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Is Buying A Home Wise?

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Forum Name: Business / Finance / Money
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Printed Date: Nov 14 2019 at 8:48pm


Topic: Is Buying A Home Wise?
Posted By: BonaFideDiva
Subject: Is Buying A Home Wise?
Date 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?



Replies:
Posted By: Sheryse
Date 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..


Posted By: SparkleDiva
Date Posted: Oct 27 2007 at 8:09pm
Hey BFD!!! Well one advantage would be the tax breaks.


Posted By: EPITOME
Date 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...


Posted By: BonaFideDiva
Date 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.


Posted By: SuperNova
Date 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
 
http://www.realestateabc.com/homebuying/goodidea.htm" rel="no follow - http://www.realestateabc.com/homebuying/goodidea.htm
 


Posted By: EPITOME
Date 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


Posted By: Kael
Date Posted: Oct 28 2007 at 8:36am
When the alternative is renting, buying a home is definitely a smart investment!!! 


Posted By: Kael
Date 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.


Posted By: Conceited
Date 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


Posted By: Conceited
Date Posted: Oct 28 2007 at 9:48am
Originally posted by Kael Kael wrote:

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.
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.


Posted By: Sheryse
Date Posted: Oct 28 2007 at 10:23am
Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Posted By: naijasbeauty
Date Posted: Oct 28 2007 at 10:34am
Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Property tax is tax deductible. So that is the good part. This is a buyers market so I say get in while good. Obviously be wise about it but you can really negotiate prices. Also let's say 5 yrs from now you go to sell & the market is not in your favor then simply rent. There is an inverse relation between the home buying market & the renting market. When one is up the other is down. You can just mitigate your cost for the time being by renting. That is essentially what you are doing right now renting... Paying off someone elses mortgage with no Thank You & nothing to show for it. They get all the tax break & you get nothing. Ouch


Posted By: Kael
Date Posted: Oct 28 2007 at 10:47am
Originally posted by naijasbeauty naijasbeauty wrote:

Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Property tax is tax deductible. So that is the good part. This is a buyers market so I say get in while good. Obviously be wise about it but you can really negotiate prices. Also let's say 5 yrs from now you go to sell & the market is not in your favor then simply rent. There is an inverse relation between the home buying market & the renting market. When one is up the other is down. You can just mitigate your cost for the time being by renting. That is essentially what you are doing right now renting... Paying off someone elses mortgage with no Thank You & nothing to show for it. They get all the tax break & you get nothing. Ouch


Thanks for chiming in. You said just about everything I wanted to say!


Posted By: Kael
Date Posted: Oct 28 2007 at 10:48am
Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Those property taxes are built INTO your rent! You just don't know it, girl! And, like Naijasbeauty (off topic, but that's such a pretty name!) said, your landlord/the property owner gets to take the deduction, not you!


Posted By: BkGurl37
Date Posted: Oct 28 2007 at 4:54pm
This discussion reminds me of the book Rich Dad, Poor Dad. He makes a good point about how owning a home is really a liability as opposed to an asset. BFD I understand what you're saying cause I used to question that all the time myself. But I see owning a home more of an asset when you own multiple properties that hopefully pay for themselves. If you were to own another property and rent it out depending on the area you purchased the property you may be able to make enough money to pay the mortgage for that home as well as your own and be able to keep some pocket money to invest in your Roth 401k. I'm not talking about renting a one family home, but more so a 3 family home. Living in NYC it will be IMPOSSIBLE for me to purchase anything right now, but I feel if I was somewhere down south, I would be able to invest in properties and make some extra income.

But if I were to choose between renting and owning, I would definitely choose to own because you have the option to make changes to the home and add your own personal touch to it. The tax breaks are just the icing on the cake. JMO


Posted By: FLLWLover
Date Posted: Oct 28 2007 at 5:32pm
I think buying a home is wise as a starting point. BFD you're an accountant so the tax reduction/write-off part is likely no big deal for you to find.
 
