Rates

Just out of curiousity, are there any folks out there who based on the recent interest rate cuts, would you be more inclined to buy vs. before? Of course we'll all have to wait for it trickle down through banks, but would it make a difference in your buying decision?

You talking about houses or boats?

I'm curious, when does it start to pay off to refinance either a house or a boat? When you can get a 2% cut in your rate? 1%? 3%?

Say you signed your boat loan at like 8%. Later find a bank offering 6%. On a 10 yr loan for $40k, that would save like $50 per month & $6000 overall. Time to make a move.

I talked to my loan guy and he had me at 6.99 on monday. He said B of America met tuesday and he expects loans to move down a quarter and he expects it by thursday, but we will see. I sign the paperwork sunday.

I have everything I own...boats, vehicles, travel trailer etc... on a home line plan (meaning its either on the mortgage or credit line....the credit line can be converted into a mortgage at any time) which is variable (mortgage 4.85% line 5.75%......so I will be more than happy when rate drops (although I'd be happier if the Boc kept up with the fed)

I am really close to buying but may wait until march/april loans will move down more than 1/4 point.

I always believe that you should pay cash... so interest rates on loans are a non-issue... but it is very attractive to borrow to invest with the recent decline on some very healthy dividend paying stocks... and the interest would be tax deductible... now that would be a good investment. They have a chance on going up... the boat will only go down... just be glad you paid cash!

I got a 10 yr Boat Loan from USAA on a used boat 2 weeks ago for 6.39%. I wish I had waited another month or so, but I still think I got a really good rate. I highly recommend using USAA if you qualify; I have found them to have the lowest interest rates.

Thanks,

Ken Land
Bullet Lines
www.bulletlines.com

using my handy dandy financial calculator, if the price is 60K, the typical terms are 180 months, at 8%, about $574/mth, if at 6% $506/mth. It's not a couple hundred/mth, but annually, depending on the loan amount could reach %1,000/year. Even more so savings on a house financed at the typical 30 years.

It is scary to see how much interest you pay over the full amortization of a boat. And the boat has increasing costs over time... repairs and fuel. Yikes!

$75,000 boat will cost a person over $120,000 over 180 months and thats assuming noting ever goes wrong with the boat or trailer over that 180 months.

Sounds like a no brainer to me!!!

Here is my advice to everyone.

With interest rates so low!!!

REFINANCE your house to the maximum... and then buy the best boat, best RV, best motorcyle, best car, best snowmobile, best atv, best plasma tv...

You will have the best of everything!!! And as the saying goes...

The one who die with the most toys... wins!!!

Or was it... the one that buys all of those toys at the bankruptcy sale... wins...

Can't remember! LOL

best advice is to pay cash for everything...no debt at all. Hopefully I will be completely debt free in less than 10 years. boat and house.

Associated Credit Union of Texas - http://www.acuoftx.org

Financed my boat @ 6.99% for 240 months. Its kind of a weird loan that offers me the option to shorten the term after 48 months at the best rate at that time.

I knew going in that I wouldn't have it more than 3 years anyways, so I didn't worry about it. Turns out I didn't even keep it a year! LOL

Don't refinance your house to buy a boat, so if something happens and you can't make your $400 boat payment they take your house...
At least if you finance the boat and you can't make the payment all the bank takes is your boat.

mark ....and then what?

my debt is now greater than it has ever been......but my net worth is greater than ever too.

there are good reasons to have lots of debt....if you use it wisely.

I think Net Worth is a great thing.... as long as it is Net Worth than can be realized. I am a believer that toys and principal residence are not really assets that can be converted to cash easily.... but Net Worth made up of investible assets or secondary real estate assets are a true indication of wealth.

I personally feel that my house is still worth the same amount I paid for it, yet my assessment came in at 3 times higher than I paid for it only a year and a half ago.

But back to the topic at hand... if people are looking at refinancing their home to buy big ticket items...

You should be able to get Prime minus 1/2 or .9% on open floating rate mortgages.

Mark,

On a new boat you can expect to pay 6.99% if purchase price is under $40,000. You can get 6.50% if over $40,000. Max terms will be between 180 and 210 months at most banks.

This is with excellent credit and 10% down payment of course.

5.75 at my credit union

there are good reasons to have lots of debt?


i gotta hear, why is this?

i hope to be completely debt free in 3 years.

A good reason for debt (the only reason for significant debt) is to buy appreciable assets (i.e. a home, securities, etc.)

Taking on significant debt for depreciating assets only means you are postponing your retirement. Who wants to work into their 70's because you took on too much debt today.

I like when people take on lots of debt... for toys etc... I invest in those companies... then when they peak... I sell... and then I look for those that are going bankrupt and buy their toys for a huge discount... only using the profit I made on the investments... Its a great cycle.... I love it!!!

Getting pleasure from other peoples misfortune is pretty sad, I hope your only joking.

I agree only borrow money to buy appreciating assets. Keep debt to equity levels low, better to increase wealth slowly with low risk than risk it all to make it big. There's only so much wealth a family needs. All IMO of course.

Substitute misfortune with stupidity depending on how charitable your feeling...

I guess its been said...borrow to buy appreciable assets.


8882001.....so when your housing market bottoms out you didn't spend all your hard earned cash paying off your house which is now worth 10000 !!

