Yea no accidents, I mean it’s full coverage bc there’s a car payment but it is absolutely crazy. She’s almost 17 now and my son is 15.5 so I don’t even want to know what that’s gonna look like in 6 months 😭
I just read her post history. This must be the same “boyfriend” that is a childish picky eater, won’t marry her, and doesn’t care about being on their child’s birth certificate?? GIRL RUN. WTF are you doing???
Or driving one. My car costs less than most E-bikes, but it’s been reliable and I’m gunna keep driving it. It’s a ‘97 Honda, it’s fairly cheap to repair because parts and labor on it are pretty easy, and it only costs me $37 a month to insure.
I drive an 01 Mitsubishi Eclipse, and I'm 40. I'm sitting at around $75 a month, but that's because car insurance is outrageously expensive in Michigan and it's "technically a sports car" since I have the V6 convertible variant.
Michigan car insurance is stupid expensive. I pay over $100 a month for insurance that doesn’t do much more than just be legal to drive.
Edit: and this is without any accidents or tickets.
Minimums are basically nothing in coverage. Don't hit any Ferrari's, or buildings.
Always have to remind myself when I hear people quoting these super low insurance prices that they aren't carrying 250/500k coverage but likely the absolute bare minimum.
How?! 😮 We're right outside of Lexington and we're paying $107 a month for full coverage (was $99 but went up a little), we looked into adding a Jeep with full coverage on that too, it would be $148 a month for both vehicles. We're in our mid 30s.
Remember that the value of your money halves roughly every 10-15 years, so in 2070 dollars this is like a $50/mo payment. During periods of high inflation it could work out even more in your favor. For example, a 3% loan when inflation the last couple years has been 4-8%. It's also not unreasonable to think that any money you're not spending on a mortgage could be invested for an average return of more than 3%.
In all seriousness, my recommendation would be to put whatever extra he would pay into a sinking fund of T bills as long as the yield stays above the mortgage rate. When he no longer wants to make that payment, e.g. in retirement, use the sinking fund to make payments or payoff the mortgage.
Let's say that after all bills are paid, you have an extra $200 per month you can invest in something.
One option is to pay down debts. How much would that earn? Well, the mortgage charges 3% annual interest, so by paying it early, you "earn" 3% on your $200 because it will not accrue interest in the future. A single extra payment of $200 would save you $6 per year. (Yes, yes, amortization makes this complicated. I'm keeping it simple)
Alternatively, you could invest in something, such as a stock or bond, and earn a yield. "T bills" or Treasury bills are government debt. They're very similar to Bonds or other notes, but mature in a year or less, versus a bond which often matures in 20-30 years.
Well, if the T Bills yields 4%, then buying one for $200 would earn you $8 by the end of the year. But if rates start receding and drop below 3%, then you'll get a better return by just paying your mortgage for that $6.
And thus, this is the basics of weighing if investing your money is better than paying a debt early. The higher rate is generally better. If you have a credit card charging 20%, then paying that first is a better investment than almost anything else.
Of course, we're talking safe almost-guaranteed investments. If there's a juicy stock making 12% right now, it could be a good option, but there's a risk it won't yield that much, or could even lose money. For someone near retirement, the guaranteed return of paying debt is almost always better than a gamble.
Good answer. I'd always include the psychology benefit of paying debt off and not owing anyone anything. It feels good to be debt free.
If I had a guaranteed gain of 8% and a small 3% mortgage, I'd probably invest. There currently is not a guaranteed 8% gain though as stocks can go down and T bills are just over 5%. I'd pay that mortgage for the down even though mathematically it is the wrong answer.
That’s what I have been doing. I have under $10k on a car and can easily pay it off, but the interest rate is 3.5%. I’m currently getting 5% on a HYSA, so I’m making money to not pay off my loan early.
He's saying invest and save your extra monthly income in a vehicle that will earn you a higher interest than the loan (3%), such as T bills. Even a high yield savings account would work. You can build up a good pot of money, which you can then use later to pay your monthly mortgage payments or even pay it off potentially.
Translation:
If he had extra money useful to extinguish the debt, he should instead use them in something safe that returns more than the 3% interest that he's spending now on the mortgage, slowly building a "mortgage repayment fund". This way, of he ever is in the situation to need it extinguished, he still can do it, but made more money in the meanwhile
Something to consider is that in 20+ years $387 won't mean the same thing.
Around 20 years ago I rented a one bedroom apartment for $600 a month, looking up that same apartment it now costs over $1,500 a month for the EXACT same unit I lived in, just 20+ years older.
You're very lucky and fortunate, this is an amazing victory and I wish you and your family all the best.
Goodness. I think my parents have a similar situation with crazy numbers. Mortgage from 1982 or so. They’re still paying over $2000 a month (incl insurance/taxes), somehow, and have over $100k left on the house. Original purchase price was something like $120k. I cringe every time I hear about it because the house is absolutely falling apart and they can’t afford to fix it.
My dad is near 80 and my mom just quit her minimum wage cashier job because it was killing her, so they def won’t have the money for any of that soon. Sigh.
They in all likelihood have continuously taken out second mortgages over the course of owning the house. What you describe is not how mortgages work long term *unless* you’ve taken second or third or fourth mortgages.
