Was Anyone Else As Stupid As Us (and probably 1/2 of my neighbors)

[ruadisneyfan2]

Our mortgage has been at 800 dollars a month for 20 years. We haven't made an effort to pay it off early because it's so cheap. We could easily rent our house out for 2500-2700. It's something we might do if we move to Florida.

Anyone buying our house with 20% down would be paying 2700 a month. We could afford it but we wouldn't be spending 20k a year traveling. A lot of people are just working to pay a mortgage. We've been fortunate we've never been in that boat.

Have you ever run a mortgage payoff calculator to find out how much you would save by paying it off? I realize the monthly payment is comprised of mostly principal in later years but it still saved us thousands to pay it off 5 years early. Not to mention the glorious feeling of being able to put that money to better use. When we want to save for something, it happens much more quickly without having to send $1282 to the bank every month.

 

[DCLMP]

Have you ever run a mortgage payoff calculator to find out how much you would save by paying it off? I realize the monthly payment is comprised of mostly principal in later years but it still saved us thousands to pay it off 5 years early. Not to mention the glorious feeling of being able to put that money to better use. When we want to save for something, it happens much more quickly without having to send $1282 to the bank every month.

We are just about paid off. Probably should have made it more of a priority. My husband went through a lay off the last recession which set us a back a bit.

 

[greeneyedchick]

Absolutely not. What you own matters because a house can be a far, FAR deeper money pit than a rental. In a rental you’re out your rent. In a house you can be out tens of thousands of dollars if you bought a lousy house just fixing all the crap that breaks, and you lose about 10% straight up off the price you paid for the house in commissions and misc fees between your purchase and sale of the house and of course there is the cost of maintenance. Which most people underestimate. In my neighborhood in CA you can drive around and see what houses were recently bought because their yards look like crap. They bought great houses- but they stretched so far they can’t even afford the gardening to keep it up. I shudder to think what differed maintenance is piling up inside the houses.

I agree. I used to be a "always buy, never rent" person. We've owned homes for over 25 years. However, we now live in FL and need a new roof. We have 5 leaks. We put in a claim with our insurance. They left the state and refused the claim. Due to the insurance situation in FL, we could only find 1 company to insure us with an open claim (insurance costing us $10,000 a year) and because we did file the claim, we have to replace the roof. The estimates we are getting are for arounf $120,000. We don't have the money. We can't sell our home unless we can find a cash buyer who is comfortable taking a risk that they won't be able to get homeowner's insurance until they replace the roof. Due to the custom tile order, we're told it takes a minimum of 6 months (our HOA will not allow anything but a spanish tile roof). I feel trapped. We can't afford to keep paying the insurance premiums (they were $2,000/ year when we moved here 5 years ago) and replace the roof. We have our claim with the FL state insurance agency that took over our the insolvent insurance company. We are holding out hope that we will get something. I totally regret filing the claim (we have never filed one before). But in the end, if I we had rented, none of this would be our problem. We can usually handle unexpected repairs but $120,000 is more than we have laying around. Interest rates for roofing loans are high. Our best option is to replace the roof and sell immediately to pay back the loan ,if we can get one) before we pay too much interest. It's sad because I love this house. I have now sworn that when we sell this house, we're renting.

 

[DCLMP]

I agree. I used to be a "always buy, never rent" person. We've owned homes for over 25 years. However, we now live in FL and need a new roof. We have 5 leaks. We put in a claim with our insurance. They left the state and refused the claim. Due to the insurance situation in FL, we could only find 1 company to insure us with an open claim (insurance costing us $10,000 a year) and because we did file the claim, we have to replace the roof. The estimates we are getting are for arounf $120,000. We don't have the money. We can't sell our home unless we can find a cash buyer who is comfortable taking a risk that they won't be able to get homeowner's insurance until they replace the roof. Due to the custom tile order, we're told it takes a minimum of 6 months (our HOA will not allow anything but a spanish tile roof). I feel trapped. We can't afford to keep paying the insurance premiums (they were $2,000/ year when we moved here 5 years ago) and replace the roof. We have our claim with the FL state insurance agency that took over our the insolvent insurance company. We are holding out hope that we will get something. I totally regret filing the claim (we have never filed one before). But in the end, if I we had rented, none of this would be our problem. We can usually handle unexpected repairs but $120,000 is more than we have laying around. Interest rates for roofing loans are high. Our best option is to replace the roof and sell immediately to pay back the loan ,if we can get one) before we pay too much interest. It's sad because I love this house. I have now sworn that when we sell this house, we're renting.

