Originally Posted By: Wolf359
That's 25% down on a 100k+ mortgage. Don't know what things are like when you're under that. Only reason for a 10 year loan is that if you have the cash flow, you will pay it off quicker. If you look at an amortization table, if you have a 30 year mortgage, after 10 years into it, you've still got a pretty balance left whereas after 10 years, it's just pure cash flow.
The bank doesn't care when you got a mortgage. All it cares about is the DTI ratio and your credit score. Assuming they're good for just 50k loans, they shouldn't have an issue. Also keep in mind that what people are asking and what they're getting can be two different things. Sometimes I test out the market by putting out a for rent sign in front of the house (which can be done with multifamilies, some condo associations don't allow it) and then when people call and ask how much the rent is, I tell them and if they balk, I ask them how much they want to pay and then if they're close, we negotiate the rent. I usually give myself a little room so that if the tenants sound like they'd be good, I'd drop the price a little bit on the spot just to lock them in.
I would pay a 10-year mortgage off faster, but the difference in interest rates between a 30-year and 10-year, including paying for the additional years, won't account for any stock gains over the same period for the capital difference, right?
I don't know what you mean by cash flow. With less money going toward paying for a 10-year mortgage, I'll have more cash flowing into my 401(k), Roth IRA, and mutual funds, right? I know these past two recovery years have been pretty good, but I saw 20%+ gains last year and 10%+ so far this year(though 2009-2011 were pretty [censored].) If I bought a place with a 10-year mortgage, I'd have less invest.
Good advice in the second paragraph, thank! I think, to get the place rented quickly we'd choose a price point lower than the other two, like $875.
Are mortgage decisions by banks based on the number of debts at all? I was originally approved for a much more expensive place when we weren't sure whether we wanted a "forever" home or a cheap starter home. I feel like we got really lucky finding the place we're currently in, since it's cheap in pretty much every regard and has everything we need, plus some. I still find myself envying those who have really nice houses, but not when I hear how much they're paying each month for them - some, up to 4X more, not including bills! I feel like we can have a couple of kids in this place before running out of space, and we can save money in the mean time.
That saved money, I'm wondering if it makes sense to invest in another, cheap condo. Thanks for the comments so far!