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Well I find the Mortgage Professor to be very shallow on his history of loans, sure our fathers generation did do the 20% down and mortgage but their fathers generation and generations before basically knew nothing more than IO loans. In fact the 20% down and what we called a traditional mortgage isn't truly traditional based on time at all. In fact it wasn't till the 50's that what we call the traditional loan came about.
Than this so called professor says this is abnormal today:
Now I suppose he is suggesting people with good credit rating, in higher incomes can not achieve a low interest rate in the last 20 years??? Where has he been? In fact most anyone with good credit should be around 5% or below in our recent low interest enviroment. Once again does this guy live in the seventies or did he post this stuff in the early 80's? Plus since I demostrated that having a savings vehicle that pays on compounding interest will cover and work even if it's up to 2% below the interest on the mortgage! Such as the 15/30 year mortgage, take out a 30 year mortgage instead of a 15 year one, difference of payment amount you place in a savings account that is earning up to 2% below your mortgage rate and in 15 years you side account would pay off the balance or be within a very narrow margin.
The 20% down and having equity within a house or any property is a suckers bet for the purchaser but an excellent protection for the bank or financial interest of the person holding the note. It gets no more simpler so I really don't know where this Professor guy is coming from?
Than this so called professor says this is abnormal today:
But this was an unusual case: her mortgage rate was low, her tax rate was high, and her preferred investment was tax-exempt. A taxable investment would have to beat 4.75%. If the mortgage rate had been 6%, a taxable investment would have to beat 6%.
Now I suppose he is suggesting people with good credit rating, in higher incomes can not achieve a low interest rate in the last 20 years??? Where has he been? In fact most anyone with good credit should be around 5% or below in our recent low interest enviroment. Once again does this guy live in the seventies or did he post this stuff in the early 80's? Plus since I demostrated that having a savings vehicle that pays on compounding interest will cover and work even if it's up to 2% below the interest on the mortgage! Such as the 15/30 year mortgage, take out a 30 year mortgage instead of a 15 year one, difference of payment amount you place in a savings account that is earning up to 2% below your mortgage rate and in 15 years you side account would pay off the balance or be within a very narrow margin.
The 20% down and having equity within a house or any property is a suckers bet for the purchaser but an excellent protection for the bank or financial interest of the person holding the note. It gets no more simpler so I really don't know where this Professor guy is coming from?