this is just awful

no thanks
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"Time in the market is more important than timing the market."

I understand this, but I keep holding most of my cash and waiting for that next recession. Should've bought more last March.
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WOW, I feel like a fool! I thought I knew it all about mortgages and financing property but I was just awakened after talking with my banker. Let this be a lesson for everybody.

So, since I'm stuck in the house with too much time on my hands and go into my mortgage accounts to review payment historys.

I have 3 mortgages with 30 year/5 yr arms. When I originally took these out I planned to make extra principal payments to get them to 15 year loans which is what I did for the first 5 years on each account. All my other mortgages I've always done 15 yr/5 yr arms.

So in reviewing a property I bought in 2013 I noticed the principal portion of my payment dropped from $379 down to $119 the following month at the 5 yr mark. So then I look at a property I bought in 2009 and same thing when it adjusted in 2014 and same thing when it adjusted in 2019. And sfter the first 5 year marks I had quit making additional principal payments because I had paid enough EXTRA to knock out 15 years.

So I just called my banker and questioned what was going on and he explains to me that when it adjusts the bank system says this is a 30 yr note so it adjusts it back to the balance of years (which basically just reduces your principal each month.

So the bottom line is a 30 year loan is a 30 year loan unless you have the ability to pay it in full at some point. I've never seen this discussed or explained , EVER . And I've read tons of books and info.


This really makes me upset because I thought I knew it all.

So , In hindsight the problem lies in having a 5yr ARM instead of a fixed loan for the whole term it appears.
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100% disagree, but still interested in your reasoning.
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At your age just set up an investment account of your choice, Roth is a good bet if you won’t need the money and set up an automatic deposit, and allocate it once a year.

You’re good man. These guys talking individual stocks are like betting the line on the NBA. Don’t do it with real money.
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Barchart says ZOM by a mile both short and long term, SNDL short term, NGA no way
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He has the gut instinct of a GOD. He doesn't need reasoning.
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some guy on CP recommended it
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So what you are saying is, even if you make extra principle payments over the years, it doesn't move up the end date of your loan, it just adjusts the remaining balance of principle/interest over the existing 30 years of payments.

Loans are all designed to screw the borrower. The same way that its all heavy interest to Principle ratio that declines slowly. even if you pay it off entirely in one chunk sum at the midpoint, the bank gets like 70 percent of the principle total established at the onset.
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YES,YES! I guess if you have a 30 year fixed you will benefit but if you have the ARM and quit making additional principal after it adjusts you've just wasted time and money.

I always thought with an ARM the only thing that adjusts is the interest rate. Not so.
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The couple of Times we've done an ARM we've always planned to (and did) either sell the home or re-fi to a fixed before the ARM takes place. But the re-fi only makes sense after a couple of years (to cover the new closing costs/fees) and even then its not as smart as your broker says it is. You still waste money there.

This year there were no lenders giving fixed 30 year loans above $770K (or jumbo loans) which is the loan you need to get in California (places like LA and SF and surrounding areas) since most 3 bedroom homes are 1.1 - 1.5 million.
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But their CEO's name is Dong
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PLUG down to $50. Hold, sell, or buy more?
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EBON down 2% after hours

bullet dodged!
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I think the solution ,which my banker said he could do , was to do a loan modification at the 5 years. So for example I could take the remaining 25 years and have them change it to 10 so I have the 15 yr loan in essence. Yes the required payment will be higher but I hate paying all the interest on a long term loan anyway. So looks like you got out of their scandle.
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