No Cool, You are missing nothing. What I have done is a little bit tricky. Just last year Massachusetts passed a new law it allows for the selling of equities to increase income distributions, previously I had been getting approx $25K to $30K in dividend income. So I wrote a letter to the bank and explained that UNLIKE my cousins who received a HUGE upfront payout based off the selling of my Grandmother's house (I was exed out of that due to shenanigans which made little sense to me at the time or now- something about me getting 1/2 of the stocks and my two cousins splitting a half but of course they sold at at the height of the market to the guy that owned Picturetel... and they made out like bandits and upfront bandits at that while I have been struggling all these years to put food on the table... ) So I explained that I TOO had a child and I was getting older by the minute... etc. And we arranged to initiate this new provision in trustee law in Beantown- the result my income next year will be closer to $100K the difference $60K or so will be divided and used to pay $3 thousand plus monthly mortgage... so all I need to provide is the $75 grand up front from my stocks which I can do.... It's a near perfect plan with only one flaw.... furniture needs to be bought... I have two bins crammed full of old stuff from two Grandma's passed on, nick knacks-I'll use what I can and then try to do one of those no money down pay us no interest until 2009 type furniture deals you see on TV for a couch and chairs etc... I actually expect to pay off mortgage interest only for a while and if I can get it- at a fixed rate for 7 years (offering 5 now) In 2019 I'll be able to pay off the house in entirety and put my kid into a non public school.... It is a convoluted life plan and one put into motion actually by a health scare to my dog Clyde. I realized he's 7 & by the time this trust shakes out he'll be 18 and probably not with me anymore... the country house will do him no good then. He needs to run into the road and get smacked by a car NOW while he's youngish and can recover! Bad joke knock on wood; Truthfully, I'd like him to experience the wild like a dog should without a leash and in the woods... and my boy he'll be 15 when the love comes from Boston and he could have a fun amazing learning experience now when it matters or at 15 when he'll probably be jammed up in some cubby hole playing video games... It really boiled down to taking myself out of the equation. I could bury my head in the sand and keep things just the way they are forever... Or....With risk can come reward or so I am hoping... Leaps Of Faith can be some of the prettiest jumps of them all. ~ stoney
Hell, why not, live the free life like all these other losers. They don't deserve to have all the fun at our expense. File bankruptcy shortly before you come into the money in '19. Not like you'll need credit for a few years anyway at that point. And even if something happened and you absolutely NEEDED credit..there are places that will lend on an active bankruptcy, so no worries. may be at a higher rate, but hey no problem!
THE 6.25% Solution Stoney's Dream Weekend House Pt. 2. My inner torment was HIGH as hell recently as the added pressure of timing a mortgage lock in to the news and stocks and constant drumbeat of both recession and rates going UP! There is something about the particular gobbily gook of mortgage speak that I can't digest. In stocks throw any term you want at me outside of that I freeze up, it's very intimidating. Add to that the salesmen pitches you field and it's all terrifying... I began by reaching out to a local Washington Mutual player in the town. He instantly O.K.'d me by my credit rating. This I used as non leverage as I dialed around never really getting anywhere. I ended up going with the people who already sit on my trust. This because the person I was told to contact picked up the phone and said " Private Wealth Management " i liked that- it brought visions of special treatment and special rates to my deluded mind. Anyway it means (I hope) a lot less paperwork and less accounts to open. etc. The mortgage is as follows as I understand it: 30 years. 7 years fixed at 6.25% the first 10 years are interest only... I chose this over a 5 year option that had a 6% yield... When I first bought my NYC apt rates were 7 3/4 % and I payed that for years before the once in a lifetime refinance deal came around... I just don't get it. I find this to be a fair rate my monthly payments will be under $3,500. Why can't we all just lend money and get along? Rates Have to go down from here to rescue everybody??... I am about to buy a house with very little down (20%) and a non traditional interest only loan... why am I doing this now? In the face of the most noise ever about the death of housing... Case Shiller etc... 10% guaranteed loss they say any house you buy now... well for the first time real estate appealed to me like a stock... the drumbeat too negative, the trade too one sided, the contrarian came out I guess I suddenly decided the bottom was in in housing and I had better find this place before the spring... it's a gut feeling but in a few lightening quick moves I have lucked into something very special./ A whole lot of this is " fate " and that of course makes it interesting. I feel I am on a road maybe I didn't chose... who chose it? Who broke me out of my money hoarding stupor and injected all this RISK suddenly in my life?... all the added headaches... remember I have just put a clothing store to rest and was just sitting in my underwear all day trading... so now I'm constantly on the move back n forth NYC to Ct and I have two lives... my own land for the first time. And it feels different. Apartment hunting is so grotesque a sport in NYC it taints the whole view on things.. this house I'm so damn proud of it already and I haven't even bought it much less fixed it up and built a garage... all in good time; all in good time. Good Times.~ stoney
emm reading your post you took out an interest only first 10year(30year total) loan. I wuold be appaled with that mortgage, People who take out interestonly loans are betting on the short term, you will be paying that for the next 10 years with no paydown to your capital? Sounds like all you have is luck and hope on your hands. Inheritance or no inheritance dividend, this will be a bad trade. -------------------- I live in new york, connectictue hasn't even STARTED to go down, you house will go down in value at least 30% You do realize you are commuting from CT, to NY. Why is that? ask yourself, cause theres no jobs in CT. Sure its $900k homes, they might not be the first to fall, but they will fall the hardest. like a cr0x. Luxury homes won't be luxury no more. interest only mortgates.. fuinnny, I seriously don't know what kind of mind games you are playing to yourself, but its your money, well to re-phrase, its your DEBT.
