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My wife and I were discussing this earlier. The conversation arose when we received our monthly 225.00 gas bill. (We're on a budget plan because it would have been over 800/month for Jan and Feb.) - Yeah, that's screwed up. No regulation for the price of gas is bad. As homeowners, we're getting taken advantage of simply because there are not as many of us as there used to be.
Prior to buying our home in 2007, we rented a nice two bedroom apartment.
The apartment building came equipped with a sauna, weight room, swimming pool, billiard room, balcony, and only one utility. - We paid 900/month for everything.
We bought our house in April, 2007. After we take into account mortgage, property tax, and homeowners insurance, we're at 918.00/month. - We live in a modest house that was built in 1953. - This isn't too bad -until we take utilities into account.
Let's see: 225.00/ month gas, 55.00/ month water, Electric averages out to 50.00/month. - This adds up to 330.00/month. -Plus 918.00 = 1,248.00/month.
So the house and utilities costs 1248.00/month, and the apartment/utilities cost 900.00/ month, which is a difference of 348.00.
So, from today forward, over a 5 year span, 348.00 month saved adds up to $20,880. - Thats the amount we could have saved had we stayed in our apartment.
Meanwhile, our house will not be worth any more in 5 years than it is now. Heck, we'd be lucky to get what we paid for it in 5 years ( and we bought it at a really low price, after the market took a dip)
Essentially, there really is no equity in homeownership for us, and I imagine there are plenty more like us.
Point of all this is, for the majority of us, homes aren't assets, they are liabilities.
If I could do it all over again, I would have stayed in the apartment.
Other things I'd like to note: There are not as many homeowners as there used to be, which means that we are getting preyed upon. - For example, despite the fact that my house is worth 5,000 dollars less than it was last year, my property taxes went up by 200.00/year. Why? Because the city doesn't have as big of a tax base as it used to, which means they are taking advantage of us. - The same model applies to utilities.
Additionally, I left out maintence costs. - Grass cutting, landscape upkeep, paint, furniture, yada yada - which means that we would have saved more than 348.00/ month by staying in the apt.
Thoughts?
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Dude, when you rent you are bascally throwing your money away. I rent, but it's cheaper than owning a home.
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We've gained around $100,000 in equity over the past 6 years in our first home. I think a lot has to do with where you live and what you buy.
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well, this is a pretty funny topic for me since my first home closing is tomorrow..i decided to make a buy (but I'm only 23 and the house is not nearly as much as yours appears to be).
I think it is the smart thing to do IF the money doesn't strangle you to the point that you can't live. It probably is smarter to spend 300 more a month to OWN as opposed to RENT...unless that 300 is NECESSARY for you to live...I guess it's all circumstance..and I probably don't know too much right now either.
"First down inside the 10. A score here will put us in the Super Bowl. Boston is far to the left as KC settles into the slot. Fannin is flanked out wide to the right. Judkins and Sampson are split in the backfield as the ball is hiked ... Here we go."
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j/c
I would have to say that if you decide to buy... make sure it's not a fixer upper... I have owned my home for 3 years and I have spent well over 20,000 in repairs to the house. Granted, I got it for 35,000 less than what I would have paid being in a finished house. Nontheless it also costs a lot of valueable time and makes it not worth it. in my opinion.
In my situation, there are many many days where I envy the renters. My life was simple back then.
Meh.
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When you're renting, you're not building equity. I know people who have a smaller mortgage than our rent payment and I think "renting really sucks."
On the other hand, if you rent, & need a new furnace or a major plumbing or roofing bill comes in, it's not your financial problem.
Overall, I'd say owning your own home is the wiser choice, though... esp. in the long run, and as someone else said, a lot depends on where and what you buy. I woudn't mind having my own lawn....
Last edited by lampdogg; 04/25/10 10:32 PM.
![[Linked Image from i28.photobucket.com]](http://i28.photobucket.com/albums/c201/shadedog/mcenroe2.jpg) gmstrong -----------------
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I've rented for 10 years, and can't wait until the day I own my own house.
I've paid almost $700 to live in a 750 sq ft apartment in the burbs. My biggest thing is I get nothing out of renting. When you have a house, after it is paid for, it's yours with no more monthly payment. Sure you have to pay for repairs, but renting is a never ending deal. The only guy that gets rich is the landlord. MY 2nd beef with renting is the privacy issues. I know every time my neighbor was getting some, I heard it for the most part. I'm sure it's the same for him when I had company over. It's like you have to plan those special events when the neighbor wasn't home.