......you will probably find the wealthiest people are the ones who take on debt and risk.....not the mom and pop who paid everything off so they could feel safe and debt free.(which arguably really isn't a bad thing but wont necessarily create extra wealth)



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(Message edited by absoluteboarder on January 28, 2008)

I love my boat. Monthly payment? $0.00. I think I may buy another.

Not to knock anyones ideas about appreciable assets, but a good majority of the people on this board are somewhere between 23-29 (like myself). That being said they are looking to buy property within the last 2-3 years. Over that period only about 11% of the property purchases have been appreciable assets, and although the market has seen strong gains they can't sell and realize those because of their tax bracket. How can you say debt is bad. Very archaic idea. For instance if I didn't have a equity position on my house then I would be paying taxes to the government every year. In addition the idea that property is this quality investment is very "blind". The only assets that are good investments are what are considered "quick assets", those being assets that can be turned into cash quickly (property doesn't fit that criteria for sure). Debt is good as long as it is managed properly, it doesn't need to be debt only for so called appreciable assets. Yes get debt free so you can pay the government! By the logic on this board people should not go to college because debt is bad!

Eirc, Your profile says you're a 46yo investment adviser not a twenty something looking to buy property. I payed my way through MTU but it was a few years ago so maybe it's more costly now. The idea that paying interest is somehow better then paying taxes is absurd, You're still paying someone who will take their possessions back if you don't make your payments. There is no point in paying interest if you are not building equity for anyone but the seller and the bank or if the item you buy is deprecable. Save your money and buy the boat you can actually afford. Ten years from now you'll be a lot happier.

John profile says 27 (number of post is 46). Not saying paying interest is better, just saying that in regards to paying either way I have to pay. On average I pay 7K in interest and get a boat, or 5K in taxes and get nothing. That is a no brainer for me. My younger brother just got accepted to Cornell, figures came in will cost 33K a year after grants and scholarship. If he can't pay cash don't go? Doesn't sound like good advice to me.

Erik I agree with your comment about a house not always being such a great investment. You can't just buy a house and expect it to make you a $100K in a year or two like it has been. So many people thought that and the market is in the situation it is now. Getting into the house at the markets peak with nothing down, interest only, etc.. A house is a place to live and has always appreciated at a nominal rate, but in the last 10 years or so has been insane. People have made some foolish investments and now the government wants to bail them out. Yes there were some bad mortgages made but it has become way to easy to buy a house.

I have a friend who is a hedgfund manager and he has the same outlook as you do. He equates the current housing maket to that of the stock market when it took that huge dip around 2001. Many people had alot of high risk investments that were performing very well and were not diversified, market dropped and they lost most of what they had.

Eric, Sorry about the mistake. I didn't know that there was a 71% tax bracket but congrats for being in it. Most people people who pay $7k in interest get no more than $2800 back if they are in 40% group and if they want to borrow against their homes in a volatile market. I can't predict the future ten years from now any better than you can so I await the success stories of your clients. If they're doing as well as I am they'll be very happy. I like being able to pay as I go, to change jobs whenever I feel like it, and to retire without debt at an early age. I'm not tied to my stuff and I like it that way.

Actually John taxes are not that simple, depends how your income is taxed. For instance I receive salary as well as 100% salary match on performance which is taxed at a bonus rate. In addition AMT comes into play as well. So the numbers were rough but in the ball park. To each there own I enjoy having a house, vacation house, boat and MBA from Graziado School of Business and MY DEBT. I will to be out of debt by the time I am 40-43 so I still don't see how it was bad.

On to a different topic.

I am in the midst of planning a trip down south to buy 1 or more pieces of real real estate.

Before I make the trip... I want to know where there are nice lakes that will be nearby... but I want a community that is more geared towards retirement or resort like.

Areas I am considering...

Phoenix
Stockton

Can anyone provide some more specific subdivisions or gated communities within those areas.

Thanks!

PS Looking at:
4 Peaks Condos - North Scottsdale
Lakeside Village - Chandler
Val Vista Lake - Gilbert

Dont know much about Stockton.

Well, sounds like the rates really don't have much of an impact on whether or not people will make the buying decision, but if they are, it might help speed it up. Anyway, there are many schools of thought regarding debt and its uses. Some are able to find and maximize opportunities to borrow low and invest high. I have racked up more than I need much like many others in the 23-30 category. But I'll agree with Mr. Ramsey with this little diddy (kinda mentioned above), if you can reduce your income by $10,000 with interest paid, it will save you $3,000 of taxes due on the income you earned. For the record, I'm happy to send anyone a check for $3,000 once your check for $10,000 to me clears my bank. ha ha ha. Anyway, to each their own. I used debt like most others to get what I want, just have to pay for my stuff 3 times as well.

Yeah, the other thing I just thought of is, that we all have lots of thoughts of how to build wealth but according to statistics we're probably all broke with good intentions.

Trainwreck,
is there a minimum loan amount for 240 months.
Also,
can this type of financing be achieved for a boats thae are 2-3 years old.

I bought my used boat with a 180 month loan. At the time that was the max offered on a used boat at the 4 or 5 places I looked for financing.

I hope you are planning to do what I'm doing and eating the interest the first couple years with lowered payments and then pay it all off at once early (didn't have the patience to wait another year or two to pay cash). Otherwise you are going to be upside down quick with a 20 year loan.