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Forum
-> Household Management
-> Finances
amother
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 Yesterday at 8:31 pm
I hear that one of his opinions is that if you cant afford the payments on a 15 year and need to take a 30 year then it means you cant afford the house.
Is this another one of his opinions that make no financial sense?
If I take a 30 year mortgage and my monthly payment on a house is $3500 then I am building equity. buying on a 15 year makes my monthly payment too high so I wont be able to buy. If I rent an apartment, I am paying about $3500 in rent. If I wait to afford the 15 year mortgage then the prices go up. If I buy now, I can always refinance if the prices go down.
My proof: I bought a house in 2013 for 300k on a 30 year at 3.5%. I refied in 2020 to a 15 year at 2.5%. If I had waited to buy my house till I could originally afford a 15 year, I would have paid $475K at 5.5% pricing me out of the market completely.
I know he helps lots of people but this seriously makes no sense to me. This seems similar to his advice about not using credit cards that I pay off every month (forfeiting points and purchase protection) or paying off low interest loans instead of investing in higher yield savings losing opportunity cost (ex: paying off my low interest cars 1.9% before putting my extra cash in a locked CD at 5.5%)
Is he only talking to a specific demographic that cant control spending and doesnt understand finances?
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amother
Dahlia
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Yesterday at 8:37 pm
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I am a huge huge fan of Dave. However I work in the industry. Hardly anyone I Know takes a fifteen year for reasons you stated
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amother
Zinnia
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Yesterday at 8:38 pm
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Take him with a grain of salt. He has good philosophies but some are too extreme. I take the concept but don’t live as crazy as he thinks we all should.
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amother
Lime
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Yesterday at 8:43 pm
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I agree with you. Only thing I don’t is I wouldn’t take a low interest loan 1 percent to put the money in a higher interest ex cd 5 percent. My husband and I hate loans.
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lamplighter
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Yesterday at 8:57 pm
I agree with you about the 15 year mortgage but your particular example/numbers to not reflect the market norm. Those were the golden years of real estate.
He is extreme in his ideas but his approach to spending and debt has helped millions. I don't find his steps or his percentages to work for a frum family. I do like listening to him. In many ways off the backs of soaring materialism in the frum world- he's a breath of fresh air.
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amother
Lavender
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Yesterday at 9:00 pm
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Dave Ramsey is not tailored for frum Jews. Non-Jews can move to cheaper areas that yidden can't. Their housing issues are different.
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amother
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Yesterday at 9:00 pm
| amother Lime wrote: | | I agree with you. Only thing I don’t is I wouldn’t take a low interest loan 1 percent to put the money in a higher interest ex cd 5 percent. My husband and I hate loans. |
I agree. I wouldnt take out a loan to put into high yield savings.
However, I have 1.9% on my car. I am not going to not put away my monthly investing/saving so that I can pay it down faster.
I am going to make my low interest payments until I am done my loan and keep my other money available to put in my 401k and savings with higher interest.
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amother
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Yesterday at 9:04 pm
| lamplighter wrote: | I agree with you about the 15 year mortgage but your particular example/numbers to not reflect the market norm. Those were the golden years of real estate.
He is extreme in his ideas but his approach to spending and debt has helped millions. I don't find his steps or his percentages to work for a frum family. I do like listening to him. In many ways off the backs of soaring materialism in the frum world- he's a breath of fresh air. |
I think it applies even now. rent in frum areas is astronomical. a house in monsey is 4.5k a month to a landlord.
to buy (assuming you have a down payment) in a neighborhood that is not central is not a whole lot more. if going down to a 15 year means you have to rent for another 5 years, thats 5 more years of not building equity.
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amother
Blueberry
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Yesterday at 9:09 pm
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I work in the mortgage field for over 10 years. From what I recall, there were maybe a handful of people in the past 5 years that took a 15 year loan. Majority would not qualify for a 15 year loan...
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amother
Crocus
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Yesterday at 9:23 pm
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Dave Ramsey has a lot if good points but on the issue of mortgages I disagree with him. This advice simply doesn't work in the frum world.
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amother
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Yesterday at 9:39 pm
| amother Crocus wrote: | | Dave Ramsey has a lot if good points but on the issue of mortgages I disagree with him. This advice simply doesn't work in the frum world. |
He actually did a podcast with kosher money. It was very interesting to listen to. Basically at some point he said, well somethings gotta give. The finances here don't work. Lol. He basically agreed that frum finances are ridiculous.
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amother
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Yesterday at 10:09 pm
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In 2005 we took out a 30 year mortgage at 5.5 percent. In 2010, 5 years in, we refinanced to a 15 year loan at 3.875 percent. So 5 years on the original loan and 15 years on the refi equals 20 years start to finish which means that we are DONE in a few months (April 2025 iyh) while still in our 40's. We did it all on our own but of course we bought when house prices were much lower.
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amother
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Yesterday at 10:59 pm
| amother Sapphire wrote: | | In 2005 we took out a 30 year mortgage at 5.5 percent. In 2010, 5 years in, we refinanced to a 15 year loan at 3.875 percent. So 5 years on the original loan and 15 years on the refi equals 20 years start to finish which means that we are DONE in a few months (April 2025 iyh) while still in our 40's. We did it all on our own but of course we bought when house prices were much lower. |
Imagine you had waited till you could afford a 15 year? You probably would have paid an additional $100k rolled into your mortgage if not more.
If someone has a down payment and decent credit, it is fiscally responsible to buy and start building equity. You have to pay to live somewhere anyway. Why not pay it towards yourself?
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amother
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Yesterday at 11:14 pm
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So in the 5 years between when we bought in 2005 and we refinanced to 15 years in 2010 no our home didn't go up $100k or even probably $20k. It didn't lose value but probably stayed about the same. Because 2005 was kind of a seller's market and high prices and then the housing bubble developed and burst in 2008 along with recession coming. But in those 5 years we built about $12k in equity and we enjoyed having our space so I think we made the right decision.
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Gebentched1
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Yesterday at 11:16 pm
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Love ramsey. We implement lots of his tips into our financial lifestyle. But there a few things I truly don't agree with, and this is one of them.
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