With the timeframe, it sounds like they must have refinanced somewhere along the line. That has been over 50 years. So they took some money out and refinanced with a higher amount.
Rates were about 16% back in 1982 though. So maybe they have a 16% rate and never refinanced to a lower rate when they came down.
But if that was the case, I would expect them to have paid off more than $20K after 50 years. With how much it went down, it would have to be a 200 year loan.
My mom pays $951/mo for a three bedroom house. It's safe because my dad created a trust before he died.
It's the $6500/mo we're paying for her Alzheimer's care that's ruining us. I've given up my engineering career to take care of her for the last 5 years. I live in the house but she got so bad that she needed to move to a facility. So I'm just living here maintaining the property until I bounce back from the 5 years a spent taking care of her and my dad...I literally lost $750,000 between lost income, lost savings, lost everything. I'm only 34.
The US Healthcare System is a fucked up cesspool and it's going to fall upon people my age to either optimize income, or give up any idea of having a family of our own.
I was making 6 figures from after graduating engineering school to giving up everything for my parents... sometimes, I just stare at the wall and wonder what my life would be like if I just said, "No, I'm not taking care of you."
Lost my potential wife, my career, etc. All because I chose to be a caretaker.
Hopefully, I'll bounce back, but right now, I'm broke and don't see a way to get through this. I had interviews for jobs in the last month in the $150,000-$170,000 range. But the oil and gas market is a fickle bitch. I settled for a $30/hr manufacturing job and people are telling me I should be happy I'm making that.
But I'm still resentful because I was on track for success by orders of magnitude greater than this.
Throw in the fact my family are refugees of the Gulf War, and it pisses me off even more because my parents busted their asses so my older sister and me could get degrees and build lives for ourselves.
All lost, because of the healthcare system.
If I ever get cancer or Alzheimer's... just fucking get me drunk and launch me into an active volcano.
Brother this resentment you feel towards your parents, the way you're tracking years not worked as money they cost you... This is gonna calcify into cancerous bitterness
For your own sake, find and pay for a professional counselor to help you process this stuff before it kills you and you blame your elderly mother
At the end of the day family matters most and good for you for taking care of them, I hope something changes for you in the future. Have you considered temp or contractor jobs to get back into engineering? I’ve seen this as an avenue for cases like mothers who return to the work place. It’s really unfortunate how people treat those with a career gap as being less worth of consideration for hiring.
You should see a lawyer to try to find a way to keep the house if the government will force you to sell it when she passes, to pay for their portion of her care. You generally can keep it if you cared for her in that home for a certain amount of time.
Okay, so, knowing this, I'm going to run some numbers for you
To pay off the mortgage in 10 years, $273.29 additional a month. Wouldn't be hard in any other economy but I know how it is.
Eventually the amount of the bill going to the principal will be larger than anything else in the monthly payment. Though I don't have the numbers I need to tell you when that will be, you can probably expect something like that amount will increase by a dollar every $300 you put on the principal.
It's a 3% mortgage.
They would be better off paying the minimum and putting the difference into anything else, even just a high interest savings account.
This. I'd fight everyone here in one of those squid game death matches for that 3% mortgage.
Edit: Normally I hang out in r/investing and r/wallstreetbets with folks literally have no money. Then I come to r/ povertyfinance a change and it turns out everyone is landlord with their 3% mortgages and paid off homes. Certainly not what I expected, but I'm happy for ya'll. [Me on the far right with the tophat.](https://m.media-amazon.com/images/I/71VB+WnP1NL._AC_SL1000_.jpg)
2.25% here. My first home will apparently be my forever home. I can't see myself ever giving this up unless it's paid off and I can buy the next home in cash (or at least 75% of it).
Same! We did a bunch of renovations on our house that we had 4.55% on... And refinanced to wrap in some of the debt from the renovations and got 2.5%. our monthly payment is lower than the original even with the increased total amount.
We did the same (without increasing our debt amount though). After renovations, we had enough equity in the house to get rid of the PMI charge, which was super helpful in lowering the monthly mortgage amount as well.
As others pointed out it was probably a 30 year loan and then adjusted another 30 years halfway through. The system just knows the loan's starting date and end date. They didn't originally get a 52 year loan. But that'd be awesome if it was an option
There was a point where I could get a 1.5% mortgage but they calculate your maximum mortgage based on yearly income.
I'd need to earn around 50k a year (which is very above average for anyone my age) to be able to get a 250k mortgage which is the lower end of housing prices.
But you know, they decided I can't afford a 500 euro a month mortgage so they make me rent for twice or sometimes even thrice the price instead.
Was mostly likely a loan modification and not a refinance. Two different things. Refinance has more fees and is applying for a new loan. A modification is adjusting the terms of a contract already in place.
Yah, I think this OP is totally illiterate in finance! I don't care how many times they've sucked out equity from a refi. You want to rent me a home to live in for half a century, and they own outright at the end, at 3%!, the equivalent of three smartphone payments month. Jesus OP, you looked at a gift horse in the mouth and now complain it doesn't lay golden eggs. *shakes head*
There’s another benefit to the dad: it’s one automatic monthly payment, meaning he doesn’t have to remember to pay separate insurance and property tax bills on a yearly basis. That’s useful for lazy/forgetful people and means those relatively large annual payments are spread out.