>> Well with 8 typos including the word mortgage normally I wouldn't reply but I know Cool and these words do scare me. I've started to shift since reading the inspection report... fear is replacing what hope and promise was there... the last couple of housing predictions have taken their toll on me... all of this of course has given me an opening I see rates going up soon not down so getting a mortgage and mortgage seems like the thing to do. The interest only part is problematic but keep in mind there is no prepay penalty if the market turns south or I get sick of not seeing the principle go down I can pay it down in chunks. I plan now to just pay off the loan in year 7 at the first reset... The House has already declined in value somewhat but I hear where you are coming from... I could be on the hook for the difference... Some mediating factors in my favor I am in a very posh town right across the street from a famous inn.. there is great rentability ($8 grand just for Christmas week!) and August when I'm in fire Island that will be paid for by renting as well, a lot of lakes around evidently... I'm also protected by a wildlife preserve so even if my house falls down around me I have a unique 4 acres in a very desirable town and with a spa / inn next store that doesn't accept pets or kids! Both will be welcome at my casa when I can get it to ready form... yes the very point about this post was the psychology of it all... the psychology both of risk- when to take it and housing when to own... in my own life with ten year timeframe to go broke in I feel Now Is The Time To Take This Leap... and yes the commuting is freaking me out having driven back n forth in a day twice already missing shortcuts with little gas and my beat up station wagon with so much space between gas stations... it's all terrifying for a city guy... anyway thanks Cool for ratcheting up the angst for me on this Friday morn! ~ stoney
This type of thinking only leads to the poorhouse. I have had a few friends who had that urge to spend when their business was doing well (and spend they did!). Now their business is not doing well beause of the economy and they are wishing they had not gone on that spending tirade. Think of this, there are plenty of college kids who are right now in dorm rooms living very poorly getting laid and partying every night. On the flipside, there are plenty of wealthy older men running around NYC who are in obvious depression who spend their nights on websites like this. If money is what you need to have fun, then you need to re-evaluate. If there are broke fools out there having fun with none, then a wise investor/trader should be no different.... plus the maintenance that goes into these houses is a nightmare. Thats one thing more for you to think about and do.
Well that is the idea... to begin to go broke. It sounds retarded and it is but I have saved and saved and saved and now F it I'm going to spend and spend and spend. I don't know who I am kidding all I do is spend everywhere my herb bill alone would frighten the average man. I don't save as much as I stay 100% invested and I keep all my cash in stocks. Banks? Who needs em. Now as to that poor college kid screwing his brains out or whatever... well of course I did that and with the cocaine & the beautiful girls of Boston University.... oh of course I yearn for those days again. What's the point. Of course I had more fun then. Do I need money to have fun. No if you were to just give me this house I would be going through the same range of emotions... fear of change, fear of owning this big investment that will sit vacant most of the week, the money is because it costs money. I'm perfectly happy doing nothing but herbalizing and watching the Giants and pontificating on the Net-- how do you think I won " Blogger Of The Year 2007 " If I had my way I'd do nothing.... and play it safe. i'm all about safe... it just all happened so quick it was fate. I was meant to have this house it's a quirky weird house- a former schoolhouse turned living situation stone on the lower level, all the things I love, built by a famous architect too which helps the mindset as I watch my dollars go down the drain.... let's start with $3,400 monthly new hit and add that to the rest that's why I'm surprised I got a mortgaged but hey who am I too argue??? If you want to pay 80% of this experiment up front well hell get on board... The question was how could I make the credit crisis work for me instead of getting punished by it? The answer was join in! And when I see my dog racing around the property up there- how could I not for this for him. That's the really sick part the ultimate truth is I think I did this $838K purchase for my Dog. He's seven and it was a fatalistic year he almost choked to death on a huge filet mignon he stole and then had real bad stomach issues after he got into two loaves of bread and he's a dog who should be running outside and I'm keeping him cooped up now since I closed my business... those 40 blocks of walk we used to take... he's in need if this to make his later years great. And if my wife and I and child get a great satisfaction out of this fine. So be it. It's a team ride hear at stonedinvesting, a team led by a very questionable leader. ~ stoney