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I refuse to rent in a building that allows me to hear the neighbours, I prefer a building with older couples (me and the wife are the youngest in our building by a fair bit). We NEVER hear a stereo, people partying or arguing, or anything else when we're in our apartment, the walls are very sound-proof and the neighbours are mature.
gmstrong -----------------
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Quote:
I know every time my neighbor was getting some, I heard it for the most part. I'm sure it's the same for him when I had company over. It's like you have to plan those special events when the neighbor wasn't home.
From the comercials I've seen,you better not take Cialis.
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I've actually been on the phone back and forth with my realtor all night as I received an offer on our house tonight. We're going back and forth seemingly trying to squeeze every penny out of it from each other  Rent just throws your money away. Like someone said, unless you're squeezed and living check to check, it is an investment which will net you something in the end if you decide to sell. My house isn't huge- but I'll be able to pocket a decent amount after paying off my mortgage and the realtor fee. I'm using all of it towards the next one, which I plan on staying in for a long time. Hopefully til I'm all old and gray.  In our case, my payment will go up, but I'll still be able to afford my payments. I admittedly won't have the same amount of money to save up like I would have now, but at the same time, my car is paid off as of next week, and that money is less than what I'm looking at what I'll be paying extra on the house. So it's basically a wash for now. It's a good investment still IMO as long as you aren't squeezing yourself. Renting a piece of property may be a little better- I personally couldn't imagine living in an apartment. I enjoy my space and privacy.
![[Linked Image from pic18.picturetrail.com]](http://pic18.picturetrail.com/VOL905/3216203/6567769/349897772.jpg) "The Browns' defense is kicking mucho dupa."
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From my perspective it seems to make sense to buy a home if you intend on living there through it being paid off. If you're only going to live somewhere say 5-10 yrs and then move again does it really benefit you to buy if you're going to sell then get a new home? I am asking because this is a situation that could be coming up with my mother in Cleveland. She currently lives on the West side and is debating on moving to the East side as its closer to her friends.
"The medium for the bad news was ESPN, which figured. The network represents much of what is loud, obnoxious and empty in sports today."
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When you buy, you are investing in equity in a real property. When you rent, you are paying to use someone else's property, and are investing in their equity in their property.
One thing about your calculations. Your homeowners insurance covers your possessions against loss. Unless you bought a policy when you rented, if there was catastrophic loss ... you're on your own.
I have to ask about your gas bill. How big is your house, and how old is your furnace? My house is about 1400 sq feet ..... has a 1950s furnace .... and I kept the place at 70 degrees throughout the winter, and my highest bill was $238. (I don't do a budget) I also have all gas appliances. Even if your home is double that size, an $800 gas bill seems way, way over the top. I check the gas comparisons every 3 months and change companies as the prices dictate. I fact, I have had my own price changed just by finding a lower price and calling the gas company and they matched it.
You may want to check into the energy tax credits for a new energy efficient furnace or insulation if your bills are that extreme. at a 33% rebate, a $3000 investment could return itself in 2-3 years, and eliinate a potential maintanance issue down the road.
As far as the tax situation, you can appeal a tax appraisal to your county auditor. (or appropriate department) My appraisal hasn't changed in 3 years .... and it's the same as it was ..... and it's what houses similar to mine are selling for now. If it was way out of whack, I'd appeal it right away.
Part of home ownership is owning your own home. I suppose it's not for everyone. I could not imagine liviing anywhere where I was at the mercy of a landlord ..... could face a real possibility of increased rent every time my lease was up ..... and had to conform to every single one of their rules, or else.
In the end ... 20 years down the road and living in an apartment, you have nothing. Living in your own home, you probably own it outright, or are paying down close to 100% principal with each mortgage payment. (minus tax and insurance) It is a wonderful feeling to burn that mortgage note ... and know that your home is, indeed, YOUR home.
To me, this is the best part, that even while still paying a mortgage ......... I can do, change, dig up, plant, paint, tear down, or do anything else I please to improve my home .... because it is my home.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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I'm not sure if I'm allowed to refer to this site or not ... but it has some GREAT info about buying a home versus just staying with renting: www.patrick.netThe jist of it is, unless you are getting a home at a reasonable price ... the cost of maintenance, property taxes, home owners and interest on your mortgage will more than outweigh what you are paying just for rent alone. You will end up paying way more in the long run, even if you do eventually "own" the property. The problem with "buying" a house is that everyone is against you. Everybody from the sellers themselves, to the appraisers, to your own selling agent is making money from YOU buying a house. So nobody has any incentive to tell you if you are making a bad buy or not.