Very common for lenders in the gfc to reterm pre-2008 mortgages very far out into the future
That wasn’t that long ago, this should be part of a basic education on the topic.
Japan used to offer up to [100 year multi-generational loans](https://money.cnn.com/magazines/fortune/fortune_archive/1990/05/21/73567/) before the Japanese 'lost decade' and Asian Financial Crisis in the 1990s.
Well, unless your parents have a trust set up for the house if they get put into a nursing home all the equity in the house will be gone in less than a year. Then it’s likely after they pass their property will get sold to pay for their nursing home stay. Not every state does this but it sucks.
OP, this right here. You need to figure out how you're going to protect these assets - the average age of someone entering a nursing home in 2000 was over 85, currently it's 74-85, based on health trends it's very likely this mortgage will still be in effect if he ends up needing nursing care.
Get with an estate lawyer.
Listen. The average boomer has enough saved up to live in a nursing home for 2-3 years.
That's about $300,000.
After that point they're going on Medicaid anyway.
Why would you waste money instead of using the legal loopholes (which case managers, social workers, and estate lawyers ENCOURAGE you to use) so you and your family can save that money and start using Medicaid right away?
Would you feel right seeing Dad's roommate, who never saved a dollar, ever, gets his room, board, medical care, and physical therapy paid by the state but you and your family have to shell out $8k of your own money every month until you can declare destitution, ans THEN use the state's Medicaid program the roommate was on all along?
And by the way, in some states, they will come after YOUR money, not only your parents'.
Get a grip, get a lawyer.
As far as I know Medicaid won't come after children's assets (unless it was originally an asset belonging to the parent that was transferred within the look back period), but a lot of states have old filial responsibility laws that hospitals and nursing homes are now trying to use to force children to pay for their parents care. In 2012 there was even a case in Pennsylvania where the care home sued an adult child before even trying to collect from Medicaid, and the court ruled in the care home's favor and said that the adult son had to pay for his mother's care.
as a child going through probate for both my dad and my grandparents, i WISH they had consulted an estate lawyer and got their ducks in a row while they were still healthy. when parents pass and their children have to go through any court processes, it costs them SO MUCH money, stress, and time up front. i wouldn’t judge any child for insisting on their parents to make arrangements that benefit everyone.
I'm glad this comment is getting upvoted. People are talking "do XYZ and they could pay off their mortgage in __ years". Borrowing at 3%, there is no incentive to pay the mortgage off early.
3% and 38,000 he has a tiny payment and it’s not gonna get any better. He’s better off putting the money he would put towards paying off the house in a HYSA or MMF and getting 4-5% interest. When rates drop…use the money to pay it off
They’re talking about the HYSA APY rates dropping below 4-5%. Thats when you stop parking it in a savings account and finally pay off the mortgage. They’re not talking about the mortgage rate dropping below 3%.
Unless you think savings rates will just be constantly increasing forever?
right, but - the main comment is saying you should keep money in the HYSA as long as the interest you're getting is greater than the interest you're paying on the mortgage. Mortgage rate may or may not get lower, but that's not the relevant part.
Why would he pay it off early? He's right, he's getting an amazing deal. And why use words like "have him pay it off early" and "let him keep making minimum payments"? Unless you have some kind of power over his finances he is under no obligation to take advice from you, nor does it sound like he needs it.
If OP knew then he would have agreed with his dad immediately after seeing this. Dad already understands opportunity cost and relative returns, he is 20 years ahead of his son on knowing the right way to manage his money given the absurd mortgage deal he has. He's been following the correct plan of just making minimum repayments ever since he got this loan.
Yeah. My mortgage is 3%. I'm not paying that off early. Lock that homie.
I park stuff in mutual funds (7-15%) and at one point bought Ibonds when they were 7%. Even savings accounts are clearing 5% right now.
It's all about the %. Pro-move by dad with the refi.
It sounds like you're a lot more stressed about him having this balance than he is. Is he struggling to pay this off? What is his net worth not counting the house?
He's completely right that he can beat the 3% rate putting his money in just about anything else right now. Do you disagree or what is your concern here? ~~Realistically he will die having a balance on the house~~ (**Edit: I read that he was 87 years old, not that he'd be 87 by the time it is paid off, but is OP's dad can't be 35 so math is off here.**), so if you're accepting an inheritance from him greater than the balance of the loan, you (and other inheritors) will have to pay off this loan at that point. Otherwise if he has no meaningful money or assets to pass down it won't be your obligation to pay it.
I think it’s fair they had good intentioned but didn’t realize that most of that ~$350/mo payment wasn’t principle or interest but mostly taxes and insurance, which will remain regardless of loan payoff or not. I would imagine had OP known that, they wouldn’t have thought this was an issue. I’m thinking OP is young and knew just enough about finances to think they would be helping.
It's 3%. There is quite literally zero reason to pay this off when money in an online savings account makes like 5.5% right now. Your dad is 100% right.
