Monthly Payment Plan

["El Gran Magnifico"]

why do that i can go FHA plus third party the PMI walk in door paying almost nothing....its really a good shake even if you are financially stable why even put 20 down if you can third party the PMI? and with state programs in some places 2 percent is all you need not even 3.5

If you put 20% down you wouldn't need PMI. Why would you want to incur additional expense if you didn't have to? If you plan on flipping the house rather quickly OK. But less down = higher mortgage payment. Less Down = PMI (an expense that is not necessary), less down = less equity.

If you had a $100k mortgage with no money down. vs A $100k mortgage with 20% down. You would pay an additional 10K on interest for the life of the loan. Your monthly payments would be about $120 a month higher and you would pay close to 5k in PMI that is completely unnecessary. You would have absolutely no equity in the property on day one - and wouldn't have until you paid a significant amount down.

If you're financially stable you don't get there by making these types of decisions. You would agree to pay an additional almost 40k for a house over the term of the loan because you didn't want to give up 20% down (which you had the means to pay)?

 

["El Gran Magnifico"]

I don't know your situation, but if I just gave you (or anyone average) a $5m house free and clear, you'd be bankrupt and foreclosed very soon because of the taxes, maintenance, and all expenses associated with running a $5m house.

Dramatic example, but it proves the point and is true on a $200k house depending on your situation.

I wouldn't. I'd sell it. Downgrade to a 1M home and invest the rest in Gov't Bonds or TBills . The interest would more than take care of my housing expenses on a year to year basis. And probably cover most of my Disney Trips.

You do have a point But if you're serious on the offer I'll take you up on it.

 

[LAKid53]

Wow, this thread has gotten way off topic and is giving me flashbacks to my financial management classes in college...

As an AP who is also a Florida resident, I use the payment plan. Yes, I can pay the entire amount up front, but the ability to in essence borrow money interest free is appealing. Even better if one uses a debit, not credit card to make the monthly payments. Why shell out the money up front if you don't need to? And given the time value of money, those future payments will be made with money that has less cash value. For those of you financially savvy, go run a cash flow. I charge my payments to my Disney Visa card, which I pay off every month. So not only am I paying with cheaper $$$ each month, I'm earning reward points that convert to cash. That I can use at Disney to pay for meals and souvenirs.

In answer to the OP's question, yes, I would still purchase an AP if I was no longer a Florida resident and eligible for the payment plan. Because I would then purchase my AP as a DVC member (discount price is comparable to Fla residents) and that purchase has to be made in full.

 

[Chef Mickey]

No idea why so many people seem to hate Chef Mickey. I havent taken anything he has said as elitist. Everything he has said is 100% true and if more people believed in and followed what he says, we wouldnt have had the housing bubble like we did.

People want to buy now and pay later, the problem with paying later is that 1000$ purchase turns into a 2000$ purchase. People buy 30k cars that they have to finance for 6 years and trade in as soon as its paid off, people buy a 250k house (where i live in the south 250k will get you a lot of house in a top school district... adjust for your location) on a 40-50k income, finance for 30 years and never have money for upkeep....

These same people are the ones who contribute nothing to a 401k or retirement plan but will have their hands out to me and Chef Mickey in 30 years wanting us to pay to feed and house them...

Appreciate it. People just don't like being told no and that a monthly payment and "do it all" mentality is contributing to a real financial problem. I mean, people say they deserve a vacation with a straight face.

 

[Chef Mickey]

So I can't afford my car or house?

There's a lot more to the thread than just that and I've made my opinion clear, but in general, yes. I'm certainly fine (and made it quite clear) that taking out a mortgage at a low interest rate with some skin in the game (decent downpayment) is fine. A house can be an asset.

A car, I'm work lukewarm on making monthly payments. I typically buy cash. But, but 0% interest! You're an idiot to pay cash! Meh, not really...the 0% deals are usually built right into the final price and many will even advertise clearly the 0% OR $3500 cash back, etc. Talk to the finance guy. Nothing in this world is free.

People look at it as a monthly expense instead of looking at the total cost of ownership.

Example: I can afford a $400/month car payment.

Trouble for most is that they take $400/month and buy something that is expensive to maintain, insure, and/or doesn't get great gas mileage. Then they are stretched when it comes time to repair or fill her up.

Often, they'll buy something in the used European category (maybe a 2012 Benz or BMW with 35k miles) to stretch their dollar and get sticker shock when they see the first repair bill or realize they have to use premium gas.

Worse, they'll lease a car because $400/month can get you a lot of car if you lease. But then they're on payments forever and never own anything.

In either example, they would have been better off buying something economical, perhaps Japanese, in the low maintenance category. Think Honda, Toyota. Not as cool, but great mileage, low maintenance, and you can get a newer model.

Leasing is great in some situations, but I know a lot of people that lease to get a nicer car, not to lower their monthly payment. Over half of all BMWs and Mercedes are leased...they soak you btw. Leasing luxury can be very expensive.

 

[Chef Mickey]

Wow, this thread has gotten way off topic and is giving me flashbacks to my financial management classes in college...

As an AP who is also a Florida resident, I use the payment plan. Yes, I can pay the entire amount up front, but the ability to in essence borrow money interest free is appealing. Even better if one uses a debit, not credit card to make the monthly payments. Why shell out the money up front if you don't need to? And given the time value of money, those future payments will be made with money that has less cash value. For those of you financially savvy, go run a cash flow. I charge my payments to my Disney Visa card, which I pay off every month. So not only am I paying with cheaper $$$ each month, I'm earning reward points that convert to cash. That I can use at Disney to pay for meals and souvenirs.

In answer to the OP's question, yes, I would still purchase an AP if I was no longer a Florida resident and eligible for the payment plan. Because I would then purchase my AP as a DVC member (discount price is comparable to Fla residents) and that purchase has to be made in full.

We've been through all that. Everyone gets the time value of money, borrowing at 0%, and earning points for using rewards cards.

The only discussion here is that monthly payments have become a mentality and people who really can't afford the vacation are using monthly payments as a means of affording a vacation. If you have student loans, credit card debt, no savings, a mortgage, and 2 car payments, you might be able to afford the monthly payment on the AP. But can you really afford it. It's people like that we are questioning.

I buy everything possible on a CC because I earn miles and pay my balance in full monthly. I would also use the monthly payment option for an AP, because it's free. I am simply saying that if you're making the monthly payments because you can't afford it any other way, you can't really afford it and you should knock out some other debt or save more money.

I can understand houses and even cars, but monthly payments are getting out of control. You can buy a can opener or a box of carmel apples on QVC for 5 easy monthly payments.

Extreme example. I can't afford a Bugatti Veyron, but if you let me pay it off over 100 years at $1,000/month at 0%, I could. Should I buy the car?

 

[Sonconato]

I wanted to thank everybody who voted and commented. There was a lot of great feedback. I had no idea what to expect in terms of the percentages and truthfully, I would have expected there to be more of an imbalance of votes but which way, I don't know.