However, the reality is just as BkGurl said. Your 1st home is really a liability. (FYI though, it's no better in the south. The rate of pay vs. cost of living is skewed, making very difficult to purchase extra properties)
 
I mean yes though you get the "pride" of home ownership, your surprises are really very minimal. & if you pay on time, you'll never have to worry about being told that your apt will become condos & you need to move..
 
One of the good things, is if you're willing to take the risk, it can be used as leverage...


Posted By: Sheryse
Date Posted: Oct 28 2007 at 5:35pm
Confused

If I could afford a home don't think I wouldnt buy one my point was that since my income is limited I am glad that I rent for now.. 



Posted By: mstoini
Date Posted: Oct 28 2007 at 5:47pm
very good post!  I think it also depends on the area.  Where I bought my house, my monthly payment (including what I put in for taxes each month) is not much more greater than if I rented so it was a no-brainer for me but I guess it makes sense that if you're in an area where that payment is double your rent where you may want to rethink it.  Still, it's like you're not giving your money to something that you're not going to own anyway.  That part is hard to get past.


Posted By: BonaFideDiva
Date Posted: Oct 28 2007 at 6:05pm
Originally posted by Sheryse Sheryse wrote:

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..
 
Better long term? How so? If I go the term of the loan, I am paying a little over a million dollars for a $250K home. And even if my house doubles in value, Im still at a loss.
 
And what LIQUID financial value is in owning a home? If you want to pull out on your equity, you have to take out a LOAN. The bank aint giving out cash, LOL.
 
There IS no liquid financial value. Owning a home cant get u nothing but another loan.


Posted By: BonaFideDiva
Date Posted: Oct 28 2007 at 6:06pm
Originally posted by SparkleDiva SparkleDiva wrote:

Hey BFD!!! Well one advantage would be the tax breaks.
 
Girl gimme a breakLOL
 
Im an accountant. I been finding tax breaks for years.
 
Or lets say ur tax liability gets decreased by $1000 per year. well, over the course of 30 years I would be saving $30,000....but I still paid out $1 million...so Im still at a loss of $970K....
 
Id rather pay the $30K Confused


Posted By: BonaFideDiva
Date Posted: Oct 28 2007 at 6:08pm
Originally posted by Janoviab Janoviab wrote:

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
 
http://www.realestateabc.com/homebuying/goodidea.htm" rel="no follow - http://www.realestateabc.com/homebuying/goodidea.htm
 

Not true.

A return on an investment is LIQUID. No one is GIVING you that $10K a year you get in equity. So its all a perception. It aint real. All u can do with that $10K is get a loan for that amount...which means interest.
 
Id rather get a T Bill (treasury note). They SEND u ur check twice a year!


Posted By: Sheryse
Date Posted: Oct 28 2007 at 6:10pm
Originally posted by BonaFideDiva BonaFideDiva wrote:

Originally posted by Sheryse Sheryse wrote:

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..
 
Better long term? How so? If I go the term of the loan, I am paying a little over a million dollars for a $250K home. And even if my house doubles in value, Im still at a loss.Shocked
 
And what LIQUID financial value is in owning a home? If you want to pull out on your equity, you have to take out a LOAN. The bank aint giving out cash, LOL.
 
There IS no liquid financial value. Owning a home cant get u nothing but another loan.
 
Shocked Dayum..
 
Know that you put it that way..
You are the accountant!!LOL
 
 
 
 
 
 


Posted By: BonaFideDiva
Date Posted: Oct 28 2007 at 6:11pm
Originally posted by Conceited Conceited wrote:

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
\
 
But how about this. Mortgages are going to be MORE than rent. PERIOD. I dont care what anyone says.

Why not take the amount which your mortgage would exceed your rent nad invest that?
 
How is it an asset? Usually, assets generate income. Unless you SELL, u aint gonna see no equity.
 
Hell if I stay in my house for 30 years and pay over $1 million, i better not have a damn living expense! sh*t


Posted By: BonaFideDiva
Date Posted: Oct 28 2007 at 6:12pm
Originally posted by naijasbeauty naijasbeauty wrote:

Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Property tax is tax deductible. So that is the good part. This is a buyers market so I say get in while good. Obviously be wise about it but you can really negotiate prices. Also let's say 5 yrs from now you go to sell & the market is not in your favor then simply rent. There is an inverse relation between the home buying market & the renting market. When one is up the other is down. You can just mitigate your cost for the time being by renting. That is essentially what you are doing right now renting... Paying off someone elses mortgage with no Thank You & nothing to show for it. They get all the tax break & you get nothing. Ouch
 
This tax break aint monumental ya'll!
 
