-fault state, which is one of the things that drives up rates, but I'm still only paying $90 a month for full coverage on a 2008.

I'm not going to go into great detail cause its really not a discussion worth having but Michigan is buy far the most expensive. A quick google search found this which kind of speaks for itself. http://www.bankrate.com/finance/insurance/most-expensive-states-auto-insurance.aspx

 

[eMd]

Of course, like I posted, given how many people are paying cash for homes now, with mortgages at historic lows, it's pretty amazing.

More people aren't paying cash for homes to LIVE in.
More home sales are paid in cash than there used to be.

Those paying in cash are the ones who are investors, hosue flippers, and those buying rental properties. These are usually people who have enough money to pay cash for a foreclosure and then pay for repairs and to fix it up.

The majority of people still cannot pay cash for house to live in.

 

[tvguy]

More people aren't paying cash for homes to LIVE in.
More home sales are paid in cash than there used to be.

Those paying in cash are the ones who are investors, hosue flippers, and those buying rental properties. These are usually people who have enough money to pay cash for a foreclosure and then pay for repairs and to fix it up.

The majority of people still cannot pay cash for house to live in.

My friends in real estate here say both are up. Certainly investors are buying more home, but the number of owner occupied homes where buyers are paying cash. Big chunk of those are folks who have been sitting on the fence for 6 years, and put their money in the stock market. With the Dow sitting at a record 14,849 as I type this, these are folks that have doubled their home since 2006,

 

[eMd]

My friends in real estate here say both are up. Certainly investors are buying more home, but the number of owner occupied homes where buyers are paying cash. Big chunk of those are folks who have been sitting on the fence for 6 years, and put their money in the stock market. With the Dow sitting at a record 14,849 as I type this, these are folks that have doubled their home since 2006,

A quick search on the internet as well as my own friends in real estate have assured me that while yes the amount of people paying cash for homes to occupy has gone up it's still not enough to be paying cash for a house as the norm.

Those who were smart and or/lucky enough to put away money into the stock market or save that amount are able to do this. This is NOT the majority of Americans.

 

[MrsPete]

Of course you won't recoup what you paid for the car. A car is an expense (and in many cities a necessary one), not an investment.

Correct, a car is not an investment. It is a depreciating asset, which means it has real value to you, but it will be worth LESS with each passing year. A person can never "get ahead" by splurging on items that lose their value, so -- although a car is a necessity for many of us -- it only makes sense to buy one that fits comfortably within one's budget.

My friends in real estate here say both are up. Certainly investors are buying more home, but the number of owner occupied homes where buyers are paying cash. Big chunk of those are folks who have been sitting on the fence for 6 years, and put their money in the stock market. With the Dow sitting at a record 14,849 as I type this, these are folks that have doubled their home since 2006,

While I have no personal knowledge on this topic, I do believe that more people'd be paying cash for (their own) houses. In past years investments were booming, and it made sense to keep a low-interest mortgage and let your money work for you in the stock market. Today that avenue is rather uncertain, so it makes sense -- for those who can do it -- to pay cash for a house. Also, I think many people are moving away from the "buy as much house as you can" concept that emerged in the 80s and are considering real-people, middle-class houses again. We've all heard stories about people being "underwater", and people who are smart enough to save enough for a house are likely to want to avoid that.

 

[eliza61]

I do think it also depends on your situation. Me and most of my friends are approaching retirement. my portfolio is up this year by double digits. i need my cash to make the most money it can in the next 4-5 years.

Would I pull out 100k to pay off a mortgage I got with a 3% interest rate? when it can be earning me 7,8,10% returns? probably not. but I'm close to retirement even if i got laid off today between severance and unemployment I'd be still pretty darn close.

so my friends and family, most are still financing (some have downsized) their retirement homes but lke I said, no one is pulling out 300k out of their portfolios when they can get the money cheaply.

The is a caveat, they do have the money to pay for it so that does bring with it a bit of security, no underwater issues.

 

[Kathi OD]

Google it. 15 year mortgages weren't common until the mid-1930's, then 20.year after WWII, and 30 year in the late 1950s.

DW and my parents were of the mind set if you couldn't pay cash for a house, you either needed to save more money, or buy a smaller house. We were the first generation to even have a mortgage.

Of course, here in SAcramento one third of all home sales in 2012 were cash....and I have a friend in Pennsylvannia who is a realtor and she says half her home sales these days are cash.

The point was, that a generation ago, 10 year mortgages were not the norm, and your googling has proved that.

In 2012, one-third of all home sales in California were cash sales. http://www.mortgagenewsdaily.com/02072013_california_cash_sales.asp

However, read all the way through...of those sales, 55% were made by investors or people buying vacation homes, not those buying their primary residence.

I'd bet your PA realtor friends figures are in pretty much the same range...with most of those cash sales going to investors or second-home buyers, or those who can take advantage of that tax break and have decided to down-size while prices are low.

 

[goofyfigment]

The point was, that a generation ago, 10 year mortgages were not the norm, and your googling has proved that.

In 2012, one-third of all home sales in California were cash sales. http://www.mortgagenewsdaily.com/02072013_california_cash_sales.asp

However, read all the way through...of those sales, 55% were made by investors or people buying vacation homes, not those buying their primary residence.

I'd bet your PA realtor friends figures are in pretty much the same range...with most of those cash sales going to investors or second-home buyers, or those who can take advantage of that tax break and have decided to down-size while prices are low.

I live in PA and I can't think of anyone I know that would be able to pay cash for their homes. The salaries in this area just aren't there and the unemployment rates are up here. I live in a pretty large city and we are 2 hours from philly, 40 minutes from the Poconos and about 2 hours from NYC.

