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Home Ownership in America in the 21st Century. Is it still worth it?
Old 4 weeks ago
  #31
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Bob Ross's Avatar
 

Quote:
Originally Posted by Derp View Post
is there any incentive to owning your own home these days?
Bought my first apartment in 2004. Mortgage + maintenance were approximately equal to what I had been paying rent. So that's a wash.

And then four years later I sold that first apartment for a $100,000.00 profit.

So that's the upside.
Old 4 weeks ago
  #32
A few years ago I refinanced my home. The results yielded a savings of approximately $500 per month. I was real glad about that and then my property tax was increased by $200 more per month!
Old 3 weeks ago
  #33
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Just for amusement, I looked up the house my parents bought in 1960 for $18k on Zillow.

It's now at $1.3m. Tiny little thing.

Guess it depends on where you want to live!

If you were in the countryside somewhere it'd be a lot more reasonable, I'm sure.
Old 3 weeks ago
  #34
Quote:
Originally Posted by realtrance View Post
Just for amusement, I looked up the house my parents bought in 1960 for $18k on Zillow.

It's now at $1.3m. Tiny little thing.

Guess it depends on where you want to live!

If you were in the countryside somewhere it'd be a lot more reasonable, I'm sure.
Yes indeed! Real State is still one of the most solid investments one can make.
Old 3 weeks ago
  #35
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As my father used to say, there will always be less land over time, so the value of real estate long term always goes up.

There are bubble markets and periods, for sure, but long term if you can stay in one place, it's the best choice to make.
Old 3 weeks ago
  #36
Quote:
Originally Posted by realtrance View Post
As my father used to say, there will always be less land over time, so the value of real estate long term always goes up.

There are bubble markets and periods, for sure, but long term if you can stay in one place, it's the best choice to make.
Until you downsize or move somewhere less desirable, you also ever make "real" money on your primary residence though - because when you want to move, everywhere else has gone up in value too.

That said, I'm still really glad we could buy when we did. I haven't paid off any of the capital, but our (rented out) property pays for itself plus a bit extra each month, while we were living there it was much cheaper than renting, and it's gone up in value 50% or more in 10 years.
Old 3 weeks ago
  #37
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Yeah, moving's always the issue. The numbers used to say, stay in a place at least 5 years and you'll at least break even (counting purchase costs, real estate agent commission, the usual traditional model).

Problem is, many people increasingly move every few years; so in that case, unless you want to become a remote landlord (or these days, there are companies who you can pay to handle that), purchasing may not make any sense.

I think this is a bit over the top, but at least it can be amusingly instructive for some:

https://youtu.be/YtoEoHpZFOo

Old 3 weeks ago
  #38
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Quote:
Originally Posted by psycho_monkey View Post
Until you downsize or move somewhere less desirable, you also ever make "real" money on your primary residence though - because when you want to move, everywhere else has gone up in value too.
This is true buy it is still possible to make savings in real terms due to increase in value over time. If you buy with a 10% deposit and the value of the property goes up, when you come to remortgage the monthly repayments can come down considerably as the loan to value decreases.
Old 3 weeks ago
  #39
Quote:
Originally Posted by Phil0 View Post
This is true buy it is still possible to make savings in real terms due to increase in value over time. If you buy with a 10% deposit and the value of the property goes up, when you come to remortgage the monthly repayments can come down considerably as the loan to value decreases.
Yes, that's something I really should do!
Old 3 weeks ago
  #40
Quote:
Originally Posted by Phil0 View Post
This is true buy it is still possible to make savings in real terms due to increase in value over time. If you buy with a 10% deposit and the value of the property goes up, when you come to remortgage the monthly repayments can come down considerably as the loan to value decreases.
That's what I did and it really helps to fatten up the pocket book.

In time as you continue to pay off the loan, the taxes begin to decrease which is really nice as well.
Old 1 week ago
  #41
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DeltaCharlieEcho's Avatar
Quote:
Originally Posted by Derp View Post
...

Three bedroom apartment:
Rent - $550 (includes water, trash, and sewage)
Electricity - $200 (on average per month)

So the cost of my home is $750 per month.

...
You must be living in a hood ass area if you're getting a 3BR for $550... And you can do way better than $800 a month on a mortgage. Seriously over a standard 30 year loan (360 months) even with a 200,000 house with 17% interest you're looking at 234,000. That's 650 a month. That's an older home in a nice area of town that you can spend extra money to remodel and use as a rental property when you get to a place in your life where you decide to move up.

Your numbers are way off here, and you shouldn't be buying a house by yourself anyway.
Old 1 week ago
  #42
Gear Maniac
 

I'm confused by the figures above, even if you meant 1.7% they are wrong.
Old 1 week ago
  #43
Gear Maniac
 

Oh I think I've seen what you done. If it was 17% the monthly repayments would be 2859 a month and total payable 1,029,240. Don't forget compound interest, you can't just multiply 200,000 by 1.17.
Old 1 week ago
  #44
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Thread Starter
Quote:
Originally Posted by DeltaCharlieEcho View Post
You must be living in a hood ass area if you're getting a 3BR for $550.
Old 6 days ago
  #45
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jeremy.c.'s Avatar
Quote:
Originally Posted by DeltaCharlieEcho View Post
You must be living in a hood ass area if you're getting a 3BR for $550... And you can do way better than $800 a month on a mortgage. Seriously over a standard 30 year loan (360 months) even with a 200,000 house with 17% interest you're looking at 234,000. That's 650 a month. That's an older home in a nice area of town that you can spend extra money to remodel and use as a rental property when you get to a place in your life where you decide to move up.