And when ur renting, you have to still pay for repairs, etc. In addition, property tax is still ur liability. God forbid you have HOA dues.


Posted By: naijasbeauty
Date Posted: Oct 28 2007 at 6:49pm
Originally posted by BonaFideDiva BonaFideDiva wrote:

Originally posted by naijasbeauty naijasbeauty wrote:

Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Property tax is tax deductible. So that is the good part. This is a buyers market so I say get in while good. Obviously be wise about it but you can really negotiate prices. Also let's say 5 yrs from now you go to sell & the market is not in your favor then simply rent. There is an inverse relation between the home buying market & the renting market. When one is up the other is down. You can just mitigate your cost for the time being by renting. That is essentially what you are doing right now renting... Paying off someone elses mortgage with no Thank You & nothing to show for it. They get all the tax break & you get nothing. Ouch
 
This tax break aint monumental ya'll!
 
And when ur renting, you have to still pay for repairs, etc. In addition, property tax is still ur liability. God forbid you have HOA dues.


The tax break is not monumental but at this point I will rather pay a mortgage than continue to pay $2,500 a month in rent. At least that money is going to something that is MINE. I can do to it as I please. Renting & buying both have their positives & negatives but if I work out the utilitarian math on whether I should continue to own or rent? Owning my own place is a greater utility uptick. Every dollar counts & no matter how small or big the tax return it's still something compared to renting. BTW in my renting situation, I still have to pay a HOA fee (instead they call it $600/yr soon to be $800/yr for "amenities" fee). & no this doesn't include the mandatory $105/mnth technology fee I must pay. simply covering internet & surround sound system in the unit. Cable packages, land line etc are out of my pocket extra.


Posted By: naijasbeauty
Date Posted: Oct 28 2007 at 6:50pm
Originally posted by Kael Kael wrote:

Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Those property taxes are built INTO your rent! You just don't know it, girl! And, like Naijasbeauty (off topic, but that's such a pretty name!) said, your landlord/the property owner gets to take the deduction, not you!


Thanks KaelEmbarrassed


Posted By: BkGurl37
Date Posted: Oct 28 2007 at 7:00pm
I like this thread BFD...A lot of good information on here


Posted By: BonaFideDiva
Date Posted: Oct 29 2007 at 10:05am
Originally posted by Sheryse Sheryse wrote:

Originally posted by BonaFideDiva BonaFideDiva wrote:

Originally posted by Sheryse Sheryse wrote:

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..
 
Better long term? How so? If I go the term of the loan, I am paying a little over a million dollars for a $250K home. And even if my house doubles in value, Im still at a loss.Shocked
 
And what LIQUID financial value is in owning a home? If you want to pull out on your equity, you have to take out a LOAN. The bank aint giving out cash, LOL.
 
There IS no liquid financial value. Owning a home cant get u nothing but another loan.
 
Shocked Dayum..
 
Know that you put it that way..
You are the accountant!!LOL
 
 
 
 
 
 
 
LOL @ Sheryse
 
Im just saying. I am trying to look at it from a logical perspective.
 
With stock, you invest a certain amount. You get paid dividends. You can CHOOSE whether to cash them or reinvest them. You do NOT have that option with a house.


Posted By: BonaFideDiva
Date Posted: Oct 29 2007 at 10:07am
Originally posted by naijasbeauty naijasbeauty wrote:

Originally posted by BonaFideDiva BonaFideDiva wrote:

Originally posted by naijasbeauty naijasbeauty wrote:

Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Property tax is tax deductible. So that is the good part. This is a buyers market so I say get in while good. Obviously be wise about it but you can really negotiate prices. Also let's say 5 yrs from now you go to sell & the market is not in your favor then simply rent. There is an inverse relation between the home buying market & the renting market. When one is up the other is down. You can just mitigate your cost for the time being by renting. That is essentially what you are doing right now renting... Paying off someone elses mortgage with no Thank You & nothing to show for it. They get all the tax break & you get nothing. Ouch
 
This tax break aint monumental ya'll!
 
