New To Investing Thread

[catastrophe]

The wife is in kind of a strange job where it’s not run by the state but I guess since they provide benefits to city employees they get a similar pension style retirement instead of social security. Seems pretty much the same as SS except there’s a sweet deal that no matter when you started you can retire after like 25 years if you can stick it out that long. Otherwise gotta wait until you’re 65 to collect.

[Kat Kid]

On a different note, two great investment books I just tore through:

How I Invest My Money by Josh Brown

A series of short pieces by a variety of financial industry people describing how they invest their own money. Great read.

An even better book is The Psychology of Money by Morgan Housel and it has 20 short chapters with one lesson and some really great numbers that drive home notions that I had in my head but still very powerful lessons, like about compounding interest, or that stonks only go up, but also really good insight in to why people make financial decisions based on their own experiences and the context they are in.

[sys]

This could easily be true for a property that cost a couple hundred thousand. But if you bought a $1-2 million home, I’m pretty confident it’s not gonna consistently appreciate 7-10% a year.

it's the leverage that does it.

[sys]

this is maybe getting more political, but people don't realize what an amazing gift from the govt the 30 year fixed rate mortgage is.  these do not exist in most countries! 

[IPA4Me]

this is maybe getting more political, but people don't realize what an amazing gift from the govt the 30 year fixed rate mortgage is.  these do not exist in most countries!

There's was talk of removing it within the last few years

Sent from my moto g power using Tapatalk

[puniraptor]

My understanding is most mortgages here (Japan) are 40+ but the rate is dependent on your personal situation. Like if you took a lower paying job or lost your job your rate would go up. Sounds like a terrifying enslaving death spiral.

[puniraptor]

My understanding is most mortgages here (Japan) are 40+ but the rate is dependent on your personal situation. Like if you took a lower paying job or lost your job your rate would go up. Sounds like a terrifying enslaving death spiral.

Nope 35 years is the cap.

[wetwillie]

this is maybe getting more political, but people don't realize what an amazing gift from the govt the 30 year fixed rate mortgage is.  these do not exist in most countries!

There's was talk of removing it within the last few years

Sent from my moto g power using Tapatalk

What does the govt have to do with mortgage length? 

[KITNfury]

this is maybe getting more political, but people don't realize what an amazing gift from the govt the 30 year fixed rate mortgage is.  these do not exist in most countries!

There's was talk of removing it within the last few years

Sent from my moto g power using Tapatalk

What does the govt have to do with mortgage length?

Fannie /Freddie

[IPA4Me]

this is maybe getting more political, but people don't realize what an amazing gift from the govt the 30 year fixed rate mortgage is.  these do not exist in most countries!

There's was talk of removing it within the last few years

Sent from my moto g power using Tapatalk

What does the govt have to do with mortgage length?

Fannie /Freddie

Yep. They're something like 80% of the 30-year market. If they drop them, the 30-year loan is gone.


https://www.americanbanker.com/opinion/dont-let-the-30-year-mortgage-sway-housing-policy

[wetwillie]

this is maybe getting more political, but people don't realize what an amazing gift from the govt the 30 year fixed rate mortgage is.  these do not exist in most countries!

There's was talk of removing it within the last few years

Sent from my moto g power using Tapatalk

What does the govt have to do with mortgage length?

Fannie /Freddie

Yep. They're something like 80% of the 30-year market. If they drop them, the 30-year loan is gone.


https://www.americanbanker.com/opinion/dont-let-the-30-year-mortgage-sway-housing-policy

Didn’t realize that, so the thought is the marketplace without federal backing would only be willing to take on 15 years or less?

[IPA4Me]

Yep. That was the marketplace before the feds starting backing them.

[catastrophe]

This could easily be true for a property that cost a couple hundred thousand. But if you bought a $1-2 million home, I’m pretty confident it’s not gonna consistently appreciate 7-10% a year.

it's the leverage that does it.

I was wondering what you would do to calculate the actual return, but even looking purely at what you put in vs. get back, does that take into account the interest paid and property tax? I guess if you wanted to be super precise, you’d also factor in cost of maintenance into the ROI equation since that’s an expense renters don’t have.

[chum1]

so the thought is the marketplace without federal backing would only be willing to take on 15 years or less?

Yep. That was the marketplace before the feds starting backing them.

Which means you had to have quite a bit of money in order to afford a home.