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Legend
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In Ohio you can have a "Exclusive Buyer's Agent", who represents your interest and not the sellers.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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Quote:
In Ohio you can have a "Exclusive Buyer's Agent", who represents your interest and not the sellers.
You can have that here in Cali and most states too ... but their commission STILL depends on you buying a property. So they have no real incentive to talk you out of a bad deal.
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Actually, they work fot you, and their code of conduct requires them to advise you on those grounds.
My agent spent a great deal of time pulling comps and working to help determine a solid starting point for negotiations on my house. She also advised me as far as what point to be prepared to walk away. (and it was less than the asking price) She did a really nice job for me, and her thinkig was actually really close to mine a far as price and conditions.
Micah 6:8; He has shown you, O mortal, what is good. And what does the Lord require of you? To act justly and to love mercy, and to walk humbly with your God.
John 14:19 Jesus said: Because I live, you also will live.
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So why DID you buy a house. I rented, and I built my house I am in and managed to keep it after a divorce. My choice was an investment. Our home is not paid off yet; it has helped us get about $80K in loans over the year. I always have a parking spot; it has appreciated about $30K (conservative minimum for where I live) since I built. Being a homeowner is a headache and more work. I have the patio I want and an acre landscaped the way I want, and a large garden out back. I write off the property tax. Wife and I are retired, no kids, and we still enjoy coming home to the simple place. Built two small additions. But we like this MUCH more than renting. We could certainly live somewhere cheaper, but hardly better than where I have us for now. My wife loves it here; that matters. Mommy ain't happy, nobody is happy. Biggest deal? A) We are living in our nest egg and enjoy no neighbors to speak of; B) it is appreciating and gives us sturdy opportunities for loans aand collateral. No equity for you in renting. Maybe you should rent; but I only rented long enough to pay off some lawyers and get adown payment together. No regrets here. 
"Every responsibility implies opportunity, and every opportunity implies responsibility." Otis Allen Glazebrook, 1880
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Don't know where you live Bard,,, but you might want to check on that appriciation you mentioned...
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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Quote:
The conversation arose when we received our monthly 225.00 gas bill. (We're on a budget plan because it would have been over 800/month for Jan and Feb.) - Yeah, that's screwed up.
800 a month for Jan and Feb. how old is your house and is there any insulation at all in it...last yr i was running about 325 durning the winter months...this yr i had a new high effientecy furness put in and my highest bill was 145 and my house has 2700 sg ft plus a heated garage..Seems to me you have some problems you need to take care of..
nordawg
The only reason people get lost in thought is because it's unfamiliar territory.
#gmstrong
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I hear you. My dad's house was appraised at 190k 6 years ago, we've had 2 appraisals done the last few months and they came in at 132k and 135k. All this equity people are talking about here just might not be reality in the current market.
And into the forest I go, to lose my mind and find my soul.
- John Muir
#GMSTRONG
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Truth of the matter is it depends on a lot of variables. What your budget is, where you want to live, how much you want to invest time wise into your place, neighbors, schools, kids, family, etc...etc...etc.
There are some that look at it as a financial investment. There are those that look at it as a place where they never intend on selling the house so it really doesn't matter what arbitrary number someone puts on it as far as "value" or "worth" is.
There are pro's and con's to both situations. I, personally, love my home and all the headaches that come with it. Sure, I'll complain about them, and there are days where I wonder wth I was thinking. But in the end, I mow my grass and trim my roses and sit on the porch and look out at the next thing I have to fix and drink a cold beer and smile knowing that it's mine. And for me, that's a awesome feeling.
KeysDawg
The fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. - Carl Sagan
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Yeah, it's insane what's happened to home values..
Even in Aurora Ohio which is a relatively wealthy community.. We've seen property values take a hit.
Hopefully, for those that bought homes in the last 3 or 4 years, they'll see a rise in value.. but I wouldn't count on it.
this is why going back to the RIGHT way to buy a house is important..
20% or more down, 30 year mortgage, make 1 extra payment a year (make sure it applies directly to your loan balance) and your home is paid for in roughly 17 years.....
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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Quote:
20% or more down, 30 year mortgage, make 1 extra payment a year (make sure it applies directly to your loan balance) and your home is paid for in roughly 17 years.....
Actually, I believe one extra payment a year would only drop your payoff date down about 6 1/2 years - you'd still be paying roughly 23 years. Not that it matters much.
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You're correct Arch. It's a 7 year decrease if you make one extra principal payment a year.
I round all my payments up to the nearest hundred and apply the extra to the principal, then I make my Christmas payment as my extra payment. =D
KeysDawg
The fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. - Carl Sagan
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As far as renting vs. buying....I'll probably be renting for a long time. I'll be moving around too much in the next few years to purchase a home.
