Tag Archives: mortgage payment

Setting boundaries with difficult tenants

As a landlord, I’ve dealt with some difficult tenants, and I’ve noticed they all tend to use very similar tactics. Setting boundaries is a necessity to keep things under control, and in the end keep all of your tenants happy while keeping yourself sane.

Continue reading Setting boundaries with difficult tenants

Don’t e-mail yourself a list of all your passwords and bank account numbers to yourself from work

So my buddy, we’ll call him Bob, runs Data Loss Prevention (DLP) for a big company. DLP is software that limits what you can do with sensitive information, in order to block it from going out of the company. The NSA wasn’t using DLP back when Ed Snowden was working for them; they probably are now.

Sometimes DLP blocks people from sending their own personal information. Doing so is their right–it’s their information–but from a security point of view, I’m really glad DLP kept them from e-mailing their entire life around in plaintext.

Continue reading Don’t e-mail yourself a list of all your passwords and bank account numbers to yourself from work

Don’t buy a house if you can’t afford it

I see the advice all the time not to buy a house if you can’t afford it, but rarely do I see a good explanation of what that means.

It’s really easy. Let me explain it, as someone who paid off a 30-year mortgage in five years and now co-manages rental property and has to determine if someone can afford to rent from us or will be over their head. And no, just because I’m a landlord doesn’t mean I think everyone should rent. There are definitely times when buying makes sense. Continue reading Don’t buy a house if you can’t afford it

I am not in jail.

The bank vice president apologized for calling the police on me.

That’s neither the beginning nor the end of the story, but it seems to me that police involvement of any kind is a sign that your real estate deal isn’t going as well as it could.

It all began with a Citibank loan officer named Aaron who promised me a smooth closing. In my view, being questioned by a uniformed police officer has no place in a smooth closing. And that wasn’t even the worst part of it, which troubles me.  Continue reading I am not in jail.

Another benefit of not having debt

I’ve written about how not having debt gives you power, though I can’t find the particular post at the moment. But I remember when I got my first mortgage. I went to a party, and my boss was there, along with my five other bosses, and the big boss got this look in his eye when I said I’d bought a house. That look in his eye said one thing: I own you, and I can do whatever I want to you.

And he did. From that day forward, all of the assignments nobody else wanted fell on me. Anything that was destined to fail went to me. And the cycle followed me from job to job, then stopped, like turning out a light, the day after my wife and I paid off our mortgage. It was the closest thing to magic I’ve ever seen. One day, I was the guy who got assignments at 3 PM on a Friday that were going to take me 8 hours to get done–and they had to be done by 8 AM on Monday, and one day, I wasn’t that guy anymore.

I tested it again this month. I turned down a job that offered me a $7,000 pay cut. Nothing unusual about that, right? Not in this case. In this case, rejecting that pay cut meant I didn’t have a job anymore. Continue reading Another benefit of not having debt

Can you afford that house or apartment?

Declining incomes have more people paying a higher percentage of their income in rent than in the past. I blame the recession. And what caused the recession? People getting in over their heads, buying more house than they can afford. I blame the big banks for that, because I personally experienced it. If I’d bought the kind of house loan officers were telling me to buy in 2002, I’d have been foreclosed on, too.

Here’s a very easy way to figure out whether you can afford a particular place. Continue reading Can you afford that house or apartment?

Just because you can afford it now…

Today, the sermon at church was based mostly on Nehemiah 5. Nehemiah 5 talks about the ruinous financial situation of the children of Israel at the time the book was written. Check out Nehemiah 5:4-5.

“We have had to borrow money to pay the king’s tax on our fields and vineyards. Although we are of the same flesh and blood as our fellow Jews and though our children are as good as theirs, yet we have to subject our sons and daughters to slavery. Some of our daughters have already been enslaved, but we are powerless, because our fields and our vineyards belong to others.”

In other words, in order to pay their bills, some had resorted to selling their children into slavery. Sadly, some Americans find themselves in that situation today. Or close to it. At least it’s uncommon enough that we’re offended when we hear about it. Continue reading Just because you can afford it now…

Do twice-monthly mortgage payments save money?

The debate whether twice-monthly mortgage payments save money is making the rounds on some popular blogs right now. The idea is paying your mortgage every two weeks rather than every month in order to save money.

Whether this trick works depends on several things, but the most important part is that you shouldn’t pay a penny extra for this service.So generally that means any time you get an offer in the mail for something like this, you should tear it up. Deal directly with your lender.

The savings comes from two things. One, if your interest is compounded often enough, paying twice a month actually decreases the amount of interest you’re paying, ever so slightly. They taught me the math back in College Algebra way back in 1993, but that was a long time ago. I’m actually surprised that I remember ever knowing how to do the math.

But the bigger savings comes from sneaking in an extra payment every year. You see, by paying every two weeks, you make 26 half payments, instead of 12 full payments.

You can accomplish essentially the same thing by mailing in a little extra (1/12 of a payment, rounded up to the next dollar, to be precise) every month. If your mortgage payment is $1,000, send in $1,084. You save essentially the same amount of money and still only have to remember to pay once a month.

And if you’re thinking about refinancing, consider this instead. Use a mortgage calculator to figure out your new payment, and just start sending in that payment. You don’t lower your interest rate, but you save closing costs, which can be significant. And you save by not starting over again at zero on your principle balance.

A good mortgage payoff calculator (there are numerous good ones that you can find by searching Google) will let you weigh the two options and make a good decision. The better option will vary based on interest rates, closing costs, and how long you’ve been making payments on your current mortgage.

You can try to negotiate a re-fi with no closing costs. But some loan officers won’t budge on that. Others will do sneaky things to the terms to get that money out of you some other way. So beware.

A final, very unconventional option, if you have half your balance paid off, is to take out a home equity line of credit. Then use the HELOC to pay off your mortgage. This is only beneficial if your interest rate is lower and you plan on paying the house off in five years or less. Interest rates will almost assuredly be higher when the HELOC resets at the end of its current term. But the upside to a HELOC is that you don’t have any closing costs. So it could be a way for you to lower your interest rate for free.

So the answer is, yes, twice-monthly mortgage payments save money. But so do other tricks, and you can combine them to save even more.