To continue getting political, I suppose there's probably a reason home ownership comes up in discussions of wealth inequality.

[IPA4Me]

so the thought is the marketplace without federal backing would only be willing to take on 15 years or less?

Yep. That was the marketplace before the feds starting backing them.

Which means you had to have quite a bit of money in order to afford a home.

To continue getting political, I suppose there's probably a reason home ownership comes up in discussions of wealth inequality.

The flip side is the 30 year mortgage increases home prices by driving demand.

[Phil Titola]

Just got 2.5% on a 30 year. Amazingly cheap money.

[IPA4Me]

Yep. We're applying tomorrow. Rates are looking nice.

[michigancat]

so the thought is the marketplace without federal backing would only be willing to take on 15 years or less?

Yep. That was the marketplace before the feds starting backing them.

Which means you had to have quite a bit of money in order to afford a home.

To continue getting political, I suppose there's probably a reason home ownership comes up in discussions of wealth inequality.

Even with a thirty year fixed the amount of capital you need is still high enough to exclude a large portion of people. It's kinda messed up!

[sys]

I was wondering what you would do to calculate the actual return, but even looking purely at what you put in vs. get back, does that take into account the interest paid and property tax? I guess if you wanted to be super precise, you’d also factor in cost of maintenance into the ROI equation since that’s an expense renters don’t have.

i was not attempting to be precise, but i think if you were to try a real accounting that you'd have to calculate your all-in costs minus an imputed rent.  all with some sort of discount rate for when the costs and offsets occurred.

in my case, my imputed rent is higher than my cost of ownership, so while i don't have a precise figure, i'm pretty confident in the general direction.

[sys]

What does the govt have to do with mortgage length?

the rate wouldn't be fixed either.   and they'd be a lot more rigorous about down payments.

[IPA4Me]

I bought my first and second home with no money down. VA loan the first time. Second one was 80% primary and 20% HELOC. Refi two years later into one loan at a ridiculously low rate for 2008. Drooling over this next loan opportunity for our dream horse farm.

[KITNfury]

so the thought is the marketplace without federal backing would only be willing to take on 15 years or less?

Yep. That was the marketplace before the feds starting backing them.

Which means you had to have quite a bit of money in order to afford a home.

To continue getting political, I suppose there's probably a reason home ownership comes up in discussions of wealth inequality.

Even with a thirty year fixed the amount of capital you need is still high enough to exclude a large portion of people. It's kinda messed up!

I think fha loan is 3.5% down. I understand some people can't scrape that together due to very low income, but that's pretty freaking low barrier for most people that spend wisely.

[michigancat]

so the thought is the marketplace without federal backing would only be willing to take on 15 years or less?

Yep. That was the marketplace before the feds starting backing them.

Which means you had to have quite a bit of money in order to afford a home.

To continue getting political, I suppose there's probably a reason home ownership comes up in discussions of wealth inequality.

Even with a thirty year fixed the amount of capital you need is still high enough to exclude a large portion of people. It's kinda messed up!

I think fha loan is 3.5% down. I understand some people can't scrape that together due to very low income, but that's pretty freaking low barrier for most people that spend wisely.

It's not low at all when the median sale price in the county is over a million and then you'd have a ridiculously high payment. And I don't even think the FHA will give loans high enough.

https://www.bayareamarketreports.com/trend/oakland-berkeley-real-estate-market-conditions-prices

[kim carnes]

so the thought is the marketplace without federal backing would only be willing to take on 15 years or less?

Yep. That was the marketplace before the feds starting backing them.

Which means you had to have quite a bit of money in order to afford a home.

To continue getting political, I suppose there's probably a reason home ownership comes up in discussions of wealth inequality.

Even with a thirty year fixed the amount of capital you need is still high enough to exclude a large portion of people. It's kinda messed up!

I think fha loan is 3.5% down. I understand some people can't scrape that together due to very low income, but that's pretty freaking low barrier for most people that spend wisely.

It's not low at all when the median sale price in the county is over a million and then you'd have a ridiculously high payment. And I don't even think the FHA will give loans high enough.

https://www.bayareamarketreports.com/trend/oakland-berkeley-real-estate-market-conditions-prices

I’d recommend anyone trying to get an fha loan gtfo of the Bay Area. 

[Kat Kid]

No offense Rusty but the Bay Area is the most extreme example in the most extreme state so not really relevant.