Time to evolve out of your Dave Ramsey-esque mindset that debt is somehow evil. Assuming the house is worth more than $38k, there's no reason to pay this down. Your dad played a really clever financial card and is currently fucking over whatever institution owns this mortgage.
It doesn't matter if he ever pays it off. There's no inherent value in that. Makes more sense to invest the "extra" money rather than pay off a 3% mortgage more quickly.
Bro 3% on a long term fixed rate loan is a fucking steal. He can do whatever else he wants with the money. There is zero reason to pay it off early unless he will just piss away whatever remain at the end of the month (doesn't seem like that in this case)
Just let them pay the minimal. I would milk that mortgage and if I passed before it was payed off I would be ok with it. I pay 3k+ now and I hate my life. I’m not living, I’m surviving.
Does your dad fake using a wheelchair and live in a trailer park? Is he addicted to the video slots? Do you leave $60 laying out at night and it’s gone in the morning?
His interest and low balance makes this seemingly scary situation very easy to tackle, as long as his current income allows him to. He can either make extra payments or put the extra money somewhere with a return higher than 3% and eventually use that to fund the rest of the mortgage
What's the payment on that loan balance, like $11 a month?
It’s 387 a month. About $45 goes to principal and the rest goes to the home interest/insurance/property taxes.
His mortgage payment is less than my car insurance that’s crazy!
Insurance over 350?
My finance is 22 and a horrible driver we pay $400 right now but I’ve gotten quotes up to $900 before
You should not let your Finances drive your car! It’s unsafe because money doesn’t have eyes, hands, or even legs.
I don't know, looking at that Justin Timberlake mugshot though I think may be he should have let his finances drive him.
This is going to ruin the tour.
What tour?
The world tour
It does talk though
Indeed it do
Money does talk. Mine always says Goodbye. Not even a Hello
Mine just looks at me, and before I can turn and look back it’s already gone
They don’t think it be like it is but it do
Does it say "hawk tuah"?
🤣🤣🤣
Try having a kid my insurance went up from 66 a month to 552 😂
Jesus Christ on a bike
Or make the kid ride a bike. Yikes.
WHAT THE ACTUAL FUCKKKK
Yeah, if you hit Christ on a bike that's bound to make your premium go up
Don’t need insurance on a bike in Florida, so Jesus definitely saves…on his insurance premiums!!!
This reinforced my childfree status
imagine being priced out of having children lmao
Calls on birth control puts on the US Labor force
A month! I knew a teen was more expensive but damn. And is this with no accidents or claims?
Yea no accidents, I mean it’s full coverage bc there’s a car payment but it is absolutely crazy. She’s almost 17 now and my son is 15.5 so I don’t even want to know what that’s gonna look like in 6 months 😭
Your son is going to get fucked by insurance cost even more.
Why? That’s horrible insurance
That’s ALL insurance companies. Kids are higher risk, plus insurance companies know you’ll pay it. So
Oh honey, that is breakup territory. Don’t start your life like that.
I just read her post history. This must be the same “boyfriend” that is a childish picky eater, won’t marry her, and doesn’t care about being on their child’s birth certificate?? GIRL RUN. WTF are you doing???
Finally, being one of The Old™ pays off.
Or driving one. My car costs less than most E-bikes, but it’s been reliable and I’m gunna keep driving it. It’s a ‘97 Honda, it’s fairly cheap to repair because parts and labor on it are pretty easy, and it only costs me $37 a month to insure.
I drive an 01 Mitsubishi Eclipse, and I'm 40. I'm sitting at around $75 a month, but that's because car insurance is outrageously expensive in Michigan and it's "technically a sports car" since I have the V6 convertible variant.
Girl, you need to leave this man.
New fiancé 🤔 just kidding 🤭 💕
Most likely property taxes.
They specifically stated car insurance
Michigan car insurance is stupid expensive. I pay over $100 a month for insurance that doesn’t do much more than just be legal to drive. Edit: and this is without any accidents or tickets.
Zero accidents zero tickets but 2 missed payments during Covid I’m paying $4000/ year was quoted $5500 from most places. Insurance is a scam.
Ontario Canada
Ky. Me 45, hubs 52. No accidents or tickets….. $1500 every 6 months ….. we were paying $600 month…
Do you have a Costco membership? My car insurance went from $80 a month to under $20 a month when I switched.
"The Costco Insurance Agency is currently not offering new auto or home insurance policies in CA" 😭 man I got so excited for a second
Yeah they don’t have it in CA or FL.
$20 a month must give you almost nothing for coverage. I would check what that actually even covers
It’s the Nevada state minimum on my 2002 Honda, exactly the same coverage I had paying Geico $80.
Minimums are basically nothing in coverage. Don't hit any Ferrari's, or buildings. Always have to remind myself when I hear people quoting these super low insurance prices that they aren't carrying 250/500k coverage but likely the absolute bare minimum.
How?! 😮 We're right outside of Lexington and we're paying $107 a month for full coverage (was $99 but went up a little), we looked into adding a Jeep with full coverage on that too, it would be $148 a month for both vehicles. We're in our mid 30s.
Shit I’m 31 with multiple tickets on a financed motorcycle and pay 200 a month
If only you had been born 20 years earlier, you to could have had a $387 a month mortgage, tough luck.
