Being poor has nothing to do with income.

[fintstone]

I must say that having highly mortgaged property with interest rates below inflation/appreciation has been pretty lucrative (long term) for me. It provides a lot of leverage. If you buy while prices are down (even if interest rates are going up), your income or rent will go up with inflation while your payment will stay relatively the same (other than tax and insurance rates). If interest rates subsequently come down, values of homes will usually rise significantly (as payments go down). Your income and rents will not come down, but if you refinance, the payments will (and certainly with respect to the market). The key is to just not get to the point where you cannot pay the mortgage/s. Of course, as you get older, you may prefer less risk/volatility.

[Rick Lee]

Here's one that kind of threw me for a loop. This guy is 73 or so, Vietnam vet, lifelong heavy smoker, lives in a hovel, has an F150 and a Harley. He acted like he'd won the lottery when he refi'ed his house two yrs ago. Paid off his car and bike, refi'ed into another 30 yr note. I think he ended up with an extra $700/mo to play with. For someone my age, that'd have been a terrible deal. But he's single, not close with his kids and he won't live long enough to make a dent in that new loan balance. He's obviously amortizing the car and bike loans from five or seven years into 30, plus all the closing costs. But it will be someone else's problem when he dies. I wrote him a $10k policy, so his kids will easily be able to cover the cremation with that, and then he'll get the VA burial benefit. Sometimes it just matters how old you are when you make bad financial decisions.

[stevej37]

^^^ How does a 73 year old get accepted for a 30 year note??

[Rick Lee]

I don't know if he'd never used his VA benefit or what. But when rates get stupid low, lenders get creative to keep their existing customers on the books.

My folks are a few yrs older and refi'ed a few years ago. They're filthy rich, but keep the mortgage because their cash was earning far more elsewhere at the time. They had a hard time qualifying due to lack of income (never mind the huge net worth). My dad said to the loan officer, "If I make $500k/year, I could lose that job the day after the loan closes and not be able pay my mortgage. But you can see our SS# alone is enough to cover everything and more, and that won't ever go away in our lifetimes." I actually think the lender had to get an exception from Fannie/Freddie for them, something about their loan being 20-30% of the home's value. But my folks will jump through hoops to save pennies.

[911 Rod]

Some would say everyone here is lucky to not have any debt.
We say luck had nothing to do with it!

[flatbutt]

Originally Posted by stevej37

^^^ How does a 73 year old get accepted for a 30 year note??

Seriously how does that work?

[Rick Lee]

Age discrimination is illegal.

[fintstone]

My wife and I have had this talk about paying off mortgages. At one time we had a great deal of money in mortgages. Especially our rentals. Over time, we have paid most off. This gives us great cash flow going into retirement (plus we have pensions). About 7 years ago, we bought a lot bigger house and then about 5 years ago, a vacation home. Both had mortgages. We knew that we would not be able to pay both off prior to retirement but decided that was not an issue as our retirement income/cash flow was plenty high to afford both (probably as high as when we worked or more) and we would probably have nowhere to spend it otherwise. It was a pretty good decision as it gave us a much better place to live and both homes have increased in value while we were able to reduce interest rates significantly by refinance. The only reason we were living frugally to pay off homes would be to provide a bigger inheritance to kids that do/did not work as hard or live as frugally as we did. As it is, they will do very well as we have investments and other paid off rentals and homes.

[stevej37]

On my 80th...I'm signing up for a 30 year...lol

[stevej37]

^^^ That's a 30 year mortgage....or a 30 year old blonde.

[Seahawk]

Originally Posted by fintstone

I must say that having highly mortgaged property with interest rates below inflation/appreciation has been pretty lucrative (long term) for me. It provides a lot of leverage.

It does. Again, wealth is not income.

When we bought the house in SC a few years ago, just under $600k, interest rates were excellent, appreciation curves on houses were also excellent and I had a renter within 24 hours that covered the mortgage and taxes.

The house has appreciated quite a bit, may return some of that, but it is income neutral...meaning beyond maintenance, the house isn't costing me anything. The math suggested I not liquidate funds to buy the house outright since my investments have been positive and interest rates were low at the time so I settled on the right mix to eliminate certain mortgage fees and expenses.

If the underlying math and assumptions change, I'll adjust.

This is HS Econ stuff...the crime is we don't teach it today. Civics and home economics...get some.

[KFC911]

Originally Posted by stevej37

On my 80th...I'm signing up for a 30 year...lol

I'll have to wait a bit longer .... the 6 figure truck loan I get for my 75th b-day comes first

[stevej37]

My first home mortgage in 1982 was at 15% interest balloon payment.
At the end of 3 years it was re-examined.

Luckily rates started dropping.

[KFC911]

A lot of this goes back to cheap, easy credit ... the "opiate of the masses". When I was in college, there were NO credit cards being used by anybody .... none. I knew a buncha folks that lost their gigs around 50 .... made a LOT of $$$, and were sweating bullets because they were essentially a paycheck away from being unable to afford their lifestyle and house payment .

The facade ain't real for many ....

[Seahawk]

Originally Posted by KC911

...made a LOT of $$$, and were sweating bullets because they were essentially a paycheck away from being unable to afford their lifestyle and house payment ...

My favorite Finance prof (real world guy) called that not giving yourself a financial prenup.

Easy to get a loan, get married, hard to recover if you don’t plan in advance.

Always have a reality based exit strategy.

[Sooner or later]

My sister teaches 8th grade. She enters groups of her students into the Oklahoma stock market game. One of her groups just won their district (6 in Oklahoma) for having the highest return. This is the 3rd time she has entered some kids, her kids have won 2 of the 3 they have entered. The 1st group doubled the S&P return. Other than winning I am not sure how well this latest winning group did.

Oklahoma requires some type of finance to graduate. The following is the personal finance class that Lawton Public Schools offers .

Personal Financial Literacy
EHS, LHS, MHS
Grades offered: 9, 10, 11, 12
Length of course: 1 semester - .50 credit
This course will encompass 14 topics as set forth by
the Oklahoma Legislature mandating students become
proficient in personal finance. Topics covered will
include personal income, budgeting, taxes, banking,
managing a checking account, savings and investments,
retirement, borrowing money, credit/credit risks, con￾sumer fraud and identity theft, renting/buying a home,
risk management insurance, impact and consequences
of gambling, bankruptcy, and charitable giving.
Students are required to take this course if they do not gain credit for
the 14 required topics in any other designated course such as Math of
Finance or Economic

[Sooner or later]

[Seahawk]

Originally Posted by Sooner or later

My sister teaches 8th grade. She enters groups of her students into the Oklahoma stock market game. One of her groups just won their district (6 in Oklahoma) for having the highest return. This is the 3rd time she has entered some kids, her kids have won 2 of the 3 they have entered. The 1st group doubled the S&P return. Other than winning I am not sure how well this latest winning group did.

There is nothing not to love about the above.

[KFC911]

But I don't wanna move to Lawton and repeat the 8th grade for the 3rd time !

That's simply awesome SOL

[Sooner or later]

District winners get to go to a luncheon at the Oklahoma City Branch of the Kansas City Federal Reserve to make a presentation on their stock picking methodology. Each presentation is graded and an overall winner is determined. The 2021 presentation was canceled due to Fed Reserve covid restrictions. As of now, this year is still a go.