initialDRacer

iTrader: (9)

how about the 2k down that I paid to them via credit card? will I get that back?

osunick

iTrader: (8)

I'm curious, what did you buy for your mom anyway?

RonA

If the financing didn't go through then you can walk away from the deal. I don't see how they could keep your $2000. It was the price of the car regardless of where it came from (cash, bank financing, credit card, etc.). What kind of car did you get your mom anyway? Make sure you do your homework before you go to the dealer next time. They will make you pay as much as they can regardless of where the money comes from. Just remember they don't have your best interest in mind, only their wallet.

osunick

iTrader: (8)

A house appreciates in value, I have a friend who made $200K on his house in a year in San Jose. The other thing is that mortgage interest is tax deductible so you get a lot of that interest back when you file your taxes. If you change your mortgage to 15 years, then you pay a lot less than 2x the value of the house if you end up paying it back. Another difference is that the impact of interest is fairly minimal if you buy smart and sell for a tidy profit in 5-6 years, which is what a lot of people do. You don't see many people paying off their mortgages these days. This situation is totally different. The dealer is ripping him off up front, they don't even have to wait 3 years like the bank does to see the 2 grand. It's a bad situation that we should all take heed of and avoid in the future.

initialDRacer

iTrader: (9)

2000 mazda protege LX. I'll just not sign anything and just return it back. I used 500miles on it already...

NapervilleEVO

tax deductible means you get your tax rate of maybe 20% back. that is a little bit. the 80% is a lot of the interest. that is of course assuming you did not run into the tax exemptions cap already. which you will do if you have a few kids and a house that is roughly 3x more then your household's annual salary.

you also will be paying very close to 2x the value of your house on a 15 year loan. a rough calculation: buy a house for $100,000 @ a generous 7% will mean you pay around $170,000. i low balled my calculation of interest as well. i could give you the exact number, but i don't have a good calculator or a future value of money table on hand.

osunick

iTrader: (8)

My tax rate is closer to 33%. I agree that interest does cost you in the long run, but with real estate at least you have the chance of selling for more than what you ended up paying. You assume the cost of maintaining a property and the risk that your property will depreciate but so far it works out to be better than renting for most people. There's zero opportunity for that with cars, unless you're extraordinarily lucky.

Anyway, in many areas inflation and home values have kept ahead of mortgage rates so a $50,000 home purchased 30 years ago is worth around $300,000 today in suburban chicago. Meanwhile, the bank has pocketed (assuming no refinancing or home equity loans) around $120,000 with that 30 year mortgage. It's not such a bad deal if real estate trends continue, and who knows if they will, particularly in california. In Los Angeles, homes that cost 50,000 in the 1970's are sitting on land worth over $1M today, so people can and do win big in real estate. This is clearly not the norm but I'm just throwing it out there.

Here's an example: http://minneapolisfed.org/Research/d...calc/index.cfm Using the consumer price index as a guide, and ignoring any local market forces, a $100,000 house 30 years ago in 1975 is worth approximately $362,000 today. Which is far better than the total of a 30 year mortgage on that property.

7% is reasonable for borrowing that much money, and if it's the choice between not being able to afford a home and having that ability, then it's good to have that choice. The reason why you pay so much interest is because of the length of the term, and most mortgages don't stop you from paying an aggressive schedule or even paying off the whole mortgage in a year (if you win the lottery). I mean, it's a capitalist society. We earn money and we spend it. People with goods and services to offer will offer it at what people are willing to pay for it. I assume you're a homeowner so the pros have to outweigh the cons (particularly in suburban Chicago), right?

I've bought and sold a home and in the end it won out bigtime over renting. That's enough for me.

initialDRacer

iTrader: (9)

I have good news, I saved a bunch of money on my bank account by returning the car I had a big discussion but I kept saying NO because they are trying to get rid of that car for sure. They called me atleast 10 times this weekend. They lowered the price to 8000 and I think that's pretty good but I rather just spend it on a new car with better warranty. Thanks everyone for your moral support.

favre95

iTrader: (7)

I understand how home loans work. I am just saying, when you sign your papers don't look at what your going to pay the bank if you were to take the full term of the loan. Cause on a 30 year loan which is really common place today. Expect to pay double what the price was. AND NOT all homes appreciate at the pace of what you would pay....just depends where and what you buy.