And when ur renting, you have to still pay for repairs, etc. In addition, property tax is still ur liability. God forbid you have HOA dues.


The tax break is not monumental but at this point I will rather pay a mortgage than continue to pay $2,500 a month in rent. At least that money is going to something that is MINE. I can do to it as I please. Renting & buying both have their positives & negatives but if I work out the utilitarian math on whether I should continue to own or rent? Owning my own place is a greater utility uptick. Every dollar counts & no matter how small or big the tax return it's still something compared to renting. BTW in my renting situation, I still have to pay a HOA fee (instead they call it $600/yr soon to be $800/yr for "amenities" fee). & no this doesn't include the mandatory $105/mnth technology fee I must pay. simply covering internet & surround sound system in the unit. Cable packages, land line etc are out of my pocket extra.
 
So you would rather have a $30,000 tax break over thirty years and be at a liquid loss of $750,000? Just to say you own something? Since every dollar counts, you'd rather be at a loss and own something (that if you sell wont even allow you to break even)? And thats not even including HOA dues and technology fees. Confused


Posted By: BonaFideDiva
Date Posted: Oct 29 2007 at 10:10am
Originally posted by naijasbeauty naijasbeauty wrote:

Originally posted by Kael Kael wrote:

Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Those property taxes are built INTO your rent! You just don't know it, girl! And, like Naijasbeauty (off topic, but that's such a pretty name!) said, your landlord/the property owner gets to take the deduction, not you!


Thanks KaelEmbarrassed
 
ok...so the landlord gets a itty bitty tax deduction. if ur 'renter property taxes' are already included, then owning puts you at an evern GREATER loss, cause property taxes arent even included in your mortgage in some cases.
 
I promise, if you were to invest the diff between your rent and mortgage+interest+hoa dues+property taxes over thirty years you could buy a house cash...


Posted By: queenzkid
Date Posted: Oct 29 2007 at 10:38am
Originally posted by BkGurl37 BkGurl37 wrote:

I like this thread BFD...A lot of good information on here
 
I concur Geek


Posted By: hazelis79
Date Posted: Oct 29 2007 at 11:09am
Originally posted by BonaFideDiva BonaFideDiva wrote:


 I promise, if you were to invest the diff between your rent and mortgage+interest+hoa dues+property taxes over thirty years you could buy a house cash...
 
It seems like the best way to maximize the investment on your home is to minimize that difference between your mortgage expenses and what you'd typically pay for rent.
 
When I had my second baby, we were looking at renting a 3 bedroom townhouse in a decent neighborhood for 1100-1200 per month. That's when I decided to look for a house. We were able to get our mortgage for 1000 (included taxes) a month. The other expenses were just 600/yr insurance and 300/yr HOA fees. We still came out cheaper. We had an almost new house that didn't require any maintenance except checking the AC a few times. When we sold our house 2 years later to move out of state, we walked away with a $50,000 check. I don't see how we could have come out better than that. Now that was in Florida, and before the market went south though.


Posted By: Kael
Date Posted: Oct 29 2007 at 1:18pm
Originally posted by BonaFideDiva BonaFideDiva wrote:

Originally posted by naijasbeauty naijasbeauty wrote:

Originally posted by Kael Kael wrote:

Originally posted by Sheryse Sheryse wrote:

Originally posted by Conceited Conceited wrote:

[
 
Yea, but what about property taxes?? And the housing market is so slow, that I dont think ppl can sell their house like they used to. Its a lil iffy now.
 
 
Exactly...When I hear what some people say they pay for property taxes, I am so glad I rent..


Those property taxes are built INTO your rent! You just don't know it, girl! And, like Naijasbeauty (off topic, but that's such a pretty name!) said, your landlord/the property owner gets to take the deduction, not you!


