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Att'n Home owners! Is it worth it?

Discussion in 'Anything goes' started by SoSueMe, Apr 20, 2007.

  1. Simon_Cowbell

    Simon_Cowbell Active Member

    It's a guaranteed investment... God ain't making any more land.

    The timing is bad right now, to make BIG profits.

    But, always own. Ace and BT hit on the most salient reasons.

    I would max a mortgage at 20 years. Don't want to be paying ALL that interest.
  2. KJIM

    KJIM Well-Known Member

    Uh, no. Nothing in life is guaranteed.

    And I will lose money, assuming my house sells in the first place. One of the Realtors recommended (without knowing what I bought it for in 2002) pricing it at $15k less than paid. And that doesn't count over $20k of improvements I've made. That's real money.

    So yes, it can be an investment and, at least in many places, it's a huge buyers' market right now but it's not guaranteed, and I maintain it's not for everyone.
  3. sportschick

    sportschick Active Member

    Owning a home isn't for everyone. Barring something bizarre like a wedding, I can't see myself doing it. I'm transient, changing jobs every couple years, and I hate yard work. Seems silly to get tied down like that.

    Plus my parents lost about $50,000 when they sold their house last year.
  4. Football_Bat

    Football_Bat Well-Known Member

    If you have a 30-year mortgage, you can cut the term to 17 1/2 years by making the equivalent of an extra house payment every year and applying it to the principal. That's what I've been doing — I'm three years in, and I've been adding an extra $50 to $100 every month. Between that and appreciation, I've already got about $40,000 in equity.
  5. Pancamo

    Pancamo Active Member

    If you are not retiring in the house, a 15 year mortgage and paying down the equity is foolish. Equity can be wiped away with a downturn in the market. Take the money and invest, hell ING pays 4.5% on an savings account, and have a higher interest deduction at the end of the year. If you choose to pay off the house, your investments over time should create a lump sum to pay off the house at retirement.

    BT is staying in home for life so the 15 makes sense, for transient employees, the 15 is absurd.
  6. Simon_Cowbell

    Simon_Cowbell Active Member

    Yes... a 17 1/2 mortgage is less than 20.
  7. Simon_Cowbell

    Simon_Cowbell Active Member

    I think paying someone oodles of interest is a losing proposition.
  8. dog428

    dog428 Active Member

    If you do home ownership right, you can be living very well in 10 years or so.

    Me and my wife currently have our house on the market (a process that has been as frustrating as anything I've ever done because we chose an absolute dipshit for a realtor, but that's another story). We've had a few offers, all have fallen through. But when we sell -- and we will -- we'll pocket around $40k after three-plus years in our house.

    Our next home will be in some new, trendy subdivision in where we'll pay too much for a house because it's in a good neighborhood. In exactly 18 months, unless there's a crazy dropoff in home sales between now and then, we will put that house on the market and hopefully pocket more money.

    The way we've got it figured, if we play it right and the market doesn't absolutely go bust, we can be living in our dream house in three moves. At worst, we'll be living in a nice house with a pretty fair amount of cash in the bank.
  9. Simon_Cowbell

    Simon_Cowbell Active Member

    18 months?

    Exceptionally ambitious.

    Good luck with that.
  10. dog428

    dog428 Active Member

    I'm not saying we'll sell in 18 months, but that's when we'll list the house again to avoid the taxes.
  11. HejiraHenry

    HejiraHenry Well-Known Member


    There is some sketchy advice being thrown around here, and some good.

    A 40-year mortgage is a terrible idea. Basically, it's an attempt to coax you into buying more house than you can really afford, like a six-year car note that's tuned to give you an "attractive" monthly payment without regard to what sort of shape the car might be in six years from now.

    There are many good aspects to buying a house. But you have to control the transaction and not let it control you.

    A good rule of thumb is that you can't afford to buy a house when the payment is more than 25% of your take-home pay.

    A market playa like dog could be living in a cardboard box in a few years. Home ownership, contrary to a lot of what you hear on late-night TV, shouldn't be approached speculatively. Especially right now.
  12. Birdscribe

    Birdscribe Active Member

    Took us one move... then again, we lived in our first house 14 years and sat through a vicious downturn.

    We bought our original house in early 1993 for $135k. It was an 1,800-square foot new home and it was just Mrs. Birdscribe and me. Nine months later (almost to the day we moved in), Thing 1 arrived.

    Meanwhile, the SoCal real estate market cratered. By 1996, we were 25k upside down. I had people asking me "Why are you still at that paper? You need to move to a bigger paper..." To which, I'd tell them, "I can't. I'm 25k upside down..." So, we stopped the improvements.

    By the second half of 1997, we were even again. Thing 2 came along a year later, so our home office was now a nursery and the retreat off our bedroom became the home office.

    Two years ago, we decided to move, since our neighborhood was starting to get a tad dicey (two group homes moved in a few blocks away, my car was totaled by a hit-and-run driver) and the four of us outgrew the house.

    Finally pulled the trigger midway through last year and -- after putting 12k of improvements into the house and enduring a slowing market -- we finally sold our house for 2 1/2 times what we paid for it and moved into a 3,240-square ft. home in a nicer neighborhood. Even selling after the market crested (and having one buyer pull out a week before closing), we were still able to put 35% down, keeping our payments manageable.

    Yes, it was a 30-year fixed loan; none of those creatively insane mortgages you see that are getting people in trouble by the thousands. And yes, we're not going anywhere.

    Back to the original question: is it worth it? If you're in a stable situation job-wise and you like where you're at and what you're doing, you're crazy not to dive into home ownership -- if you can afford it. In the U.S. and for the middle class, it's the biggest way of building ealth and the only reasonable middle-class tax shelter available.

    If you're single and have the Jack Kerouac gene, you'd be crazy to buy a home. Too many variables could happen -- especially in this market. The last thing you want is to have a line on a great job halfway across the country -- or the state, for that matter -- and be stuck with a home you either can't sell or have to sell for thousands less than you paid for it.
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