(Closed) Mortgages under 40k?

posted 8 years ago in Home
Post # 47
Member
3173 posts
Sugar bee

My Fiance would LOVE a house like the ones you listed (older houses with more charm) for around $40k. Too bad they’re all in bad areas around here.

My good friend got a loan for 40K but she got some kind of government assistance loan about five years ago. That’s in NC for a 2 bedroom, 1 bathroom fixer-upper. She’s been trying to sell it now for a few years.

Post # 48
Member
2116 posts
Buzzing bee
  • Wedding: October 2013

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@AB Bride:  

@bunnyharriet:  We can buy a house around here in cash, for about $50,000. A mortgage of $50,000 winds up costing around $110,000 (6% interest) after interest is paid, plus several thousand in closing fees.


How did you figure out that number?  That sounds very high, but it depends on how long someone takes to pay off the mortgage.

 

And remember…mortgage interest is tax-deductible.

Post # 49
Member
2116 posts
Buzzing bee
  • Wedding: October 2013

Also, $40k would get you a cardboard box where I live… *sob* 

Post # 50
Member
41 posts
Newbee
  • Wedding: May 2012

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@inky_1:  the poster bunnyharriet is right.  A $50k loan over 30 years (typical mortgage time) at 6% interest would cost you $108k in the long run.  This assumes you don’t make any additional payments.  If you make additional payments especially in the early years you can drastically reduce that number.  Here is an amortization schedule to show you the numbers.

http://www.amortization-calc.com/

OP – if you were to buy a house for $40k you would likely be required to put 20% down.  So your mortgage amount would be $32k.  At 4% interest this would be a total of $55k you will pay on the loan (again assuming no extra payments are made).  I’m guessing the bank will not let you do a 30 year loan and will require a 15 year or less loan.  This would actually be better for you though, since you would only pay $42.5 in the long run with a 15 year loan.

None of these numbers include closing fees which can be a few thousand.  You also have to pay an inspection fee and other misc. fees when purchasing a house. 

Post # 51
Member
10635 posts
Sugar Beekeeper
  • Wedding: January 2011

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@inky_1:  I guess that’s true for the OP!  Here it isn’t, although the Smith Manoeuvre can be used.

Post # 52
Member
10635 posts
Sugar Beekeeper
  • Wedding: January 2011

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@bride5512:  It all depends on the amortization, without that it means nothing.  As I said earlier:

Where are you getting those numbers?  If someone has a mortgage for the max. amortization allowed by the CMHC, and pays biweekly, the interest paid will be a little less the 25k.  Sure, you could say someone is going to refinance constantly, but your numbers mean nothing.

If someone isn’t using a loan as an investment/tax advantage, many people would pay off a 50k loan faster than 25 years (the max amortization if you aren’t putting down a 20% deposit).

Post # 53
Member
41 posts
Newbee
  • Wedding: February 2013

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@out4answers:  Monroe is just outside of Toledo isnt it? I believe one of my sorority sisters was from Monroe and she commuted to UT everyday and was the house a lot.

I would also think that your loan would be a little higher esp if you factor into your loan repairs and redecoration you will do. Carpet isnt cheap and in both houses would have to go thru out the entire house.

Post # 54
Member
1476 posts
Bumble bee
  • Wedding: May 2012

I would love to have a 30k mortgage. Our down payment was more than that!!

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