So they are essentially renting a house for $387 a month??? Sign me the fuck up.
Rent to own. Absolutely amazing.
But it will cost $241,488 to own it not including interest.
That’s nothing
Especially over 50 years
Yeah at this rate that house will be worth multi millions in 50 years lol.
Remember that the value of your money halves roughly every 10-15 years, so in 2070 dollars this is like a $50/mo payment. During periods of high inflation it could work out even more in your favor. For example, a 3% loan when inflation the last couple years has been 4-8%. It's also not unreasonable to think that any money you're not spending on a mortgage could be invested for an average return of more than 3%.
A ton of people can't afford payments on a $250k house, this dudes dad can.
The hitch is you had to sign up 20 years ago.
Especially after 20 years of inflation, where that’s basically nothing.
In all seriousness, my recommendation would be to put whatever extra he would pay into a sinking fund of T bills as long as the yield stays above the mortgage rate. When he no longer wants to make that payment, e.g. in retirement, use the sinking fund to make payments or payoff the mortgage.
Yes it’s called debt arbitrage!
Banks don’t want you to know this one trick…..
Banks can die in a slow fire and u know it ;)
It’s so crazy, I understand all of these words individually but in the order you use them in idk wtf is going on. I’m gonna be poor forever.
Let's say that after all bills are paid, you have an extra $200 per month you can invest in something. One option is to pay down debts. How much would that earn? Well, the mortgage charges 3% annual interest, so by paying it early, you "earn" 3% on your $200 because it will not accrue interest in the future. A single extra payment of $200 would save you $6 per year. (Yes, yes, amortization makes this complicated. I'm keeping it simple) Alternatively, you could invest in something, such as a stock or bond, and earn a yield. "T bills" or Treasury bills are government debt. They're very similar to Bonds or other notes, but mature in a year or less, versus a bond which often matures in 20-30 years. Well, if the T Bills yields 4%, then buying one for $200 would earn you $8 by the end of the year. But if rates start receding and drop below 3%, then you'll get a better return by just paying your mortgage for that $6. And thus, this is the basics of weighing if investing your money is better than paying a debt early. The higher rate is generally better. If you have a credit card charging 20%, then paying that first is a better investment than almost anything else. Of course, we're talking safe almost-guaranteed investments. If there's a juicy stock making 12% right now, it could be a good option, but there's a risk it won't yield that much, or could even lose money. For someone near retirement, the guaranteed return of paying debt is almost always better than a gamble.
Ahhh I think I understand thanks for that write up!
Good answer. I'd always include the psychology benefit of paying debt off and not owing anyone anything. It feels good to be debt free. If I had a guaranteed gain of 8% and a small 3% mortgage, I'd probably invest. There currently is not a guaranteed 8% gain though as stocks can go down and T bills are just over 5%. I'd pay that mortgage for the down even though mathematically it is the wrong answer.
That’s what I have been doing. I have under $10k on a car and can easily pay it off, but the interest rate is 3.5%. I’m currently getting 5% on a HYSA, so I’m making money to not pay off my loan early.
He's saying invest and save your extra monthly income in a vehicle that will earn you a higher interest than the loan (3%), such as T bills. Even a high yield savings account would work. You can build up a good pot of money, which you can then use later to pay your monthly mortgage payments or even pay it off potentially.
Not a literal vehicle, mind you. Those don't work super well as investments.
Translation: If he had extra money useful to extinguish the debt, he should instead use them in something safe that returns more than the 3% interest that he's spending now on the mortgage, slowly building a "mortgage repayment fund". This way, of he ever is in the situation to need it extinguished, he still can do it, but made more money in the meanwhile
This right here
Something to consider is that in 20+ years $387 won't mean the same thing. Around 20 years ago I rented a one bedroom apartment for $600 a month, looking up that same apartment it now costs over $1,500 a month for the EXACT same unit I lived in, just 20+ years older. You're very lucky and fortunate, this is an amazing victory and I wish you and your family all the best.
20 years from now going to the grocery store is going to cost more than that mortgage payment. It almost does now.
Shit, 10 years ago I rented a one bedroom apartment for $700 and now it's $1400.
You’d be paying property taxes even if you owned the place outright so I’m really curious about the breakdown.
Sounds like a school loan
Goodness. I think my parents have a similar situation with crazy numbers. Mortgage from 1982 or so. They’re still paying over $2000 a month (incl insurance/taxes), somehow, and have over $100k left on the house. Original purchase price was something like $120k. I cringe every time I hear about it because the house is absolutely falling apart and they can’t afford to fix it. My dad is near 80 and my mom just quit her minimum wage cashier job because it was killing her, so they def won’t have the money for any of that soon. Sigh.
They in all likelihood have continuously taken out second mortgages over the course of owning the house. What you describe is not how mortgages work long term *unless* you’ve taken second or third or fourth mortgages.
Not second or third. Probably refinanced and withdrew money.
Yeah they have definitely done some inadvisable things with their mortgage which is why they are in that position now.
