Steerpike

(I'm sure you know this, as you are in finance. I mention it for the benefit of others who may be reading)

Getting a 30-year mortgage and paying it off in, say, 18 years may be a much better idea than getting a 15-year mortgage because in the former case, the extra payments are VOLUNTARY; if you fall on hard times, you can reduce your payments to the minimum (30-year) without penalty until your circumstances improve. With a 15-year, if you can't make the higher payments you are in trouble very quickly. The only downside of this approach is, most cases, a 15-year mortgage often has a more attractive rate. So a 15-year is a better deal but ONLY if you are really comfortable making the higher payments, and can sustain those payments through a lengthy period of unemployment.

In reality, almost no-one ever keeps their original mortgage; people either move, re-finance, or pay-off as circumstances change. Apparently the average holding period is about 10 years - which sounds high to me. I've had mortgages on numerous properties over the years since 1985 and I'd say 5 years was my max holding time. I just looked at my old paperwork (now scanned on my computer) and my first loan in 1985 was for $103k with an interest rate of 10.5% !!!!!

TexanScot

My other half and I are looking at consolidating our households in the next year or so, and that's been my thinking too.
I'd much rather have the flexibility of overpaying a 30yr as if it was a 15yr, knowing that we can flex the payments back down if one of us were to lose our jobs.

The interest rate may not be as good as you point out, but having that extra comfort flexibility is well worth it IMO.

Steerpike

Similar reasoning applies to paying off a mortgage also. As your mortgage 'ages', and your income increases, it's tempting to pay off the mortgage to eliminate the monthly payment. But if you use up all your 'spare cash' to pay off a mortgage, then fall on hard times, that 'spare cash' could come in use. Obviously, a lot of factors come into play, but something to consider.

sid nv

My experience of buying in the US is that house inspection here is far more thorough.

In the UK, getting a house surveyed involves a guy turning up in suit, tie, and clipboard, having a walk around and not really inspecting anything much. You pay several hundred pounds to receive a report full of disclaimers that various areas have not been inspected due to eg. floor coverings cannot be lifted, plus a valuation lifted off rightmove's website. Caveat Emptor.

Here in the US, a guy that looks like a building contractor turns up, goes everywhere, straps on knee protectors for under floor inspection in the crawlspace, goes up on the roof. I went with him underfloor and on the roof, so I know he is thorough. I receive a detailed report with all minor faults photoed in fine detail. Cost $250 with a discount for immediate payment. And That is how it should be done.

OP: You are lucky to be buying a new house, so it may be a few years before learning more than you ever wanted to about grouting, plumbing, painting, and so on and so on.

johnwoo

I didn't know much of anything when I bought my first flat in London at age 25. Then my first house in the US age 33. The best moves of every made. Now I'm retired no worries having to pay rent and pretty good nest egg if I ever have to downsize.
Good luck, never met anyone who was sorry they bought their own home.

scrubbedexpat091

That was one of the biggest reasons I always wanted to own, so I didn't have to pay obscene rent in old age when I can no longer work, not like the government pension plan provides sufficient funds to actually live on in old age.

Banks are also a bit more generous if you hit bad times before they foreclose and kick you out, where when renting at least here 10 days no rent payment out on the street you go.

spouse of scouse

10 days?? That's harsh

scrubbedexpat091

It's pretty strict when it comes to non-payment of rent. If late on rent the landlord issues a 10 day notice of eviction, if rent is paid in full within 5 calendar days, the notice is cancelled and tenancy continues.

Tenants who are desperate and have nowhere to go can delay the inevitable a bit by filing a dispute resolution but if you haven't paid the rent your going to lose the dispute resolution and possibly end up owing more in the end.

Renting offers little stability in housing here, thankfully they closed the lease loophole that used to exist. Before it was closed, landlords could add a move out clause in the lease, so tenant only had 2 options at the end of the lease, move, or renegotiate the lease and likely much higher rent due to how fast rent climbs here, now at the end of a lease is goes month to month.

I am not sure if our landlords like us being here so long, we pay a good $500 less per month vs what this unit could be rented for, but the max they can raise our rent is 2.4% due to rent controls. But that shows how fast rents climbed in 3 years.

civilservant

Yes we're excited, only 10 days away from closing at this point and the final walk through with the contractor is next Tuesday.

It's only been since 9/15, but it seems like an age since we signed the contracts and I feel like I've been working on this for the last 18 months. Ready for it to be over!

johnwoo

The USA is a harsh society. In it's treatment of the poor and less the fortunate..

Giantaxe

I believe he's referring to Canada, not the US. But in most US states you can get an eviction notice within days of failing the pay rent due. But the reality is that the court process that eventually leads to a bailiff showing up at the door to physically remove you can take several months.

scrubbedexpat091

Yes British Columbia.

If you wanted to you could draw it out a bit, but non-payment of rent is cause of eviction and you will lose at the residential tenancy arbitration, wont buy too much time, but some people game the system that way.

SpoogleDrummer

That depends on how you look at it, if the landlord has a mortgage on the property or rely on the rental income then they may not be able to afford to leave it any longer.

spouse of scouse

Yep, I knew JS was referring to Canada. Another poster mentioned the US.
The US process sounds quite like that in Oz.

spouse of scouse

I see your point SD (I'm a landlord too). I just think that 10 days overdue rent = actual eviction is going way too far. If a landlord is cutting it so close to the bone that they can't afford to wait a couple of weeks for the rent, then that's a worry.