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PRS Guitars 08-24-2018 02:18 PM


Originally Posted by CowboyPilot79 (Post 2661368)
Will do. I didn't really expect them to take the CJO but I figured if I could show them a start date that would make them happy. We could pay cash for it so that may be what ends up happening at this rate. I just didn't want to have that much cash tied up right now.

Well done! Just pay cash and be done with it, way better not having a payment and if the economy tanks and furloughs happen, pretty nice owning your home.

CowboyPilot79 08-24-2018 02:24 PM

We own the house we are in now, my plan was to pay off the new one when this one sold anyway, just don't want to be sitting on two houses with very little margin until the new job is settled in. We are maxing out retirement already and have money going to kids school too. I'm actually hoping to be cash heavy when the economy dips again and gobble up some rent properties.

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jcountry 08-25-2018 08:51 AM


Originally Posted by Otterbox (Post 2661540)
Pay cash now... cash out refi later once income has stabilized or, or Max out the 401k and the IRAs as soon as possible with the savings from the lack of mortgage payments.

Yes.

Pay cash.

The interest on a mortgage is insidious.

Most people just look at the monthly payment, but over the course of a mortgage, you pay for a house at least twice.

I like the idea of putting the money you would have spent into retirement accounts also.

Pay yourself in terms of tax advantaged savings and let it grow. And no matter what-donít touch it until you actually retire.

Arado 234 08-25-2018 01:34 PM


Originally Posted by jcountry (Post 2661897)
Yes.

Pay cash.

The interest on a mortgage is insidious.

Most people just look at the monthly payment, but over the course of a mortgage, you pay for a house at least twice.

I like the idea of putting the money you would have spent into retirement accounts also.

Pay yourself in terms of tax advantaged savings and let it grow. And no matter what-donít touch it until you actually retire.

Additionally, make extra principle payments every month if your mortgage doesnít have a pre payment penalty clause. That'll save you tens of thousands over a 30 year mortgage period.

Al Czervik 08-25-2018 02:14 PM


Originally Posted by jcountry (Post 2661897)
Yes.

Pay cash.

The interest on a mortgage is insidious.

Most people just look at the monthly payment, but over the course of a mortgage, you pay for a house at least twice.

I like the idea of putting the money you would have spent into retirement accounts also.

Pay yourself in terms of tax advantaged savings and let it grow. And no matter what-donít touch it until you actually retire.

mortgage 3.2%
investments 15-18%

CowboyPilot79 08-25-2018 02:33 PM


Originally Posted by Al Czervik (Post 2662035)
mortgage 3.2%
investments 15-18%

Here it goes...lol

There are valid arguments on both sides of this debate, it really comes down to ORM. Our risk acceptance level is much lower, the only reason we are considering a mortgage on this house is to get wife and kids moved and expecting our current place may sit for as long as a year on the market. Once it sells we will pay off the other house. We *could* pay cash now for this one too but that leaves us with very little margin, $400k+ tied up in houses and most likely two months until I start indoc. No room for hiccups. We are willing to eat the $3k and some interest until we pay it off to avoid being that close to the line on our available cash. We aren't willing to play the market gap long term. Just not for us.

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jcountry 08-25-2018 03:54 PM


Originally Posted by CowboyPilot79 (Post 2662042)
Here it goes...lol

There are valid arguments on both sides of this debate, it really comes down to ORM. Our risk acceptance level is much lower, the only reason we are considering a mortgage on this house is to get wife and kids moved and expecting our current place may sit for as long as a year on the market. Once it sells we will pay off the other house. We *could* pay cash now for this one too but that leaves us with very little margin, $400k+ tied up in houses and most likely two months until I start indoc. No room for hiccups. We are willing to eat the $3k and some interest until we pay it off to avoid being that close to the line on our available cash. We aren't willing to play the market gap long term. Just not for us.

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Iíd also be VERY selective right now.

Many markets are way overheated.

The real estate market will likely collapse (or at least aggressively correct) over the next couple of years. Donít want to be 100 k upside down on something you canít sell if life happens.

No matter how you choose to work things, definitely have enough of a down payment to avoid PMI (private mortgage insurance.) That is ďinsuranceĒ which covers only the bank and which you pay 100% yet benefit from in no way. Itís throwing money in a pile and burning it.

PMI should be illegal. Itís like paying a royalty to the guy who stole your TV-just to watch him stick it in his car.

Definitely-Most Definitely do get title insurance. It is ultra cheap-and will save your ass if someone makes a clerical error somewhere along the title trail.

Name User 08-25-2018 04:30 PM


Originally Posted by Arado 234 (Post 2662018)
Additionally, make extra principle payments every month if your mortgage doesnít have a pre payment penalty clause. That'll save you tens of thousands over a 30 year mortgage period.

Save? No. It will cost you. But peace of mind has a price, too.

Arado 234 08-25-2018 07:30 PM


Originally Posted by Name User (Post 2662078)
Save? No. It will cost you. But peace of mind has a price, too.

Additional principle payments reduce your total interest over the life span of the loan.

CowboyPilot79 08-25-2018 07:44 PM


Originally Posted by Arado 234 (Post 2662136)
Additional principle payments reduce your total interest over the life span of the loan.

I think his point was you're losing out on the opportunity to invest that money and the trade off for interest savings is lower in the long run. Like I said before this has been a debate forever. We are Dave Ramsey types (I even teach classes!) so we tend toward the lower risk end of the spectrum but there are arguments on either side.

There's a pretty good podcast, ChooseFI, that does some good dialog on both sides of this argument as well (Episode 35). One place I'm opening my aperture a bit is on holding all our efund in cash and instead considering putting some of it in low risk investments (Episode 66/66R).

Another episode that really tackles the question of a paid off mortgage is Ep 68. Specifically in the Dave Ramsey lens. For us I think our plan will always be to have our primary residence paid off and stay away from a lifestyle revolving around debt. Seems weird given that my initial question here is about a mortgage, but like I said our plan is to have that for less than a year and to keep enough capital around we could pay it off immediately if we needed to start reducing exposure.

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