Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
The 30-year for the best borrowers is currently around 3.25% and Shadowstats.com says the inflation rate is currently around 6%. Do you really believe the real interest rate for purchase money is highly negative? What is your experience in the market currently?
Assuming the rate really is this negative shouldn't people be taking on as much debt as they can safely service?
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y
Regardless of the rate of inflation, anyone with even a moderate ability to invest funds safely should be taking as much advantage of the low interest rates as reasonable.
It's pretty easy to generate 10% returns in real estate these days (if you have even a reasonable amount of knowledge and experience), so I can't imagine not borrowing as much as possible while rates re under 7%, even for investing funds.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y
Regardless of the rate of inflation, anyone with even a moderate ability to invest funds safely should be taking as much advantage of the low interest rates as reasonable.
It's pretty easy to generate 10% returns in real estate these days (if you have even a reasonable amount of knowledge and experience), so I can't imagine not borrowing as much as possible while rates re under 7%, even for investing funds.
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
14y
It does seem ironic that the best time to borrow in decades is also the time that the least new loans are being made. It doesn't "feel" right to load up on debt, but the numbers are shouting load up and lock in. Thoughtfully and carefully, of course.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
14y
Bryan, back in the day the term "Purchase Money Mortgage" was a reference to seller finance either by mortgage or TD or assumption and a second to the seller. Don't think that is your intention.
Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
14y
From a theotetical point of view, the math says yes. But then, that means it would make sense to just borrow money and pay it back as scheduled without even investing it in anything (supposing you could borrow at less than 6 percent unsecured). That borrowing money in and of itself would be an investment...Not sure I want to do that.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
14y
Originally posted by Jeff Sielicky:
Bryan, back in the day the term "Purchase Money Mortgage" was a reference to seller finance either by mortgage or TD or assumption and a second to the seller. Don't think that is your intention.
As opposed to "cash out" money. That was my intention and it is what the brokers I know call it.
San Diego, CA · Member since 2011 · 86 posts · 9 votes
14y
The problem is there is inflation and deflation happening at the same time. Housing is very depressed, food and energy prices? Not so much. The value of our money is going down in attempt to keep prices from dropping (in nominal terms) but the effect does not in fact add value anywhere, it subtracts it!
Not only are housing prices dropping, but so is out purchasing power, it's no wonder people are so hard off right now, their "savings" are being wiped out.
I just managed to convince my parents to do a cashout refinance on their paid off house and loan the money to me for 4% plus i pay all costs for the loan. This works out to about 7.3% for cash, which I think is quite reasonable and gives them a little extra each month.