That’s crazy. Why so much. How much is hurricane insurance in Florida?

 

[auralia]

Our mortgage has been at 800 dollars a month for 20 years. We haven't made an effort to pay it off early because it's so cheap. We could easily rent our house out for 2500-2700. It's something we might do if we move to Florida.

Anyone buying our house with 20% down would be paying 2700 a month. We could afford it but we wouldn't be spending 20k a year traveling. A lot of people are just working to pay a mortgage. We've been fortunate we've never been in that boat.

When you put it that way if we cut out vacations we could afford today prices, but that would just be living to work. It just seems crazy that a married couple both with masters degrees and just 2 kids has to pick between a house in a good school district or vacations that said I only work part time so the kids have someone at home more (young teens) so I could easily work more with minimum needed child expenses. But I feel so bad for those just starting out.

 

[starry_solo]

I agree. I used to be a "always buy, never rent" person. We've owned homes for over 25 years. However, we now live in FL and need a new roof. We have 5 leaks. We put in a claim with our insurance. They left the state and refused the claim. Due to the insurance situation in FL, we could only find 1 company to insure us with an open claim (insurance costing us $10,000 a year) and because we did file the claim, we have to replace the roof. The estimates we are getting are for arounf $120,000. We don't have the money. We can't sell our home unless we can find a cash buyer who is comfortable taking a risk that they won't be able to get homeowner's insurance until they replace the roof. Due to the custom tile order, we're told it takes a minimum of 6 months (our HOA will not allow anything but a spanish tile roof). I feel trapped. We can't afford to keep paying the insurance premiums (they were $2,000/ year when we moved here 5 years ago) and replace the roof. We have our claim with the FL state insurance agency that took over our the insolvent insurance company. We are holding out hope that we will get something. I totally regret filing the claim (we have never filed one before). But in the end, if I we had rented, none of this would be our problem. We can usually handle unexpected repairs but $120,000 is more than we have laying around. Interest rates for roofing loans are high. Our best option is to replace the roof and sell immediately to pay back the loan ,if we can get one) before we pay too much interest. It's sad because I love this house. I have now sworn that when we sell this house, we're renting.

are there no tiles left at all on your roof?
wow! Hmm… is it Worth it to just stop paying the mortgage and consider what you’ve put in “rent”?

 

[ruadisneyfan2]

I agree. I used to be a "always buy, never rent" person. We've owned homes for over 25 years. However, we now live in FL and need a new roof. We have 5 leaks. We put in a claim with our insurance. They left the state and refused the claim. Due to the insurance situation in FL, we could only find 1 company to insure us with an open claim (insurance costing us $10,000 a year) and because we did file the claim, we have to replace the roof. The estimates we are getting are for arounf $120,000. We don't have the money. We can't sell our home unless we can find a cash buyer who is comfortable taking a risk that they won't be able to get homeowner's insurance until they replace the roof. Due to the custom tile order, we're told it takes a minimum of 6 months (our HOA will not allow anything but a spanish tile roof). I feel trapped. We can't afford to keep paying the insurance premiums (they were $2,000/ year when we moved here 5 years ago) and replace the roof. We have our claim with the FL state insurance agency that took over our the insolvent insurance company. We are holding out hope that we will get something. I totally regret filing the claim (we have never filed one before). But in the end, if I we had rented, none of this would be our problem. We can usually handle unexpected repairs but $120,000 is more than we have laying around. Interest rates for roofing loans are high. Our best option is to replace the roof and sell immediately to pay back the loan ,if we can get one) before we pay too much interest. It's sad because I love this house. I have now sworn that when we sell this house, we're renting.

