Home Ownership, not all it's cracked up to be...

[88GT]

I don't know about that. Living in Carmel gives you many more benefits than in the 'hood. Plus, when you decide to sell, you'll see appreciation of your property. Sure, it will cost more upfront, but you'll almost always see a return on your investment. Location, location, location.

FROM A PURE DOLLAR SPENT STANDPOINT.

I didn't address the indirect monetary and non-monetary opportunity costs, just the total outlay of monies to put a maintain a roof over your head.

 

[AuntieBellum]

Utilities for home vs. old crummy apartment - virtually the same. We pay slightly more in the winter now, slightly less in the summer.

Insurance - hard to say. Lumped with car insurance. Combined with getting older and safer vehicles, insurance has gone down.

Mortgage versus rent - Mortgage is higher. BUT we were renting from my husband's parents. Believe me, the extra spent on mortgage is money WELL spent.

Having your own space to do with as your please - awesome. Truly awesome. I don't miss renting one bit.

 

[38special]

I don't think it's bad advice. In the end you'll OWN, building equity along the way, whereas if you rented, you're essentially just pissing away money. Yea, sucks that you have PMI, but that should go away after you get to 20% equity. As for the taxes, you'd still be paying that if you rented, just disguised as monthly rent. Don't forget you get the mortgage interest deduction if you itemize (for the time being).

He paid $833/month in interest/PMI/etc. He already is pissing away money

Don't but a house you can't afford. I bought my place with more than 20% down, and my loan is only $45k. The condo was built in 2006.

There ARE good deals out there - don't buy too much house and you get it paid off in no time.

 

[pjcalla]

FROM A PURE DOLLAR SPENT STANDPOINT.

I didn't address the indirect monetary and non-monetary opportunity costs, just the total outlay of monies to put a maintain a roof over your head.

Ok. Would you rather get a return on your DOLLAR SPENT, or hope to get your money back (assuming you buy)?

Sure, I could go buy a Hi-Point and get the same "protection" as spending $2,000+ on a high-end 1911. I will get my money back out of the 1911, maybe more, but won't get anything for the Hi-Point. Same thing.

p.s. - not trying to start a pissing match.

 

[grimor]

are they still talking about getting rid of the home owner interest paid credit?

 

[pjcalla]

are they still talking about getting rid of the home owner interest paid credit?

If you are talking about the Home interest deduction, yes.

 

[mik1202002]

You could always try having a realtor take a look at it and see what they think it will go for...the market sucks but you never know.

We bought a foreclosure...we didn't have 20% down but after two or three payments the loan to house value was under 80%. So we did not have to make but two or three pmi payments and then the bank refunded our pmi. Don't ask me why but I didn't say anything about it. We have a 30 year through a local bank and make bi weekly payments that they DO NOT charge us extra for making. I wanted to go 15 year like Dave Ramsey said but my wife wasn't full time yet and we didn't know what was going to happen there. But since then she has went full time and we are making basically a 15 year payment now.

We don't have much land either just a tad over an acre but the three car garage, little detached building and big backyard is nice

 

[shibumiseeker]

last year I bought my first home in Avon and it's 1200 sqft on just under a half acre lot. I pay 800 a month for taxes, mortgage, etc... My rent for my 700sqft apartment also in avon was 750 a month. so for me the only real added cost monthly was the extra utility cost and maintenance. It ALL depends on the the terms of your loan and how much you buy whether it a good deal or not. My experience says most people overspend on their house and end up getting more then the need/can afford.

This is it exactly. You look around, buy a very small house inexpensively. You work like hell yo pay it off as soon as you can and then you are payment free. The property tax is lower in a small house, and if you have any skills whatsoever, fix it up a bit, or at least maintain it. My mom is fixing to sell a house on the Owen-Monroe county line that has something like 2-3 acres a small (very small) pond, and a couple small outbuildings and a newish 2 car garage. House is about 1300 sq ft with a loft, 2 bathrooms and 2 small bedrooms. Plenty of space for a small family. It'll likely sell for around $60k. An average family could pay that off in 10 years if they buckled down and just did it. Living in a smaller place forces you to not accumulate as much stuff which also costs less in the long run, and makes it easier to move later if you want to.


I lived hand to mouth for about 7 years to pay my place off early and it's done nothing but allow me to live pretty well on a small income, and I have an asset that is worth something like 10-12 times what I paid for it 22 years ago. It's not rent vs own that's the core of this, it's making your expenses small enough that you can afford to accumulate capital, or to live on a smaller wage if you have to. Once your place is paid off then you have a higher degree of insulation against job loss and the like, and you have much more flexibility.