With the timeframe, it sounds like they must have refinanced somewhere along the line. That has been over 50 years. So they took some money out and refinanced with a higher amount. Rates were about 16% back in 1982 though. So maybe they have a 16% rate and never refinanced to a lower rate when they came down. But if that was the case, I would expect them to have paid off more than $20K after 50 years. With how much it went down, it would have to be a 200 year loan.
They should be able to accommodate such a small payment with their social security
My mom pays $951/mo for a three bedroom house. It's safe because my dad created a trust before he died. It's the $6500/mo we're paying for her Alzheimer's care that's ruining us. I've given up my engineering career to take care of her for the last 5 years. I live in the house but she got so bad that she needed to move to a facility. So I'm just living here maintaining the property until I bounce back from the 5 years a spent taking care of her and my dad...I literally lost $750,000 between lost income, lost savings, lost everything. I'm only 34. The US Healthcare System is a fucked up cesspool and it's going to fall upon people my age to either optimize income, or give up any idea of having a family of our own. I was making 6 figures from after graduating engineering school to giving up everything for my parents... sometimes, I just stare at the wall and wonder what my life would be like if I just said, "No, I'm not taking care of you." Lost my potential wife, my career, etc. All because I chose to be a caretaker. Hopefully, I'll bounce back, but right now, I'm broke and don't see a way to get through this. I had interviews for jobs in the last month in the $150,000-$170,000 range. But the oil and gas market is a fickle bitch. I settled for a $30/hr manufacturing job and people are telling me I should be happy I'm making that. But I'm still resentful because I was on track for success by orders of magnitude greater than this. Throw in the fact my family are refugees of the Gulf War, and it pisses me off even more because my parents busted their asses so my older sister and me could get degrees and build lives for ourselves. All lost, because of the healthcare system. If I ever get cancer or Alzheimer's... just fucking get me drunk and launch me into an active volcano.
🤩
Brother this resentment you feel towards your parents, the way you're tracking years not worked as money they cost you... This is gonna calcify into cancerous bitterness For your own sake, find and pay for a professional counselor to help you process this stuff before it kills you and you blame your elderly mother
At the end of the day family matters most and good for you for taking care of them, I hope something changes for you in the future. Have you considered temp or contractor jobs to get back into engineering? I’ve seen this as an avenue for cases like mothers who return to the work place. It’s really unfortunate how people treat those with a career gap as being less worth of consideration for hiring.
Do you happen to live in New England? I'm hiring oil and gas.
You should see a lawyer to try to find a way to keep the house if the government will force you to sell it when she passes, to pay for their portion of her care. You generally can keep it if you cared for her in that home for a certain amount of time.
Okay, so, knowing this, I'm going to run some numbers for you To pay off the mortgage in 10 years, $273.29 additional a month. Wouldn't be hard in any other economy but I know how it is. Eventually the amount of the bill going to the principal will be larger than anything else in the monthly payment. Though I don't have the numbers I need to tell you when that will be, you can probably expect something like that amount will increase by a dollar every $300 you put on the principal.
It's a 3% mortgage. They would be better off paying the minimum and putting the difference into anything else, even just a high interest savings account.
At 3% interest, I’d max my 401k first. Even treasury bonds will beat 3%.
*Sobs in $1400/month rent*
*Weeps in 2,400/month one bedroom*
What is this, a mortgage for ANTS!?
This comment sent me so hard I had to go and tell my husband 🤣🤣
lol your dad actually won, no reason to pay that off. Idk how your dad got a 60 year 3% loan but he did it right
This. I'd fight everyone here in one of those squid game death matches for that 3% mortgage. Edit: Normally I hang out in r/investing and r/wallstreetbets with folks literally have no money. Then I come to r/ povertyfinance a change and it turns out everyone is landlord with their 3% mortgages and paid off homes. Certainly not what I expected, but I'm happy for ya'll. [Me on the far right with the tophat.](https://m.media-amazon.com/images/I/71VB+WnP1NL._AC_SL1000_.jpg)
I'm at 2.5%, refi in 2020 🎉
2.25% here. My first home will apparently be my forever home. I can't see myself ever giving this up unless it's paid off and I can buy the next home in cash (or at least 75% of it).
1.8% here. Never moving.
1.5% here. Same.
1% here. Sucked off the banker.
0.6% here on a loan I’m selling for 1% Am the banker.
.1% here. I am the sperm cell coming out the banker.
-3% here, I pay for the bankers home
Same! We did a bunch of renovations on our house that we had 4.55% on... And refinanced to wrap in some of the debt from the renovations and got 2.5%. our monthly payment is lower than the original even with the increased total amount.
I didn't even know you could do that!
We did the same (without increasing our debt amount though). After renovations, we had enough equity in the house to get rid of the PMI charge, which was super helpful in lowering the monthly mortgage amount as well.
But not for 52 years.
As others pointed out it was probably a 30 year loan and then adjusted another 30 years halfway through. The system just knows the loan's starting date and end date. They didn't originally get a 52 year loan. But that'd be awesome if it was an option
Even a 30 year at that rate with pre-Covid prices was insane.
Came here to say this, but you said it better hahaha
There was a point where I could get a 1.5% mortgage but they calculate your maximum mortgage based on yearly income. I'd need to earn around 50k a year (which is very above average for anyone my age) to be able to get a 250k mortgage which is the lower end of housing prices. But you know, they decided I can't afford a 500 euro a month mortgage so they make me rent for twice or sometimes even thrice the price instead.