As far as gas goes, my highest Gas and Electric bill over the winter (same company so same bill) in the house I'm renting was $128. I kept the temp between 70-72 and that is with a large, drafty window. I tried hanging that plastic stuff this year but the cats started to take it right back down and the dog finished the job so that didn't end up working.
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when i was a bachelor and living by myself , until age 40, I rented.
I also saved money hand over fist and biilt up a stock portfolio.
Now that I own a mortgage all my loot goes into paying the mortgage and into the money pit.
My home value is worth less than the buying price after all the thousands I have spent on upkeep and renovations and mortgage interest.
Home ownership is not all it's cracked-up to be.
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I live in a 2 story condo, and my largest gas bill over the winter was $76. I kept the temp set at 74.
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Quote:
Actually, I believe one extra payment a year would only drop your payoff date down about 6 1/2 years - you'd still be paying roughly 23 years. Not that it matters much.
nope you are incorrect on that Arch..
If you buy a house, and the payments are 1000 per month (principle and interest) and you make one extra payment a year (making sure the entire 1000 is applied to the principle) you will pay off your mortgage in roughly 17 years.. (give or take a couple of months)
it's not just the 17k you pay in, it's the interest you save on the priinciple over the years.
My wife spent 15 years in the Mortgage business.. I just checked to make sure I had it right and she confirmed it.
Don't take my word for it, ask a banker
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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j/c,...There's a lot of pros and cons,...almost too many to list.
(1) The volatiity of the market is huge, for example.
(2) Every homeowner faces a unique set of circumstances, that come at you from a variety of "pressures." Family, marriage, social, financial, personality,...just to name a few.
(3) I am pretty handy, and enjoy working on my home's "projects." Some people do not relish this as a pastime worthy of attacking. I create stuff to do, even thought the home isn't even 5 years old (June).
(4) Time is money. Sometimes you have the cash and no time,....
(5) The only things you can deduct anymore on Schedule A in amounts that will usurp the standard deduction are mortgage interest and property taxes.
(6) Kind of a repeat--everyone's reasons for buying a home are different,....
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Quote:
Quote:
Actually, I believe one extra payment a year would only drop your payoff date down about 6 1/2 years - you'd still be paying roughly 23 years. Not that it matters much.
nope you are incorrect on that Arch..
If you buy a house, and the payments are 1000 per month (principle and interest) and you make one extra payment a year (making sure the entire 1000 is applied to the principle) you will pay off your mortgage in roughly 17 years.. (give or take a couple of months)
it's not just the 17k you pay in, it's the interest you save on the priinciple over the years.
My wife spent 15 years in the Mortgage business.. I just checked to make sure I had it right and she confirmed it.
Don't take my word for it, ask a banker
All I can say is when I bought this house, as well as when I bought my first house, I was told an extra payment (principal payment) each year would knock 6 to 7 years off the term of the loan. I was told that by the loan officer.
And, I've checked about 4 mortgage payment calculators on line and they all have shown the same thing.
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Quote:
All I can say is when I bought this house, as well as when I bought my first house, I was told an extra payment (principal payment) each year would knock 6 to 7 years off the term of the loan. I was told that by the loan officer.
And, I've checked about 4 mortgage payment calculators on line and they all have shown the same thing.
Can I say you both are correct but not comparing the same thing.
It you buy a house and take out a loan for the full price, and pay an extra payment to the priniciple each year you will pay off your 30 year mortgage in 23 years.
So in this you are correct arch.
But what Damon originally said was
Quote:
20% or more down, 30 year mortgage, make 1 extra payment a year (make sure it applies directly to your loan balance) and your home is paid for in roughly 17 years.....
If you Take the same Purchase price and pay 20% down and Make the same payments as above you will pay the house off in 17 years.
I don't think the 20 percent down was being taken into account.
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Your example is plausible - but let's face it - we weren't talking about the downpayment. Daman was pretty explicit in his example "if you have a $1000 payment on a 30 year loan, making an extra principal payment every year of $1000 will get your loan paid off 13 years early".
I disagree with that. Who factors the downpayment into the equation AFTER you have bought the house? We were talking the mortgage - not total cost of the house.
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1st String
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Don't shoot the messenger. I was just trying to clear up the descepencies in the math. here is his whole post Quote:
Yeah, it's insane what's happened to home values..
Even in Aurora Ohio which is a relatively wealthy community.. We've seen property values take a hit.
