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Posted on 08/21/2007 1:00:50 PM PDT by the_devils_advocate_666
I just went through the process of getting my wife a new (well, 2006 anyway) car. I had wanted to save enough to pay cash but my old car wasn't going to hold out quite that long. So off to the bank to secure the extra funds. In the process I found out today that my credit score was 819. The loan officer said he'd only seen one higher score. He's young, so maybe it isn't all that great, but...
What does a credit score like 819 do for me? Is there anyway I can leverage this to my advantage in the future? What's the highest possible credit score?
The millionaire will buy a 3 or 4 year old Toyota while the Joneses buy a new BMW...stuff like that.
If you have to buy Gap insurance, you may need to rethink what you are doing.
Thanks, RockinRight said the same thing.
Hey, do you think I can convince my husband to let me shop more? I could use a new wardrobe.
What if, instead, you paid a million CASH for your house, and then put the money you WOULD have been paying out in mortgage principle and interest each month for the next fifteen or 30 years into investments? In pretty short order you'd have your million back and earning 10% again, AND you'd have a paid-for house!
If I’m debt free, own a house and car, have only 1 active credit card, am I an automatic max score?
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My HELOC keeps mine down in the high 700’s. Oh well.
Exactly. It is my understanding that when Sam Walton died, he drove a seven-year-old Ford pickup. And he was a billionaire (with a "b"), about two or three times over.
The father of my closest friend in the late 1960s and early '70s lived in a working-class neighborhood and drove an automobile that was nowhere near new. And he was a millionaire--at a time when a million dollars was the equivalent of several million today.
Not necessarily. The coverage protects (to an extent) the borrower in the event that the collateral auto is totaled, and the insurance proceeds are less than the loan balance. Living in Northern Virginia, especially with plenty of illegals driving about (some without insurance), means we should probably buy this coverage.
It's the same way with collision and comprehensive coverage.
If I had cash to pay for a car and to replace the car, in the event of an accident or other damage, then I would not really need all of those coverages, now woudl I?
Wow, smacked down in my moment of gloat!
I think the thread’s stayed remarkably on track considering what FReepers are capable of. ;)
I’m saying borrow the million as a mortgage, leave the other million alone in my example.
$1,000,000 earning 10% per year after 30 years:
$17,449,402.00
Cost of borrowing $1,000,000 for 30 years at 7% interest:
$2,395,087.20 in principal and interest at an amortized payment of $6653.02/mo principal and interest (we don’t count principal in cost since it is re-added to home equity and assets)
Net result, not including tax benefits of a mortgage:
$15,054,314.80 plus a paid-off house at the end of 30 years.
Alternative:
Spend the million on the house. You now have zero. Let’s forget for a moment the inherent risk in spending every dime you have.
Put the mortgage payment equivalent in an account earning 10% - that’s $6653.02/mo for 360 months. With no interest deduction. The interest deduction matters because you’re investing what your interest would have been, so your monthly outgo is the same.
Total Investment Value after 30 years in this example:
$15,039,071.00
$15243 more to take the loan and leave the million alone. Not a huge difference, until you consider that it would also take the ENTIRE 30 years to build up the same amount you would have had had you left the million alone. Also - you have to consider the tax benefits of a mortgage.
Hey now, don't give the other FReepers ideas :P
The wealthiest people I knew growing up (worth ~$50-100 million in the '60s) drove Fords.
That's way, way over my pay grade... and credit score. ;)
“If you can verify income, the “reserves” requirements in addition to down payment funds should have been no more than 2 months worth of mortgage payment.”
Significantly more.
“What repairs were needed? They might not have been as “stupid” as you think.”
Reattach loose trim strip in bedroom, seal joints in (seamless!) gutters, repair torn screen, etc.
“What area are you in BTW?”
North Central WV.
I do realize that my loan was different. The house was an FHA repo. I took advantage of one of their year end inventory reduction sales and was able to get the house for $100 down and a whole lot cheaper than its appraised value. I have a few year old appraisal of it that had not taken into account the increased property values in the area, the new windows, new roof and lots of other things. I know the comps that their appraiser used and he scratched the bottom of the barrel. I am a cheap b#stard and made a rediculously low offer. FHA took it. I should have told the bank what to do with their loan, but that would have meant scrapping my contract with the FHA.
BTW - I had the loan officer state in email that I was required to use a certain appraiser, because he was the only FHA approved appraiser in our area. There are actually 13.
I bet I got the longest credit report.
Both! The beauty of credit is it allows one to borrowoney at favorable rates without losing the principal. It’s a way to get a bit of leverage if used sanely.
She left him with a 700,000 dollar mortgage and 85,000 worth of credit card debt.
They were a two earner couple with twin Mercedes with car notes.
The wife makes about twice as much as him being the administrator of a large community business.
He has a very good attitude and told me jokingly that his credit score was zero after filing for Chapter 7.
However,he is getting all kinds of credit card offers and the local car dealer/salesman called to say he had a hell of a deal on a new Lexus.
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