Thanks KaelEmbarrassed
 
ok...so the landlord gets a itty bitty tax deduction. if ur 'renter property taxes' are already included, then owning puts you at an evern GREATER loss, cause property taxes arent even included in your mortgage in some cases.
I promise, if you were to invest the diff between your rent and mortgage+interest+hoa dues+property taxes over thirty years you could buy a house cash...


A person can invest the different between their rent and mortgage+interest+hoa dues+property taxes over thirty years and come out at a loss, too. Coulda, shoulda, woulda. Among the many other reasons for valuing ownership that have already been mentioned in this thread, I'd rather diversify by adding a few safe investments, such as real estate. There's no reason to treat home ownership and stock investments as mutually exclusive.






Posted By: daviscpcinc
Date Posted: Oct 29 2007 at 8:28pm

Yes - buying a home is wise in most cases. a savey investor could probably realize a greater return on investment.  Me - I would be spending the cash not used to pay the mortgage. Embarrassed

My homes values doubled in 7 years.  Yea...prices were inflated a bit so I don't expect this rate to continue - but I do expect the value to continue to increase at a rate higher than I would achive if I invested the same dollars in stocks/mutual funds.
 
Your taxes are reduced by the property taxes you pay - and - by the interest you pay on the loan (assuming you itemize).
 
In addition to income tax reduction - as BFD stated - you can use the property to secure loans.  This little feature enabled several people I know from being homeless when they were out of work for extended periods.
 
If I keep the home until it is paid for (30 year mortgage for me) I expect the property to be worth the total amount I paid for the mortgage. 
 
BFD - give up some of those tax tips girl! My current reductions are ok - but I am always looking for moreWink


Posted By: mstoya25
Date Posted: Oct 29 2007 at 8:46pm

My grandma bought her house for 15K in 1956, and her house is appraised at 392K....Good investment!



Posted By: uppitynegroid
Date Posted: Oct 29 2007 at 10:45pm
Great thread.  I'll keep lurking.


Posted By: Sheryse
Date Posted: Oct 29 2007 at 11:01pm
Originally posted by mstoya25 mstoya25 wrote:

My grandma bought her house for 15K in 1956, and her house is appraised at 392K....Good investment!

 
 
Wow..


Posted By: SuperNova
Date Posted: Oct 29 2007 at 11:38pm

BFD, you're looking at the home as only doubling over the length of the mortgage. It will more than likely increase much more than thatright along with the rate of the dollar itself.  Also, you have to consider that the value of a dollar is ever changing throughout time so what you get it for now is essentially locking in a lower dollar value to spend out.  But as your home increases in value you get the benefit of the increasing value of a dollar, should you choose to sell.  Check out this example of the change in the value of 200,000 from 1977 through 2006. 

 

In 2006, $200,000.00 from 1977 is worth:

$665,236.76 using the Consumer Price Index
$545,326.86 using the GDP deflator
$0.00 using the value of consumer bundle
$620,488.71 using the unskilled wage
$954,672.38 using the nominal GDP per capita
$1,299,394.36 using the relative share of GDP
 
I snathced this info from http://measuringworth.com/calculators/uscompare/" rel="no follow - http://measuringworth.com/calculators/uscompare/
 
So think about the steady increase in the value of that money, hopefully the rate of pay will increase accordingly just as it has been, historically. 
 
Also, if you were to buy a home, would you do the starter home, then sell it or would you buy a home for the long haul as something to leave as an inheritance for your family?  Think about the benefits a home could have to your heirs.  Especially if you pay it off before you leave, then you are essentially giving them that house as a memory or a large ticket item for sale.  And I'm sure a lady like you also would have life insurance so that your heirs would be covered financially to maintain a home if they needed to.
 