 

[K_W]

I don't know about that. Living in Carmel gives you many more benefits than in the 'hood. Plus, when you decide to sell, you'll see appreciation of your property. Sure, it will cost more upfront, but you'll almost always see a return on your investment. Location, location, location.

Or you do what my wife did and buy a house just outside Carmel, and wait for Carmel to swallow you up and raise your home's value. Oh, and put down a huge down payment at the start.

 

[04DarkShadowGT]

Its really not that much if any more to own, just depends on what size house. Our house was built in 2000 and with PMI, insurance, morgtage, and taxes its $850 a month. Thats not much more than our apt payment before we bought.

Besides interest is tax deductible. Housing isnt as good an investment as it once was but its still better than renting in a lot of instances.

 

[1$Chuck]

If you've got good credit, its possible to take out a 2nd mortgage to cover the differance between your down payment and the 20% required to not have to pay PMI. Then you can use that money you were wasting on PMI to pay on principle for the 2nd mortgage. Typical terms for a 2nd mortgage are usually 5 years and about 1.5 percent higher rate than the primary mortgage. Banks don't usually suggest this, but if your credit is good this option can help you keep your cash going to principle than PMI.

 

[Johnny C]

Even when I was a kid I couldnt understand why anyone would blow so much on interest buying a home.

I rented for the first 2 years after I left the nest, then decided why rent when I could buy. I popped for a cheap 4K$ trailer and fixed it up, living in it for 7 years while I saved up cash and bought 10 acres.

I built a 24 X 32 garage on my land and moved into it (with a bathroom of course)

As I could afford it (meaning paying in cash) I added on and added on and added nicer things to the inside.

Now It is almost done and it is really nice!, nicer than most folks homes I know and its free and clear!

All this time I have to give credit to my wife for putting up with it, it was hard on her...though she does benefit from all the money saved over the years. And I was already living in the garage when we got married, so...

No mortgage for me...EVER!

 

[Duncan]

and don't forget the stupid and lazy people of Indiana voted to Constitutionalize the Eternal Lien Process know as property taxes .
Instead of working to abolish them they in turn now further institutionalized it buy putting it into the Indiana Constitution ... it will take another 100 years before the idea of abolition comes about again .
The people that voted for it thought of one thing ... control the monthly cost .
Nothing about being the master of their government . Instead they made the servant the master .

Duncan

[ame=http://www.youtube.com/watch?v=svWINSRhQU0&ob=av3em]YouTube - The Police - Wrapped Around Your Finger[/ame]

Devil and the deep blue sea behind me
Vanish in the air you'll never find me
I will turn your face to alabaster
When you will find your servant is your master

 

[PistolBob]

If you've got good credit, its possible to take out a 2nd mortgage to cover the differance between your down payment and the 20% required to not have to pay PMI. Then you can use that money you were wasting on PMI to pay on principle for the 2nd mortgage. Typical terms for a 2nd mortgage are usually 5 years and about 1.5 percent higher rate than the primary mortgage. Banks don't usually suggest this, but if your credit is good this option can help you keep your cash going to principle than PMI.

I have to say, this is a very bad idea. Are you a mortgage banker by any chance?

Kids, if you want to buy a home, then save up some dough first. You can not borrow your way out of debt.

 

[Brandon]

i love having my own house.
the worst day in the house was better then the best day in my apartment.

 

[38special]

Its really not that much if any more to own, just depends on what size house. Our house was built in 2000 and with PMI, insurance, morgtage, and taxes its $850 a month. Thats not much more than our apt payment before we bought.

Besides interest is tax deductible. Housing isnt as good an investment as it once was but its still better than renting in a lot of instances.

That one always kills me "interest is tax deductable".

So, people will pay $10,000 in interest to get $2500 tax deduction. No thank you!

 

[edporch]

I always advise people to get a 30 year mortgage.
WHY?
Because by paying EXTRA every month, you can create your own mortgage of the time until payoff you choose.
There are mortgage amortization tables available to show you what you need to pay to reduce your time to payoff to 5,10,15 year of whatever you choose.

The ADVANTAGE is, if you lose your job or some other unanticipated expense comes along, you can fall back on the lower monthly payment a 30 year mortgage offers.
Then RESUME the accelerated payment when the temporary financial squeeze is over.

 

[Indy317]

It's that time of year again when my mortgage company sends me the statement telling me how much money I wasted.