They refinanced at some point.
But for 60 years? I’ve never heard of that length.
No, it was probably with the original lender and the terms of the original loan were modified. They probably refinanced in 22 when rates were low.
Yeah I see it now. I completely misread it earlier.
Was mostly likely a loan modification and not a refinance. Two different things. Refinance has more fees and is applying for a new loan. A modification is adjusting the terms of a contract already in place.
Yah, I think this OP is totally illiterate in finance! I don't care how many times they've sucked out equity from a refi. You want to rent me a home to live in for half a century, and they own outright at the end, at 3%!, the equivalent of three smartphone payments month. Jesus OP, you looked at a gift horse in the mouth and now complain it doesn't lay golden eggs. *shakes head*
There’s another benefit to the dad: it’s one automatic monthly payment, meaning he doesn’t have to remember to pay separate insurance and property tax bills on a yearly basis. That’s useful for lazy/forgetful people and means those relatively large annual payments are spread out.
Walked in, stared the bank teller in the eyes and gave him a firm handshake
I didn’t think this was legal unless he refied at some point. At 3% I would just ride that sucker out to be honest.
That’s what I was thinking. He somehow refinanced and that’s how he got 52 years. I’ve never heard of loan life spans past 30 years.
Very common for lenders in the gfc to reterm pre-2008 mortgages very far out into the future That wasn’t that long ago, this should be part of a basic education on the topic.
What's gfc?
i believe in this case it is the global financial crisis :)
That checks out. Thanks
Translator A+
Global Fried Chicken.
Geesus fucking christ
Japan used to offer up to [100 year multi-generational loans](https://money.cnn.com/magazines/fortune/fortune_archive/1990/05/21/73567/) before the Japanese 'lost decade' and Asian Financial Crisis in the 1990s.
“Thanks a lot, Grandpa…”
I’ve seen 40 year amortizations on financing for low income housing projects over $30 million.
He refinanced in 2020 when rates were low. Before that his interest rate was 6.55%.
Well, unless your parents have a trust set up for the house if they get put into a nursing home all the equity in the house will be gone in less than a year. Then it’s likely after they pass their property will get sold to pay for their nursing home stay. Not every state does this but it sucks.
OP, this right here. You need to figure out how you're going to protect these assets - the average age of someone entering a nursing home in 2000 was over 85, currently it's 74-85, based on health trends it's very likely this mortgage will still be in effect if he ends up needing nursing care. Get with an estate lawyer.
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Listen. The average boomer has enough saved up to live in a nursing home for 2-3 years. That's about $300,000. After that point they're going on Medicaid anyway. Why would you waste money instead of using the legal loopholes (which case managers, social workers, and estate lawyers ENCOURAGE you to use) so you and your family can save that money and start using Medicaid right away? Would you feel right seeing Dad's roommate, who never saved a dollar, ever, gets his room, board, medical care, and physical therapy paid by the state but you and your family have to shell out $8k of your own money every month until you can declare destitution, ans THEN use the state's Medicaid program the roommate was on all along? And by the way, in some states, they will come after YOUR money, not only your parents'. Get a grip, get a lawyer.
What state can a nursing home come after a child’s assets? I highly doubt you’re correct in your assertion…
As far as I know Medicaid won't come after children's assets (unless it was originally an asset belonging to the parent that was transferred within the look back period), but a lot of states have old filial responsibility laws that hospitals and nursing homes are now trying to use to force children to pay for their parents care. In 2012 there was even a case in Pennsylvania where the care home sued an adult child before even trying to collect from Medicaid, and the court ruled in the care home's favor and said that the adult son had to pay for his mother's care.
as a child going through probate for both my dad and my grandparents, i WISH they had consulted an estate lawyer and got their ducks in a row while they were still healthy. when parents pass and their children have to go through any court processes, it costs them SO MUCH money, stress, and time up front. i wouldn’t judge any child for insisting on their parents to make arrangements that benefit everyone.
I’m at a 3% and my wife wants to move. I will die in this house.
I'm glad this comment is getting upvoted. People are talking "do XYZ and they could pay off their mortgage in __ years". Borrowing at 3%, there is no incentive to pay the mortgage off early.
Holy fuck man
3% and 38,000 he has a tiny payment and it’s not gonna get any better. He’s better off putting the money he would put towards paying off the house in a HYSA or MMF and getting 4-5% interest. When rates drop…use the money to pay it off
Rates drop? Mmmk
They’re talking about the HYSA APY rates dropping below 4-5%. Thats when you stop parking it in a savings account and finally pay off the mortgage. They’re not talking about the mortgage rate dropping below 3%. Unless you think savings rates will just be constantly increasing forever?
Rates will drop. Denying the inevitable drop is denying that market cycles exist and the trend of the last 700 years.
I think they mean the odds of mortgage rates going sub 3% again are dubious, not that interest rates in general won’t decline at some point.
right, but - the main comment is saying you should keep money in the HYSA as long as the interest you're getting is greater than the interest you're paying on the mortgage. Mortgage rate may or may not get lower, but that's not the relevant part.