Posted By: StrayFish
Date Posted: Oct 30 2007 at 9:38am
dp


Posted By: insomniac76
Date Posted: Oct 30 2007 at 10:22am
Hi I actually know quite a bit about this subject. To be honest your paranoia is correct. The housing bubble is the issue. your house will soon be worth less than what you paid for it. on the upside you may lose money if you dont rent smart so its a catch 22. I was in that predicament also what i chose to do was rent out my home and moved into a cheaper second property that i purchased. The rent I collect from the first home pays for its own mortgage and 50% of the mortgage on my second home. so this way now i own 2 properties and im only coming out if pocket a few hundred dollars each month. I have very smart advisors, they have told me that if you want to consider home buying as an investment (which should ALWAYS be the foremost thing on your mind) , then the first property you buy should NOT be for YOU to live in but rather a property that you can rent out as RENTS are more stable in increasing than real estate prices so you are likely to actually make more money renting out your home than you would save by living in it yourself. THEN you decide based what you have left over, how much home YOU yourself can afford to live in. this will usually be something less expensive than the first home you're renting out. So for me NOW with this arrangement I am spending less money than i was when i was renting and I have much more property.


Posted By: AlabamaKinks
Date Posted: Oct 30 2007 at 9:01pm
 
Wait till your neighbors go for broke & start renting their condos out to Section 8'ers........I bet it won't be worth half a million then.


Posted By: Ayesha-Ju
Date Posted: Oct 31 2007 at 9:48am
Originally posted by insomniac76 insomniac76 wrote:

Hi I actually know quite a bit about this subject. To be honest your paranoia is correct. The housing bubble is the issue. your house will soon be worth less than what you paid for it. on the upside you may lose money if you dont rent smart so its a catch 22. I was in that predicament also what i chose to do was rent out my home and moved into a cheaper second property that i purchased. The rent I collect from the first home pays for its own mortgage and 50% of the mortgage on my second home. so this way now i own 2 properties and im only coming out if pocket a few hundred dollars each month. I have very smart advisors, they have told me that if you want to consider home buying as an investment (which should ALWAYS be the foremost thing on your mind) , then the first property you buy should NOT be for YOU to live in but rather a property that you can rent out as RENTS are more stable in increasing than real estate prices so you are likely to actually make more money renting out your home than you would save by living in it yourself. THEN you decide based what you have left over, how much home YOU yourself can afford to live in. this will usually be something less expensive than the first home you're renting out. So for me NOW with this arrangement I am spending less money than i was when i was renting and I have much more property.
 
I agree, in my parents neighborhood its mainly military families who buy their house and then when it gets time to move they rent it out.  Some come back to the house later if they choose to retire, but most retire/ live somewhere else and just rent out the house in the neighborhood.  And the main people they rent to are soldiers who rather live in a house than in the barracks or an apartment, because they feel they have more freedom (play music loud, have barbeques, things like that) and its cheaper for them because they usually have roomates who are soldiers too, so everyone benefits. 
 
My first house I'm going to buy, its going to be for renting only.  (i still need to send you a house warming gift lol, I'll wait till Korea to get something nice for ya)


Posted By: EPITOME
Date Posted: Oct 31 2007 at 3:18pm
well suze o. is on oprah talking about the housing bubble....this is an interesting thread bc i really would like to buy a condo next year wherever i go to grad school


Posted By: naijasbeauty
Date Posted: Nov 03 2007 at 9:32pm
This is a great article to read:

http://www.realgroup.com/Asset_Management/FinancialPlanning-Mortgage.pdf


Posted By: gapeach1978
Date Posted: Nov 09 2007 at 11:35am
Honest i don't see the point in buying a house because you still don't own it until you make that last payment 40 years down the road so you are still renting, miss a house payment if you want to and see what happens they will put your stuff out just  as quick as if you where living in an apt. i think it's a waste of money if you are not able to pay for it right out in cash for the simple reason that zoning changes all the time one day you are living in a nice house and the the next day they are building a super plaza across the street and that makes your value drop


Posted By: lovelynatural81
Date Posted: Nov 12 2007 at 9:24pm
Here is my two cents plain and simple.....
 PLain and simple yes a house can have its ups and downs but in the end this is where I live. I pay double payments so that I can pay my house off sooner and pay out less money. 15 years is def better than 30.
When I have paid it off ...yes I will have still have property tax but no payment...so I will be rent free.I plan to pay myself my own mortgage to save. Who wants to continue to pay out rent with no stability....you own nothing in the end that is the long and short of it. People must also live within there means, buy a house that is right for them, be sure of the type of loan you are getting.......you dont want an interset only mortgage, which is why loads of people are foreclosing now,you want a fixed rate if you plan to live in the house more than 5 years...This conversation could go on forever. In the end you have to decide what will be best for you and your future(family,etc).
 