Hopefully, for those that bought homes in the last 3 or 4 years, they'll see a rise in value.. but I wouldn't count on it.
this is why going back to the RIGHT way to buy a house is important..
20% or more down, 30 year mortgage, make 1 extra payment a year (make sure it applies directly to your loan balance) and your home is paid for in roughly 17 years.....
I don't think he stated it right,but I think how I explained it is how he meant to say it.
But I will give you that the math does not work the way he typed it.
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Hey, chill man. Didn't mean for it to come across that way at all.
It's just that if you're talking (anyone that is) about making an extra payment each year on a 30 year loan - well, we're not talking about the downpayment. That money is gone the day you move in. It should have no place in a discussion about dropping 13 years off a mortgage payment.
I agree with Daman in the sense that 20% down - give or take a bit depending on credit, etc - should be the norm. But I still see no way that making an extra payment a year, on a 30 yr. loan, will drop 13 years off your mortgage.
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I honestly didn't think I need to spell out the DP anymore than I did.. I guess I was incorrect.....
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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Joined: Sep 2006
Posts: 11,389
Legend
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Legend
Joined: Sep 2006
Posts: 11,389 |
I did check D-shot. And it is up fairly well; I don't own it all (yet), but I have a healthy 5 digit profit in place on paper; but I also have done a bunch to improve it. Understand what you mean, but it isn't a black hole by any means either.
"Every responsibility implies opportunity, and every opportunity implies responsibility." Otis Allen Glazebrook, 1880
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Joined: Sep 2006
Posts: 478
1st String
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1st String
Joined: Sep 2006
Posts: 478 |
Quote:
Hey, chill man. Didn't mean for it to come across that way at all.
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actually we are more than cool. I forgot to put a smiley on my first line. Sorry about that.
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Joined: Sep 2006
Posts: 30,959
Legend
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Legend
Joined: Sep 2006
Posts: 30,959 |
Quote:
I honestly didn't think I need to spell out the DP anymore than I did.. I guess I was incorrect.....
No, you were incorrect in stating that all a person needs to do is pay one extra payment per year (principal only) and they would have a 30 year mortgage paid off at 17 years.
Face it, the down payment has nothing to do with what is borrowed in this sense. Yes, I understand a damn downpayment.
What you said is "all you have to do is make an extra payment each year and 13 years is knocked off your mortgage". (not a direct quote). And that is wrong, whether you admit it or not, it's wrong.
A freaking mortgage is the amount you borrow on your house. A mortgage does NOT include any downpayment. I'm surprised I have to spell that out for you, but I guess I did.
Buy a house that costs $100,000, put 20% down, the MORTGAGE is $80,000. Not $100,000.
Make an extra principal payment every year on the $80,000 and it will be paid off 6 1/2 to 7 years sooner. NOT 13 years sooner.
Spin it how you want, what you said was wrong. NO downpayment is calculated into the cost of the mortgage. Terms of the mortgage? Yes. NOT the mortgage.
I love picking on you when I can.
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Joined: Sep 2007
Posts: 1,391
Dawg Talker
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Dawg Talker
Joined: Sep 2007
Posts: 1,391 |
Long term - Own a home
Short term - rent
The vast difference between now and 5 years ago is that 5 years ago both long/short term were virtually guaranteed profits. This down housing market is giving people second thoughts.
I know you factored in costs but have you factored in tax breaks from owning? I'm guessing you're paying about $500/month in interest. Assuming you get "about" 1/3 of that back on taxes, that's $2000/year savings. Over that same 5 years, that's $10,000 in refunds. That makes that $20,880 only $10,880.
Even though the house is worth less today....don't panic about it. We're all in that same boat. If you are in it for the long run, don't even consider the house's market worth until 20 years from now.
I guess I'm more of an "own" guy because I have a family and need the space/yard/etc. I enjoy projects around the house. And I was lucky that my last house sold at the height of the market (early 2006) and I made a killing on it in 5 years. Of course, all of my "projects" resulted in higher home value so that was the investment strategy for me. Other people don't work like that and it might not be a good thing for them.
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*In Baker we trust*
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Joined: Sep 2006
Posts: 43,566
Legend
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Legend
Joined: Sep 2006
Posts: 43,566 |
Quote:
Understand what you mean, but it isn't a black hole by any means either
that's great bard,, Glad for you. Some aren't nearly as lucky..,
#GMSTRONG
“Everyone is entitled to his own opinion, but not to his own facts.”
Daniel Patrick Moynahan
"Alternative facts hurt us all. Think before you blindly believe."
Damanshot
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Forums DawgTalk Tailgate Forum Is becoming a homeowner a stupid
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