Your numbers are way off here, and you shouldn't be buying a house by yourself anyway.
No.

On a 30 year mortgage, your rough order of magnitude would be (high end) $580-600 per month for every $100,000 you borrow and that will include impounded taxes and insurance (though not HOA if you have one).
A $200,000 loan (a roughly $240,000 purchase if you put 20% down) will run you about $1200/month, plus utilities.

In some markets it is cheaper to rent than to own, assuming you could even save up a down payment big enough to qualify. In other markets it makes zero sense to rent, unless again you can't save up a downpayment.

For anyone reading this though, don't be discourage if you can't save up a 20% down payment (considered conventional wisdom), just find a good mortgage broker to get the right product. An FHA loan could be like 3.5% down, and I got a standard loan at 5% down. There are options.
Old 6 days ago
  #46
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Thread Starter
Quote:
Originally Posted by jeremy.c. View Post
An FHA loan could be like 3.5% down, and I got a standard loan at 5% down. There are options.
Also important to note that there are agencies that will gift you a down payment in exchange for taking a home ownership course. If you've got a mortgage broker that's familiar with FHA, they probably already have information on these programs.
Old 6 days ago
  #47
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DeltaCharlieEcho's Avatar
Quote:
Originally Posted by jeremy.c. View Post
No.

On a 30 year mortgage, your rough order of magnitude would be (high end) $580-600 per month for every $100,000 you borrow and that will include impounded taxes and insurance (though not HOA if you have one).
A $200,000 loan (a roughly $240,000 purchase if you put 20% down) will run you about $1200/month, plus utilities.

In some markets it is cheaper to rent than to own, assuming you could even save up a down payment big enough to qualify. In other markets it makes zero sense to rent, unless again you can't save up a downpayment.

For anyone reading this though, don't be discourage if you can't save up a 20% down payment (considered conventional wisdom), just find a good mortgage broker to get the right product. An FHA loan could be like 3.5% down, and I got a standard loan at 5% down. There are options.
While I definitely don't agree with those numbers and am checking with a friend that works with loans, I do appreciate the other information provided. I will agree that making double payments is responsible if you can afford it but it's by no means required.
Old 6 days ago
  #48
Quote:
Originally Posted by DeltaCharlieEcho View Post
While I definitely don't agree with those numbers and am checking with a friend that works with loans, I do appreciate the other information provided. I will agree that making double payments is responsible if you can afford it but it's by no means required.
Out of interest, do you own a home/pay a mortgage yourself?

I pay an "interest only" mortgage in London, and whilst the payments are cheaper than paying rent (and the property has done very well in the market over the years), if I were to be making repayments, it would be MORE expensive to own than rent.

I hate to think what the interest payments will be over the 25 year mortgage, but it's very much more than you think!
Old 6 days ago
  #49
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My mortgage is now until I'm 106 and comes with a free bucket of sand and an ostrich outfit!

I have changed it to a repayment mortgage though (from interest only) as it means half our payment is interest and half comes off the debt.

That's important for my wife and I otherwise we would fritter away the extra money making Jeff Bezos richer instead of us!

Last edited by thehightenor; 6 days ago at 02:00 PM..
Old 6 days ago
  #50
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DeltaCharlieEcho's Avatar
Quote:
Originally Posted by psycho_monkey View Post
Out of interest, do you own a home/pay a mortgage yourself?

I pay an "interest only" mortgage in London, and whilst the payments are cheaper than paying rent (and the property has done very well in the market over the years), if I were to be making repayments, it would be MORE expensive to own than rent.

I hate to think what the interest payments will be over the 25 year mortgage, but it's very much more than you think!
No but I have been working with bankers and planning it out for around 4 years. I have friends in banking. I'm not completely ignorant to the topic but I could be wrong on some aspects. I do know, that if you can get a down or can make a deal with a first time home buyer loan officer you can pay less for a single family home than you would for a 2BR 1.5BA in my area.
Old 6 days ago
  #51
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Just out of interest what made you pick 17% as an interest rate. I don't live in the US but it seems very high.
Old 6 days ago
  #52
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DeltaCharlieEcho's Avatar
Quote:
Originally Posted by Phil0 View Post
Just out of interest what made you pick 17% as an interest rate. I don't live in the US but it seems very high.
Just working with numbers on the high side to under promise and overdeliver on my point.
Old 5 days ago
  #53
Gear Maniac
 