This is a nightmare. I'm sorry to hear this. I don't even have a solution to offer.
Were the leaks in your roof storm related? Or do people there file claims for maintenance problems? I'm not meaning to be snarky but around here, needing a new roof would be considered part of "upkeep" and would only file a claim if something caused damage. Is the insurance claim not paying to replace the roof?

I remember dh complaining many years ago, maybe 2005, about our property taxes here in NJ and how much lower they are in FL. Then he chatted with his brother who lives in FL about his homeowner's insurance, which was $5000/year back then while ours was around $900/year. I don't even know what they're up to now but it's really out of control from what I've been hearing & reading.

 

[greeneyedchick]

That’s crazy. Why so much. How much is hurricane insurance in Florida?

I don't know how much hurricane insurance costs. We don't have hurricane insurance. It's not included in our homeowner's. I live near Orlando. Since we're central, we're at low risk for a hurricane. Mine is so much because we have an open roof claim and an old roof. Insurance companies don't want to insure any roof older that 15 years and they don't want to insure homes built before 2005.

 

[greeneyedchick]

This is a nightmare. I'm sorry to hear this. I don't even have a solution to offer.
Were the leaks in your roof storm related? Or do people there file claims for maintenance problems? I'm not meaning to be snarky but around here, needing a new roof would be considered part of "upkeep" and would only file a claim if something caused damage. Is the insurance claim not paying to replace the roof?

I remember dh complaining many years ago, maybe 2005, about our property taxes here in NJ and how much lower they are in FL. Then he chatted with his brother who lives in FL about his homeowner's insurance, which was $5000/year back then while ours was around $900/year. I don't even know what they're up to now but it's really out of control from what I've been hearing & reading.

We moved here from NJ. Our house in NJ there was built in 1932 and had the original PA slate roof. Insurance was definitely cheaper in NJ. The leaks were caused by wind damage. We had been paying for roof maintenance every year since moving in. We would replace cracked or missing tiles and make any necessary repairs. However, there are some rules in FL which make it costly for insurance companies. They are required to match the roof tiles (our roof tiles aren't made any more) and that if the damage exceeds a certain percentage of the roof, they have to replace the roof with the newer standard material. That then requires them to replace the whole roof in order to install the newer materials and match the tiles. The roofing companies were going around promising everyone new roofs by using this loop hole which drove up insurance claim costs and drove the insurance companies out of FL. I have had over 10 roofing companies out to give me estimates and they won't even give me quotes for repairing the roof. They only do full roof replacements.

 

[Starport Seven-Five]

Have you ever run a mortgage payoff calculator to find out how much you would save by paying it off? I realize the monthly payment is comprised of mostly principal in later years but it still saved us thousands to pay it off 5 years early. Not to mention the glorious feeling of being able to put that money to better use. When we want to save for something, it happens much more quickly without having to send $1282 to the bank every month.

You also have to consider other options with those funds you would use to pay off the house. We're sitting on a 30 year at 2.5%... I can beat that with a savings account.

 

[ruadisneyfan2]

You also have to consider other options with those funds you would use to pay off the house. We're sitting on a 30 year at 2.5%... I can beat that with a savings account.

True, but there's nothing like the feeling of being 100% debt free.

The last $33k we owed on ours we pulled from a non-retirement Vanguard fund in Oct 2021. It tanked 2 months later so we feel extremely lucky. Our initial investment was $17k only 3 years prior.

 

[DCLMP]

I don't know how much hurricane insurance costs. We don't have hurricane insurance. It's not included in our homeowner's. I live near Orlando. Since we're central, we're at low risk for a hurricane. Mine is so much because we have an open roof claim and an old roof. Insurance companies don't want to insure any roof older that 15 years and they don't want to insure homes built before 2005.

Is this just in Florida? We've never had trouble getting home owners insurance.

