Law School Discussion

Quote from: regulus on May 28, 2007, 04:29:00 AM

Quote from: staplelaw on May 18, 2007, 05:25:42 AM

Quote from: lawn on May 13, 2007, 10:20:37 AM

Not really, helga, you break even in the example shown above only after 35 years. If you pay $215,800 in interest that means that $900 a month out of the $2,150 monthly payment has gone to the bank pockets and you would pay $1,250 to rent the same house. This means that you could pay the same amount of rent for another 14-15 years using the $215,000 amount that you paid in interest. It is only then that you would need additional money to cover the rent.

In actuality, this example may have a pretty good ROI (return on investment), close to 30%; for instance, if you take the mortgage when you are, say 30, you will be breaking even at 65, having 10 years to \'make profits,\' that is to say not pay rent (with the average life expectancy 75 years) -- you would make $150,000 profit on a $515,000 investment.   

The problem is that most mortgages nowadays extend over a 30 year period. 

The system is designed to make you work yourself in exhaustion -- simply to accumulate wealth for the companies you do business with and not for you. The most staggering of these examples is a home mortgage. Nearly two-thirds of the amount you pay over a 30 year mortgage is for interest. Interest is the profit of the mortgage company makes for lending you the money to buy the house. A 75,000 home at 9% interest would give you payments around $603.47 per month. At the end of thirty years you would have paid over $217,248.11 to the bank. In this example the interest earned by the bank was $142,248.11. That is over 200% return. Something is wrong with this picture. It is actually much worst than this. In order to pay the bank that $142,248.11 you would have to work and earn $197,566 because we have to pay taxes. It gets even worse when you take in account the lost interest due to not having the money gaining interest. If you had invested that interest in monthly installments then you would have had a nest-egg of only $723,143. THAT IS THREE-QUARTERS OF A MILLION DOLLARS!!!!!

Are the banks doing us such a tremendous favor that you should wear yourself out for over three decades. IT IS YOUR MONEY. You worked for it. It is not fair. You work for it. Yet they end up with it. It is simple legal larceny. They are stealing your wealth right from under you. Now, granted it is very difficult for anyone to get a house without a loan. But it does not make since to pay on a mortgage for over thirty years. For the past 15 years this information has been out about pre-paying your mortgage. And for fifteen years the banks have misled the people into saying that it could not be paid off. It is the same scam that the Credit Bureaus have run on people for years. They know that they cannot tell you the truth because it would eliminate their profits. The solution is to put as much cash down as possible and pay off the loan by using bi-weekly equity acceleration to save hundreds of thousands of dollars interest. I can not believe that people are still paying on thirty year mortgages. If you have an accountant to tell you not to get rid of the mortgage,\' because it is the last good tax shelter\', GET A NEW ACCOUNTANT. What he really is saying is to spend a dollar in order to get 28 cents back on tax dollars.