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From: rdr@inuxh.UUCP (Robert Rindfuss)
Newsgroups: net.taxes
Subject: Re: Re: 15 versus 30 Year Mortgages
Message-ID: <409@inuxh.UUCP>
Date: Thu, 20-Mar-86 09:06:33 EST
Article-I.D.: inuxh.409
Posted: Thu Mar 20 09:06:33 1986
Date-Received: Sat, 22-Mar-86 03:38:33 EST
References: <5887@kestrel.ARPA>
Organization: AT&T Consumer Products, Indianapolis
Lines: 57

_____________________________________________________________________________
Come on now! If you're going to flame someone's followup article, that's fine
 - just don't sign MY name to it!!  It's really not appreciated.
						Bob Rindfuss
-----------------------------------------------------------------------------
According to the header, this article was really from Dick King at
Kestrel Institute, Palo Alto CA:

> 
>    From: rdr@inuxh.UUCP (Robert Rindfuss)	NO, IT WASN'T!!!!
>    Newsgroups: net.taxes
>    Date: 15 Mar 86 19:00:14 GMT
> 
>    > <<<<
>    > < I prefer the fifteen year note for myself, however, because of the
>    > < psychological difference.  My wife and I intend to pay at the 15 year
>    > < rate, and I would rather lose the flexibility and never have either of
>    > < us tempted to slow down the repayment.  
> 
>    > 
>    > Fifteen years is a long time to plan on not having a really major
>    > emergency or disaster strike. If you have a 30 year loan it may
>    > take willpower to pay it off at a 15 year rate but you wont have
>    > to refinance it if something really bad happens.
>    > 
> 
> I dont understand.  If things are such that you actually are able and
> willing to pay all fifteen years there is no difference between the
> two loans.  If you have an emergency in the first fifteen years there
> is also little difference.  However, with the long loan you are
> exposed for the full thirty years.
> 
> You have to claim that the extra nine percent on the payment of the
> fifteen year loan (assuming the same interest rate of 10%) makes an
> unmeetable emergency so much more likely for those fifteen years that
> it compensates for the extra fifteen years of exposure, or (if you are
> planning to pay at the faster rate even if you take out the longer
> loan) that emergencies that can be met by dropping down to the
> contract payments of the 30 year note are common.  
> 
> Since most banks require the mortgage payment to be at most 1/3 of
> your income or so, you are here claiming that emergencies that can be
> met by trimming 3% of your income out of the mortgage payment but in
> no other way are common.
> 
> 
>    Worse than that, if the 'disaster' that struct was you losing your job, you
>    would not be ABLE to refinance it.  
> 
> Lending institutions REALLY don't want to forclose.  I know of one
> couple who DID refinance after a loss of a job. The bank was convinced
> that they would be able to find a job within a year, and they made a
> deal that a year's interest would be added to the principle, with the
> payments to start again after a year (or sooner if a job was found
> first) with the ending date of the mortgage postponed as necessary to
> make the payment the same after the moratorium as before.
>