Tuesday, February 27, 2007

Calculating Mortgages, San Diego vs. Gulfport

This is a Pay Per Post ad. But I would have done it anyway, since I like doing these kinds of comparisons.

I live in San Diego. Housing prices here are high. Every once in a while, I consider moving to the Gulf Coast so I can go to New Orleans Saints football games and eat the delicious, fattening food. What's the relative cost of housing in San Diego compared to, say, Gulfport, Mississippi? We'll use the calculators at Credit Provide to give us an answer and see how well they do.

Here's a house near mine.

3300 square feet, nice views of the ocean, selling for about $950,000.

Here's a comparable house in Gulfport.

Same size, nice neighborhood, new house for $650,000.

Using the mortgage calculators at Credit Provide, let's see what the cost difference is. With a 30 year loan at 6%, assuming $300,000 down, buying the San Diego will force us to borrow $650,000. This breaks the mortgage calculator at Credit Provide. The calculator is this incredibly cool Shockwave application with dials and sliders. Unfortunately, the loan amounts only go up to $500,000. Additionally, the sliders go in increments of $2000 or so. Precise calculations are not possible.

The loan for the Gulfport house can be done, since that would be $350,000. Borrowing that much at 6% would cost us $2,098 per month. Simple math suggests that the San Diego loan would cost nearly double that per month. I could do a lot with $2,000 a month. Like pay for air conditioning in the summer and flee from hurricanes from time to time.

For those of you whose financial lives are totally out of control, I recommend a visit to Dave Ramsey's website and a few hours spent listening to his podcast. Between now and when you implement his sound advice, you can get payday loans.

I've never done payday loans. Using the payday loan calculators at Credit Provide, I learned that the percentage rates for these loans are a function of how much you borrow. If you borrow $500, your monthly interest rate is 46%. That makes your annual percentage (APR) rate 549%. Holy cow! If you borrow $1,000 then the APR is only 261%.

The Credit Provide website describes Payday Loans in more detail. Dave Ramsey is cheaper.

They seem to cater to people with bad credit. They've got an article about auto loans for folks with bad credit, too.

I was supposed to do a review of their mortgage calculators, so I'll just sum up with this. They were pleasing to the eye and educational (particularly the payday one), but I found them impractical to use. The limits on the mortgage calculator and the fixed increments made them irritating. What I want are simpler ones that allow me to enter in any amount down to the penny. The instant feedback with the dials is cool, but I'd give that up for precision and greater range.

They also have a simple loan calculator, but it suffers from the same problems.

Now that I've panned their product, will they still pay for this post?


4rest said...

This post has made me laugh. Thanks!

Kelly the dog said...

There are other hidden costs such as not being able to get flood insurance, the beach and ocean are not as nice, issues with the local schools, etc. You also won't need to save for retirement since you'll be enjoying the local cuisine! ;-) But you also save in terms of lower taxes on a cheaper house. The folks I know down there have a lot of extra money for travel. It comes down to an issue of priorities. For the sake of argument, Huston Texas is even cheaper!