 

[ilovemk76]

I do think it also depends on your situation. Me and most of my friends are approaching retirement. my portfolio is up this year by double digits. i need my cash to make the most money it can in the next 4-5 years.

Would I pull out 100k to pay off a mortgage I got with a 3% interest rate? when it can be earning me 7,8,10% returns? probably not. but I'm close to retirement even if i got laid off today between severance and unemployment I'd be still pretty darn close.

so my friends and family, most are still financing (some have downsized) their retirement homes but lke I said, no one is pulling out 300k out of their portfolios when they can get the money cheaply.

The is a caveat, they do have the money to pay for it so that does bring with it a bit of security, no underwater issues.

I remember a recent post where you said your home was paid for and another where you had so much money you and your kids will never run out.

 

[DisMN]

Not sure what the concern or issue is. We've always taken the longest length loan possible at the lowest rates possible to keep our payments down.

THEN what we do is when we get chunks of money we pay more down on the vehicle. We've kept our monthy payments well within budget and on a 6 year loan we usually have it paid off in 5 or less if we can. We've had 5-6 new cars during our marriage and have done it this way every time.
97 month loan? You bet yer britches we'd take that! LOL

 

[MrsPete]

Not sure what the concern or issue is. We've always taken the longest length loan possible at the lowest rates possible to keep our payments down.

THEN what we do is when we get chunks of money we pay more down on the vehicle. We've kept our monthy payments well within budget and on a 6 year loan we usually have it paid off in 5 or less if we can. We've had 5-6 new cars during our marriage and have done it this way every time.
97 month loan? You bet yer britches we'd take that! LOL

We did something similar to this with our first house: We took out a 30-year mortgage . . . but paid it on a 15 year schedule. We were just-married and didn't know how time and children would affect our budget. The key was that we were disciplined enough to actually pay the extra money each and every month. We actually paid off that house in 11 years.

It'd be very, very easy, however, for someone who isn't as disciplined to make excuses: I'm not paying anything extra this month, but two months from now I'll put in my whole bonus . . . I can't pay extra now, not at Christmas time . . . I'll just put in $20 extra this month . . . I was short on hours this month, I can't pay anything extra.

Another key is to be SURE you have a simple interest loan with no pre-payment penalty. I actually remember my high school algebra teacher teaching us about interest and having us repeat out loud over and over, "I want a simple interest loan with no pre-payment penalty." I also remember a girl in my college algebra class literally crying when we studied interest -- she was a little older than the rest of us and had just bought a house with her husband, and she'd just realized that the two of them had made bad choices.

 

[eliza61]

I remember a recent post where you said your home was paid for and another where you had so much money you and your kids will never run out.

My home is paid for. I was using myself in an example of how different scenerios will garner different situations.
Some one mentioned that more and more people are paying for houses with cash. I was explaining how for some situations this may not be the best thing to do.

My husband recently passed away and due to insurance, selling of his share of his business and other investments (401K's, pensions and stocks), we were able to take care of a boat load of things.

That being said, most of my friends and I are in the situation where we are toying with retiring and have very low mortgage rates. so now we are looking into moving, downsizing or buying a second homes in the south. I'm looking in purchasing a condo in center city philadelphia for when I downsize. I got an approval for a mortgage at 3.25%. NJ has an exit tax of any where between 6-12% so I may keep my current home and rent it out for 3 years until I acquire residency in another state and take out a mortgage for where ever I move to. I believe after the 3 years I can selll my house in NJ without penality

so would I take money out of investments paying me 8, 9,10% to purchase a home with cash? My 401K is up 8.62% as of today. YTD stocks are up 13%
No probably not.

Sorry for the confusion.

 

[ilovemk76]

My home is paid for. I was using myself in an example of how different scenerios will garner different situations.
Some one mentioned that more and more people are paying for houses with cash. I was explaining how for some situations this may not be the best thing to do.

My husband recently passed away and due to insurance, selling of his share of his business and other investments (401K's, pensions and stocks), we were able to take care of a boat load of things.

That being said, most of my friends and I are in the situation where we are toying with retiring and have very low mortgage rates. so now we are looking into moving, downsizing or buying a second homes in the south. I'm looking in purchasing a condo in center city philadelphia for when I downsize. I got an approval for a mortgage at 3.25%. NJ has an exit tax of any where between 6-12% so I may keep my current home and rent it out for 3 years until I acquire residency in another state and take out a mortgage for where ever I move to. I believe after the 3 years I can selll my house in NJ without penality

so would I take money out of investments paying me 8, 9,10% to purchase a home with cash? My 401K is up 8.62% as of today.
No probably not.

Sorry for the confusion.

I remembered you lost your DH, so having a paid off house was not a surprise. Life insurance could have been used to pay it off.

I agree as long as the market increases. If a person would have sold their investments in 2007 and paid off their home, the person could have been ahead even with the fall in house prices.


I saw your thread about retiring before 57. I am planning on 58.

Our home is paid off. We are not planning to downsize when we enter retirement. In our later years that may happen. Selling a paid off house would allow the purchase of a smaller house cash. The OP fails to see that many who pay cash are not first time home buyers. Most do not have that kind of cash at 25 or even 30.

He tells how his parents bought a house case 50 years ago, and it still has the 50 year old carpet. That is not such a great feat considering 50 years ago his father was in his 50s.

My grandparents were born just after his father. They lived with an aunt, who had a larger home, until after their third child was born (over 10 years). Then they bought a home with a 20 year mortgage.