stevenpiziks (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
stevenpiziks) wrote2016-08-05 08:48 am
stevenpiziks) wrote2016-08-05 08:48 am
Needing Money to Save Money
It's a truism that to save money, you need to have money. It makes it hard for the poor to save.
Case in point:
Darwin uncovered a refinancing program called FHA Streamline. Basically, if you have an FHA-backed mortgage (as we do), you can refinance it quickly and easily on-line and over the phone. Because Brexit has caused ripples across world markets, interest rates have dropped, including mortgage rates. Darwin contacted our mortgage lender, who ran numbers for us. Basically we got this:
--Our mortgage dropped by half a percentage point.
--Our mortgage went from 30 years to 25 years. (We already had two years in, so we essentially have a 23-year mortgage.)
--Our monthly payment DROPPED by about $200 per month.
--Due to various financial finaglings, we'll make half a mortgage payment on the first month of the new mortgage and no payment on the second month, putting one and a half months of house payment in our pockets.
This gets better.
I mentioned earlier on this blog that we had the windows redone. We had to finance them. I didn't like this idea, but Darwin pointed out the financing was 0% over five years. "You can't beat that," he said.
I asked the windows sales guy what happened if you were late on a payment, or if you missed one. "Then they charge you 20% interest, back-dated."
Darwin swore to me that, as the bill-payer, he wouldn't let that happen. The windows will save us a great deal of money in energy bills over the years and will increase the value of the house immediately. He said we have the budget for it.
Then we came across the mortgage refinancing. The amount that our mortgage payment decreased is about the same as the monthly window payment. Well, that worked out! And we'll still get the savings from lower heating bills this and every other winter.
So in the end, Darwin and I increased the value of our house, reduced the length of our mortgage, got new windows, and skipped one and a half house payments.
Now imagine that we were renting.
I've rented on and off for years. I've never had a landlord install new windows for me so my heating bills would go down. And I've never in my life had a landlord who REDUCED my rent. It always went up.
Darwin and I were able to reduce our housing expenses and get more out of our home investing because we already had the money to own a house and make improvements on it.
This is grossly unfair. People who can't get a mortgage are forced to pay rent at the whim of the landlord and never get anything back for it. People who can't afford new windows are forced to pay higher heating bills. Meanwhile, someone who already has some money is able to save yet more money.
But as a society, we scold the poor and claim it's their own fault for being poor. How are they supposed to spend less in a society that requires people to HAVE money in order to SAVE money?
Case in point:
Darwin uncovered a refinancing program called FHA Streamline. Basically, if you have an FHA-backed mortgage (as we do), you can refinance it quickly and easily on-line and over the phone. Because Brexit has caused ripples across world markets, interest rates have dropped, including mortgage rates. Darwin contacted our mortgage lender, who ran numbers for us. Basically we got this:
--Our mortgage dropped by half a percentage point.
--Our mortgage went from 30 years to 25 years. (We already had two years in, so we essentially have a 23-year mortgage.)
--Our monthly payment DROPPED by about $200 per month.
--Due to various financial finaglings, we'll make half a mortgage payment on the first month of the new mortgage and no payment on the second month, putting one and a half months of house payment in our pockets.
This gets better.
I mentioned earlier on this blog that we had the windows redone. We had to finance them. I didn't like this idea, but Darwin pointed out the financing was 0% over five years. "You can't beat that," he said.
I asked the windows sales guy what happened if you were late on a payment, or if you missed one. "Then they charge you 20% interest, back-dated."
Darwin swore to me that, as the bill-payer, he wouldn't let that happen. The windows will save us a great deal of money in energy bills over the years and will increase the value of the house immediately. He said we have the budget for it.
Then we came across the mortgage refinancing. The amount that our mortgage payment decreased is about the same as the monthly window payment. Well, that worked out! And we'll still get the savings from lower heating bills this and every other winter.
So in the end, Darwin and I increased the value of our house, reduced the length of our mortgage, got new windows, and skipped one and a half house payments.
Now imagine that we were renting.
I've rented on and off for years. I've never had a landlord install new windows for me so my heating bills would go down. And I've never in my life had a landlord who REDUCED my rent. It always went up.
Darwin and I were able to reduce our housing expenses and get more out of our home investing because we already had the money to own a house and make improvements on it.
This is grossly unfair. People who can't get a mortgage are forced to pay rent at the whim of the landlord and never get anything back for it. People who can't afford new windows are forced to pay higher heating bills. Meanwhile, someone who already has some money is able to save yet more money.
But as a society, we scold the poor and claim it's their own fault for being poor. How are they supposed to spend less in a society that requires people to HAVE money in order to SAVE money?