 

[barkley]

Some one I know bought a house with a 5 year balloon payment. I.e., nice low rate with the balance of the mortgage due in 5 years all at once, thereby allowing them to buy a house that was out of their price range. The intent was that they would refinance in 5 years. These were possibly the most financially irresponsibly people I've ever known and, despite making a nice income, were always living pay check to pay check. It was a disaster I knew would happen from the day they told me about their "creative" solution. They didn't lose the house, but it was really close.

while the housing 'bubble burst' is thought of occuring back in '08 the neighborhood we lived in at the time was experiencing massive 'ballon' pops that had been occuring for 2 years and had already destroyed the market. SO MANY of our newer neighbors had bought with balloons and while many were not bad mananging their money the projections on how much their incomes and expenses would be when those loans came due 3-5 years down the line just did'nt pan out. between unrealized income increases, higher expenses and for many-the inability to refi and eliminate PMI which was a HUGE selling point of these mortgages-they were stuck.

 

[Starport Seven-Five]

True, but there's nothing like the feeling of being 100% debt free.

I'm a bit weird I guess because I don't find debt that I have the money to cover to be a mental burden. I just view it as one of 6 bills I have to schedule a payment for.

 

[QueenIsabella]

I'm a bit weird I guess because I don't find debt that I have the money to cover to be a mental burden. I just view it as one of 6 bills I have to schedule a payment for.

I'm with you--we could pay off our mortgage at any time, but we have such a good interest rate, it doesn't make sense. That said, I can respect the people who want to be completely debt free. If that's what helps them sleep at night, who am I to tell them they're wrong?

 

[ruadisneyfan2]

Dh is 65. He doesn't want to retire anytime soon but I like the feeling of that money going into savings instead of giving it to the bank. I don't want to still be paying a mortgage while retired.

 

[QueenIsabella]

Dh is 65. He doesn't want to retire anytime soon but I like the feeling of that money going into savings instead of giving it to the bank. I don't want to still be paying a mortgage while retired.

I used to say that, too, but now we have a mortgage with a really low interest rate, so we'll see. We're also staring at 3 college tuitions for the foreseeable future, so we're not feeling flush at the moment.

 

[DLgal]

No one is vilifying renting, but there is a lot of money to be made in real estate. You are not preserving wealth by renting.

Rudimentary example using real numbers from my life:

Rent is $4200 per month.

Buying a home at today's local prices and rates: $8500+ monthly housing payment. This includes a $250,000 down payment. House is $1,250,000 in an area with 1.9% total property taxes.

The $4300 monthly difference and the $250,000 down payment instead gets invested in an ETF. In 30 years, conservatively (assuming 7% annual growth) I'll have more money than that house will ever be worth in my or my kids lifetimes. I'll have somewhere around $7.1 million dollars. The house, historically, can be expected to appreciate 3% per year over time. In 30 years, it would be worth something like $3.1M.

This is how renters "build wealth" while renting. The stock market has ALWAYS outperformed the housing market.

This works when rents are lower than mortgage payments, but ALSO works when you take ANY extra you would have had to set aside for maintenance, property taxes, and insurance and invest it every month while continuing to pay a fixed monthly rent.

 

[DLgal]

True, but there's nothing like the feeling of being 100% debt free.

This is another reason why I am okay with renting. We have been debt free for years now and net worth is all liquid, not tied up in the house we live in. That makes me sleep well at night.

I feel like having a million dollar mortgage would mess with my head and stress me out way too much to enjoy life.

 

[RoseGold]

The only lucky thing is we were able to get our rate locked in at the time of signing our contract. Plus the Builder brought our rate down to 4.25%, which is much better than we could have done anywhere else.

I'm very confused by the math in this thread. That was a mediocre fixed mortgage in summer 2022. It was was a complete rip off for an ARM. It sounds like you didn't shop the loan at all? And builder are giving out loans in Florida? What on earth?

I would go sit down with your banker at an actual bank and come up with some options. If I were going to refinance, I would want to do it now. And I would want to talk to actual bankers with actual math. You can do this with a mortgage broker as well, there are many professionals who can help you with this who aren't builders.