~ $8k interest
~ $1200 taxes
~ $1200 PMI

For a grand total of $10,400 ish (rounding up) paid to other people. Sheesh...

Buying a house right out of school is some of THE WORST advice I've ever been given. I'd be so much further ahead had I rented a house for 5 or 10 years first.

Live and learn...

There is nothing wrong with buying a home right out of school. The only thing that hurts people with home ownership is repair bills for things like AC/heat/roof. If you rent, you lose it all. A decent place, at least in the metro area, is going to be for $600/month, if not higher. That is $7,200 a year gone. While you don't have to pay for home owners insurance, you still have to pay for renters insurance, which is still likely a couple hundred a year depending on what you claim.

The only way renting works is if you save a boat load of cash, quickly, to have a huge down payment. Here is the catch though, if you can save cash like that, you can do the same with your home. I saved cash until I had about $16K saved. I purchased a home for $130K. I put down 5%, took out a 15% HELOC, and an 80% 30 year fixed (should have did a seven year ARM, but oh well). The wife and I have saved, a bunch, and as it stands now, my home will be paid off within a couple of years. Having no kids does help, but too many people don't/can't work OT or an extra job, they spend thousands on electronics, cell phone plans, cable TV, guns, vacations, remodeling, etc.. This is because we live in a "debt is A-OK" society. That is why we have the problems we see now. My only complaint is not using our savings to really hit this principle early on. I estimate had I made similar early payments to the principle, we would have saved about $8K-$10K in interest.

Owning a home isn't necessarily a bad thing, but folks need to keep their fun money in check, and many don't. I haven't been on a "real" vacation since 2007. I went on vacations in 2005, 2006, and 2007, one of those was a honeymoon. Prior to 2005, I hadn't been on vacation for around 10 years. I did take some weekend trips, but mostly to visit friends/relatives at colleges in neighboring states. I stopped by CDs and made many cut backs in eating out. The #1 thing a person should do if they buy a home is start killing that mortgage principle. If one can't afford to really put any extra on the mortgage and they are really living a frugal life, then they either purchased too much home, or they might not ever have the income to ever purchase a home (at least not till they can get renters or a significant other).

Just for comparison, the wife and I have a combined income of $65-$75K depending on my OT. Oh, and since we don't have any kids or a large interest payment, we get zero deductions and for the last three years, I have send the IRS checks for at least $2,500 for taxes owed.

Sure, it will cost more upfront, but you'll almost always see a return on your investment. Location, location, location.

Sounds like a realtor. A home is a shelter, and should never be looked upon as an "investment." The entire concept of a home being an investment, and getting all giddy about the interest tax deduction is silly. Those things are used by sales people, I mean realtors, to get folks to buy homes and make themselves money. I paid $130K for my home, I put in about $8,000 in "upgrades." I would be lucky to get $100K for my home at this point in time. I likely will never see anything near what I paid for this home for quite sometime now. I wouldn't mind moving into Hamilton Co., but at this time, there is really no reason for me to do so. Even with that, I have seen home prices get slashed in Hamilton County. I have seen the exact same homes go down just like my home. A home is never an investment, it is your shelter. Too many folks buy based on what they want, not what they need.

 

[Jeremy05]

If you plan on staying in a home for 5+ years you are much better of buying than renting. Especially if you get a good deal in this economy.

 

[billt]

For 98% of th people that own homes, if you had to go rent a place today, you will pay the same if not more than you do for a mortgage. So you are paying the same very month, but you are pratically paying 100% interest because you will never see any of it again.

If you can afford it, buy it. The more money you put down the better. But regardless, buying is good.

+ 1,000 !

The problem today is most people over borrow, or at least did. As a result they don't have, as Hussein likes to put it, "Any skin in the game". Today for a 15 or 30 year conventional mortgage you are going to be required to put at least 20% down. Some mortgage companies are requiring 25% with Sterling Silver credit to go along with it. That will knock many out of the box.

People today are looking at a golden opportunity in the real estate market. Prices are going to continue to drop in this next year because there will be another estimated 3 million foreclosures taking place in the market in 2011. This could tank prices another 15 to 20 percent across the board.

For people who have good financial discipline and can put enough away over the next few years, they are going to make out well. Those who keep pissing their money away will be renting until doomsday. Save every dime you can because opportunity awaits. Those who capitalize on these ultra low real estate prices will benefit the most when this abysmal market recovers. It will. It's only a matter of when, not if. Every bad real estate market is followed by a good one. Bill T.