So just to revisit with realistic figures if you buy a 250,000 property and put down 20% (50,000) and take out a loan of 200,000. If the interest rate is 4% for the lifetime of the mortgage you would pay 963.83 per month over 30 years. Total payable 346,978.80. If you could only manage to put 10% down you would likely pay a lot more. I'd guess 250 more a month.
Old 5 days ago
  #54
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Sometimes I double the house payments. It should be paid off either way by the time I`m 50.
Old 5 days ago
  #55
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Quote:
Originally Posted by BarcelonaMusic View Post
Sometimes I double the house payments. It should be paid off either way by the time I`m 50.
What I've always been taught is to make 1 extra payment per quarter. So each payment should either be 125% or you save to make the extra payment. Theoretically, making 1 extra payment per quarter should cut the payment time in half.
Old 5 days ago
  #56
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Quote:
Originally Posted by DeltaCharlieEcho View Post
What I've always been taught is to make 1 extra payment per quarter. So each payment should either be 125% or you save to make the extra payment. Theoretically, making 1 extra payment per quarter should cut the payment time in half.
That`s great advice. I just do it when it`s convenient. I`ve been paying for 15 years, and just do it when it`s convenient. I`m blessed/fortunate, in many ways. Defiantly keep doing that. I`ve seen old people in parks picking through trash cans for aluminum to help pay the rent on their apartment(I asked and gave them some money). That`s NOT going to be us. I don`t want to give all the details of my life, other than "I`m good".
Old 5 days ago
  #57
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DeltaCharlieEcho's Avatar
Quote:
Originally Posted by BarcelonaMusic View Post
That`s great advice. I just do it when it`s convenient. I`ve been paying for 15 years, and just do it when it`s convenient. I`m blessed/fortunate, in many ways. Defiantly keep doing that. I`ve seen old people in parks picking through trash cans for aluminum to help pay the rent on their apartment(I asked and gave them some money). That`s NOT going to be us. I don`t want to give all the details of my life, other than "I`m good".
I'm hoping to be there in a couple of years. I'm sick of working for **** and having it thrown back in my face. I'm getting really lucking in the world of music and what's crazy is that I don't even have to work half as hard at it as I did for my degree in graphic design. Monday I have a friend putting in a good word for me at a somewhat major live venue and I've gotten an offer to run audio for a professional guitarist that does product reviews for quite a few large companies. Both of which are going to be great for future positions and when I do get to a point where I feel comfortable opening my own venue/studio.
Old 5 days ago
  #58
It's actually quite interesting how different countries have such different mortgage rules. Picking an "interest-only mortgage" vs a "repayment mortgage" seems unusual to me. We don't have that option- mortgages are heavily weighted towards interest at first and the principal portion of your payment increases over time. So most of my payments are applied to the principal now

We can, however, accelerate our payments- instead of making monthly payments you can do bi-weekly or weekly mortgage payments. It makes paying the house off much faster. I do bi-weekly ones as I'm paid that way.
Old 5 days ago
  #59
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Quote:
Originally Posted by DeltaCharlieEcho View Post
I'm hoping to be there in a couple of years. I'm sick of working for **** and having it thrown back in my face. I'm getting really lucking in the world of music and what's crazy is that I don't even have to work half as hard at it as I did for my degree in graphic design. Monday I have a friend putting in a good word for me at a somewhat major live venue and I've gotten an offer to run audio for a professional guitarist that does product reviews for quite a few large companies. Both of which are going to be great for future positions and when I do get to a point where I feel comfortable opening my own venue/studio.
The music world has never been worse. A degree in Graphic Design is way more valuable.
Old 5 days ago
  #60
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jeremy.c.'s Avatar
Quote:
Originally Posted by Phil0 View Post
So just to revisit with realistic figures if you buy a 250,000 property and put down 20% (50,000) and take out a loan of 200,000. If the interest rate is 4% for the lifetime of the mortgage you would pay 963.83 per month over 30 years. Total payable 346,978.80. If you could only manage to put 10% down you would likely pay a lot more. I'd guess 250 more a month.
Yes, this is realistic. The $963 only covers Principal and Interest, so once you factor in insurance and taxes (both required), you're likely around $1200, as I suggested in my ROM. And you're right, there is PMI (private mortgage insurance) if you're putting down less than 20% (unless you get a program that will pay it for you) and that can be sizable. On a $200K house probably an additional $150/month.
I had it for about a year, but property values went up so fast in LA I refinanced it and dropped it within a year of ownership.

I'd suggest if anyone disagrees with our numbers they use a quick online mortgage repayment calculator. Your interest rate will depend on your downpayment, repayment length, credit score/history, and the lender, but as of today you shouldn't be much worse off than 4% regardless. Something nuts like 17% interest would spike your payment by 2.5x. Even a fraction of a percent on your rate can save you $100/month or more.

Paying off your loan faster is a good thing, but also consider if you have the extra money and your home loan is super low, like under 4%, what that same amount could produce over 30 years in a diversified mutual fund. If the rate of growth is 10% annually instead of saving you $50,000 in interest payments, it could earn you 5 times that. I personally don't like the feeling of debt, but everyone is different, and it may be worthwhile to hold some debt if the rate is low enough and your income is stable.
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