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BonaFideDiva View Drop Down
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Direct Link To This Post Topic: Is Buying A Home Wise?
    Posted: Oct 27 2007 at 4:51pm
Is it a smart investment? I look at how much my mortgage is...and by the time I am done making the monthly payments for the term of the loan, I will have paid about $1,055,900 for a $250K home.
 
Now...even if my house doubles and is worth $500K, I am still over $500K out of pocket! More so, if I want to 'pull out' the equity, Id have to do that by securing MORE debt. So how is it an asset if it generates more liability? That makes no sense.
 
(Sorry Im in accounting mode).
 
I think that if you are buying a home to live in it and not sell it within 5 years or so you are at a loss.
 
My rent was half my mortgage. Why not just invest the other half in a Roth IRA for the same term of my mortgage?
 
I mean besides collateral (and flipping I guess)...what else is a home ownership good for?
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Direct Link To This Post Posted: Oct 27 2007 at 5:23pm
That's a dayum good question, it seem like you are still better long term wise I know people who have been renting apt/homes for years and they will never own that property, at least this is something you will someday own, or maybe even be able to sell and make a profit...
Besides that is seems like owning a home is hellish you are responsible for the upkeep,landscaping etc..  I am in Michigan and it seems people are selling their homes and moving into apts..
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Direct Link To This Post Posted: Oct 27 2007 at 8:09pm
Hey BFD!!! Well one advantage would be the tax breaks.
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Direct Link To This Post Posted: Oct 27 2007 at 8:13pm
i was asking someone about buying a condo when i get into grad school and they told me the other day that if you're not holding on to your home for at least five years you will lose money...
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Direct Link To This Post Posted: Oct 27 2007 at 8:15pm
Sparkle:
 
Im an accountant. I can find a tex shelter easily, LOL.
 
PrettyGirl:

That is a generalized statement that can be true or false depending on many factors (inflation, interest rates, property value, raise in value over time, etc.)
 
In some cases it is true...in others false.
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Direct Link To This Post Posted: Oct 27 2007 at 11:58pm

Why Buying a Home is a Good Idea

The Best Investment

As a fairly general rule, homes appreciate about four or five percent a year. Some years will be more, some less. The figure will vary from neighborhood to neighborhood, and region to region.

Five percent may not seem like that much at first. Stocks (at times) appreciate much more, and you could easily earn over the same return with a very safe investment in treasury bills or bonds.

But take a second look…

Presumably, if you bought a $200,000 house, you did not pay cash for the home. You got a mortgage, too. Suppose you put as much as twenty percent down – that would be an investment of $40,000.

At an appreciation rate of 5% annually, a $200,000 home would increase in value $10,000 during the first year. That means you earned $10,000 with an investment of $40,000. Your annual "return on investment" would be a whopping twenty-five percent.

Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.

Your rate of return when buying a home is higher than most any other investment you could make.

I snatched this from
 
 
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Direct Link To This Post Posted: Oct 28 2007 at 8:22am
this guy was on 20/20 the other day essentially encouraging people not to buy homes bc of the bubble market and other factors. didn't read the entire thing but he talks about real estate agents lying and telling you to buy when you shouldn't

http://patrick.net/housing/crash.html
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Direct Link To This Post Posted: Oct 28 2007 at 8:36am
When the alternative is renting, buying a home is definitely a smart investment!!! 
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Direct Link To This Post Posted: Oct 28 2007 at 8:45am
Originally posted by prettygirl16 prettygirl16 wrote:

i was asking someone about buying a condo when i get into grad school and they told me the other day that if you're not holding on to your home for at least five years you will lose money...


I have to disagree with that someone! I bought a place for my last two years of undergrad (sold just before graduating), and bought again in a different city when I went to law school. Between the mortgage interest deduction and the $17,000 profit in the selling price of my condo last May, it almost makes me ill just thinking about all the money I would have poured down the drain if I had rented instead.
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Direct Link To This Post Posted: Oct 28 2007 at 9:46am
Originally posted by BonaFideDiva BonaFideDiva wrote:

Is it a smart investment? I look at how much my mortgage is...and by the time I am done making the monthly payments for the term of the loan, I will have paid about $1,055,900 for a $250K home.
 
Now...even if my house doubles and is worth $500K, I am still over $500K out of pocket! More so, if I want to 'pull out' the equity, Id have to do that by securing MORE debt. So how is it an asset if it generates more liability? LOLThat makes no sense.
 
(Sorry Im in accounting mode).
 
I think that if you are buying a home to live in it and not sell it within 5 years or so you are at a loss.
 
My rent was half my mortgage. Why not just invest the other half in a Roth IRA for the same term of my mortgage?
 
I mean besides collateral (and flipping I guess)...what else is a home ownership good for?
 
I am thinking about retirement. You can retire earlier if your home is paid for.Big%20smile Rent, and mortgage are the most expensive things we pay for. It is a liability when you are young BUT, it can be an asset in your golden years.Big%20smile
 
Now, about property taxes.........Confused
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