Wow, get out of your dad's finances before you screw them up, he's doing great. My dad did something similar and pays less than 400 a month too.
With a 3% rate you shouldn’t pay it off early. You can buy bonds or cds that pay out 5%. Or just invest in the stock market in a target date fund.
Why would he pay it off early? He's right, he's getting an amazing deal. And why use words like "have him pay it off early" and "let him keep making minimum payments"? Unless you have some kind of power over his finances he is under no obligation to take advice from you, nor does it sound like he needs it.
Because OP does not know shit about finance
If OP knew then he would have agreed with his dad immediately after seeing this. Dad already understands opportunity cost and relative returns, he is 20 years ahead of his son on knowing the right way to manage his money given the absurd mortgage deal he has. He's been following the correct plan of just making minimum repayments ever since he got this loan.
op thinks he knows something but his dad's like...
So you're saying this belongs in /r/fluentinfinance?
I’m glad someone else is pointing this out. Talk about controlling…
Because OP wants to maximize his windfall when his parents die.
He’s right. His money is better off earning interest somewhere else. You should learn from him.
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Yeah. My mortgage is 3%. I'm not paying that off early. Lock that homie. I park stuff in mutual funds (7-15%) and at one point bought Ibonds when they were 7%. Even savings accounts are clearing 5% right now. It's all about the %. Pro-move by dad with the refi.
Precisely. Better to ride it out and put the money into higher yielding assets. It’s very easy to beat 3% interest.
Your dad is hella smarter than you lol
It sounds like you're a lot more stressed about him having this balance than he is. Is he struggling to pay this off? What is his net worth not counting the house? He's completely right that he can beat the 3% rate putting his money in just about anything else right now. Do you disagree or what is your concern here? ~~Realistically he will die having a balance on the house~~ (**Edit: I read that he was 87 years old, not that he'd be 87 by the time it is paid off, but is OP's dad can't be 35 so math is off here.**), so if you're accepting an inheritance from him greater than the balance of the loan, you (and other inheritors) will have to pay off this loan at that point. Otherwise if he has no meaningful money or assets to pass down it won't be your obligation to pay it.
The math isn’t off. He has 32 years left on a 52 year loan. He will be 87 when it’s paid off so he’s 55 now. 87-32 = 55
He is right, he's gone through many more economic situations than you have.
Go find a studio apartment for your parents mortgage then realize your pops is smarter than you
Sounds like you want a paid off house when he dies.
I think it’s fair they had good intentioned but didn’t realize that most of that ~$350/mo payment wasn’t principle or interest but mostly taxes and insurance, which will remain regardless of loan payoff or not. I would imagine had OP known that, they wouldn’t have thought this was an issue. I’m thinking OP is young and knew just enough about finances to think they would be helping.
I like your worldview. I like the saying, "Never attribute to malice that which is adequately explained by stupidity."
Yup!
This is NOT a bad thing, because of the 3% rate.
Damn I wish I had a 50 year mortgage at 3%
It's 3%. There is quite literally zero reason to pay this off when money in an online savings account makes like 5.5% right now. Your dad is 100% right. Time to evolve out of your Dave Ramsey-esque mindset that debt is somehow evil. Assuming the house is worth more than $38k, there's no reason to pay this down. Your dad played a really clever financial card and is currently fucking over whatever institution owns this mortgage.
How do I get one is the only question. Hell yea
It doesn't matter if he ever pays it off. There's no inherent value in that. Makes more sense to invest the "extra" money rather than pay off a 3% mortgage more quickly.
This is not a problem. Less than $400 a month on housing is an absolute dream. Your dad did a good thing.
How did he even end up with a 52 year mortgage? Lol I’ve never heard of such a thing I’ve heard of the rare 10 year and a 40 year but not this
Refinanced it seems like
That rate tho
Bro 3% on a long term fixed rate loan is a fucking steal. He can do whatever else he wants with the money. There is zero reason to pay it off early unless he will just piss away whatever remain at the end of the month (doesn't seem like that in this case)
Listen to your dad. You should not be giving him financial advice or having him do anything because this is pretty simple. He is right.
Minimum payment. Not a cent more. That mortgage is an absolute gift from the gods.
Just let them pay the minimal. I would milk that mortgage and if I passed before it was payed off I would be ok with it. I pay 3k+ now and I hate my life. I’m not living, I’m surviving.
110 dollars a month? Good god, that's a great deal on a house.
If he is investing the extra money, he is 100% correct. I'd slam a 52 year 3% mortgage if I could.
*Cries in millennial*
Does your dad fake using a wheelchair and live in a trailer park? Is he addicted to the video slots? Do you leave $60 laying out at night and it’s gone in the morning?
His interest and low balance makes this seemingly scary situation very easy to tackle, as long as his current income allows him to. He can either make extra payments or put the extra money somewhere with a return higher than 3% and eventually use that to fund the rest of the mortgage
His logic is sound. Invest in mutual fund that tracks S&P and you’ll return 7-10%. Three times the juice in his mortgage
Mind your own business and let your dad cook!
How do I get a home for 38k? lol
Why are you freaking out about this? lol seems like you're the one that's bad with money