A House or Apartment
Something to your name or rent for the rest of your life
In either case anything could happen to either place but at this point in my life( even with a soft market) I love my house.
That is what I chose.
 
 
PS. Hey BFD long time no speak...when are you paying me a visit....or better yet I need to come see your new spot....from the photos it looks great


Posted By: insomniac76
Date Posted: Nov 12 2007 at 10:04pm
Originally posted by gapeach1978 gapeach1978 wrote:

Honest i don't see the point in buying a house because you still don't own it until you make that last payment 40 years down the road so you are still renting, miss a house payment if you want to and see what happens they will put your stuff out just  as quick as if you where living in an apt. i think it's a waste of money if you are not able to pay for it right out in cash for the simple reason that zoning changes all the time one day you are living in a nice house and the the next day they are building a super plaza across the street and that makes your value drop


This is not all true. The difference is if you buy it, its yours to sell which puts you in a much better position than someone who's renting. Also if it increases in value then that increase belongs to you. This goes back to my last comment. If you're buying with the mentality that you're looking for a nice place for YOU to live then yes... you might as well rent. BUT if you are buying as an investment then you will put other factors into play when you shop. for instance, is the home in an up and coming area? or have the homes in this area already topped off in value. Is someone else going to see the value in this home should i chose to rent or sell it? or am i JUST buying for ME. You should be looking at you home like your going to buy a pair or really nice popular shoes that may or MAY NOT be 100% your own style but you know they will warm your feet and retain their value when you're ready to move on. By purchasing, you can increase your credit and net worth. by renting you never gain anything. BUT if you buying for your own pleasure you may find yourself in trouble if you have not thought it out. My friend bought HER dream house then had three kids and now that house is too small for her. She didn't factor in what someone else would think of the home nor the area. now she basically is willing to take any offer she can get. The home was great for HER but it wasn't a wise investment. Truth is she couldnt afford an investment home at the time so in her case she should have waited and purchased a home later.


Posted By: Badzchic
Date Posted: Nov 15 2007 at 9:05pm
I really think it depends on the deal.  I bought my house brand new built from the grown up.  My fixed interest rate is 5.5%.  My taxes are extremely cheap due to the fact I live in an empowerment zone which means I get the tax break for 15 years.  I now have a husband and 2 kids and my mortgage is way less then rent here in Michigan.  We pay 600.00.  We have 3 bedrooms, 2 full bathrooms, an attached garage and unfinished basement.  My mortgage makes perfect sense.  So it really has to do with the deal.  Also when I bought my home I only made 30,000 a year.  Together my husband and I make 4 times that now.   So it truly has to do with the deal and looking in the long run.    


Posted By: LadyZini
Date Posted: Nov 17 2007 at 4:27pm
You have to live somewhere, so why not own your own home?

It is important to get the right house and not overstretch yourself.

At the end of the day, who wants to be retired and still paying rent?


Posted By: Jaden
Date Posted: Nov 25 2007 at 3:11pm
I think it depends on how you're looking at paying off debt. My folks got a 25yr mortgage on our house and paid it off in 7 years. If you're only looking at paying the minimum monthly payments over 30 yrs, then yes,  you may lose money....but if you get bonuses, a raise, Christmas money from family, etc and you increase your payments, you won't be stuck with loss via high interest in the end.
 
It's similar to the situation with credit cards. My dad has the option to pay the minimum a month for say, 3 yrs, but to avoid high interest, he pays off as much as he can, as soon as he can. His credit cards are usually all paid off within a few months. He's a banker, has a good business head on his shoulders and I'm trying to be like him.
 
Anyway, said all that to say that I still think buying a home is VERY wise. I'd rather invest my money in something that is mine and that I eventually will see a return on, than literally throw my money that i will NEVER, EVER see again, into the pockets of a landlord.



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