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Thread: New home buyers?

  1. #16
    THAT'S A FACT JACK!! GAC's Avatar
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    Re: New home buyers?

    My wife and I refinanced our home a little over a year ago. We dropped a pt off our interest rate (which is now 5.5 fixed), and pay weekly (through our Credit Union), so we can have it paid off in 10 years or less.

    It's just my own philosophy, but anymore it almost seems you're paying as much to rent as it is to own. I'm sure there are some advantages to renting; but if one can AFFORD to buy, then the investment is worth the while.

    And it's a buyer's market in just about everything right now.

    Our first home was a "fixer upper". It wasn't a shack; but needed numerous repairs and improvements. My wife and I rolled up our sleeves and did a majority of them ourselves other time. It paid off in the end when it came to sell the home and move up.
    Last edited by GAC; 02-25-2009 at 08:55 PM.
    "panic" only comes from having real expectations

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  3. #17
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    Re: New home buyers?

    Quote Originally Posted by GAC View Post
    It's just my own philosophy, but anymore it almost seems you're paying as much to rent as it is to own. I'm sure there are some advantages to renting; but if one can AFFORD to buy, then the investment is worth the while.
    The problem is that most people don't really account for everything. They look at a house payment vs. rent.

    Land accelerates in value, but only marginally away from coastal, big cities. And the house itself is like a car, it starts to depreciate immediately.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

  4. #18
    We Need Our Myths reds1869's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Rojo View Post
    The problem is that most people don't really account for everything. They look at a house payment vs. rent.

    Land accelerates in value, but only marginally away from coastal, big cities. And the house itself is like a car, it starts to depreciate immediately.
    What Rojo said. Most people really don't understand just how much money and work goes into maintaining a house. They look at the Principal+Interest and think that is what their monthly payment will be. The first shock comes when they see what the real number is with taxes and insurance, and the second comes when something breaks. In our case the third came when we had to move to a new city for our jobs and had to sell the thing in a declining market.

    Can you tell I had a bad experience personally? My wife and I are now renters for life.

  5. #19
    First Time Caller SunDeck's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Rojo View Post
    The problem is that most people don't really account for everything. They look at a house payment vs. rent.

    Land accelerates in value, but only marginally away from coastal, big cities. And the house itself is like a car, it starts to depreciate immediately.
    Buy a house, your monthly payment stays the same. If rates drop substantially, you can refi with new terms and lower that payment. Rent and your landlord raises your monthly payment to keep up with inflation. I've always liked having the time value of money working on my side.

    And there's no comparison, depreciation wise between a house and a car.

    Having said that, there are lots of situations where renting makes more sense, such as on the coast or anywhere at a time when housing prices are inflated to unreasonable levels. Lots of people would have been better off if they would have rented instead of buying lately.
    Next Reds manager, second shooter. --Confirmed on Redszone.

  6. #20
    Danger is my business! oneupper's Avatar
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    Re: New home buyers?

    Quote Originally Posted by MWM View Post
    oneupper would know and has mass credibility in my eyes. You are my new hero, BTW. Just thought you might like to know.

    At the risk of getting political (I hope it's not received as such), my guess is that he's referring to the level of deficits we're going to see real soon and the impact that *could* have on interest rates. It's just a matter how much of our debt will continue to be gobbled up by foreign sources. If that well starts to run dry, even a little, then we have to start looking internally to fund the deficit. That could drive interest rates WAY up (like more than we've seen in decades). Having a fixed rate with the rates where they are now might be the only way you can afford to buy that home.

    Thank you. You can call me "Sir". I expect several rounds next time we all go to GABP.

    The current situation is tough to analyze. But in reality, the only way to beat deflation is with inflation and the seeds are being sown at this moment.

    Exactly how all this develops isn't clear, but I do believe that 5 years down the line you will be happy with the deal, not because the house has increased in value, but because your mortgage payment will be lower than it would be otherwise.

    If you bought a $200,000 house today with a 5.5% fixed, and that house is worth only $175,000 in five years but money is costing 8 or 9%, you made a good deal.

    And in the meantime those interest payments are tax-deductible, while your rent is not.

    Crazy as it may sound, back in the real estate frenzy they were saying "its all about the cash flow". Well now..it really is.

    Just my .02.
    "A person is smart. People are dumb, panicky, dangerous animals and you know it."

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  7. #21
    Administrator GIK's Avatar
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    Re: New home buyers?

    Not to mention the tax advantages of owning, plus being able to do whatever you want to the place that you live. Try building a fence for a large dog, owning a classic/summer car and properly storing it, or building a home theater with a rental. It's possible, but it's restrictive. The economy is cyclical and historically owning a home is a good investment. Renting is fine, I've done it before and, who knows, I may again - but I felt solid in the choice to buy at this time. I don't think we'll see these 5% rates forever.

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    Re: New home buyers?

    Quote Originally Posted by oneupper View Post
    Thank you. You can call me "Sir". I expect several rounds next time we all go to GABP.

    The current situation is tough to analyze. But in reality, the only way to beat deflation is with inflation and the seeds are being sown at this moment.

    Exactly how all this develops isn't clear, but I do believe that 5 years down the line you will be happy with the deal, not because the house has increased in value, but because your mortgage payment will be lower than it would be otherwise.

    If you bought a $200,000 house today with a 5.5% fixed, and that house is worth only $175,000 in five years but money is costing 8 or 9%, you made a good deal.

    And in the meantime those interest payments are tax-deductible, while your rent is not.

    Crazy as it may sound, back in the real estate frenzy they were saying "its all about the cash flow". Well now..it really is.

    Just my .02.
    All good points but it could overshoot on the way down and be worth less than $175,000. And interest rates may stay low for a while.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

  9. #23
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    Re: New home buyers?

    Quote Originally Posted by SunDeck View Post
    Buy a house, your monthly payment stays the same. If rates drop substantially, you can refi with new terms and lower that payment. Rent and your landlord raises your monthly payment to keep up with inflation.
    Not with rent control.
    The widow is gathering nettles for her children's dinner; a perfumed seigneur, delicately lounging in the Oeil de Boeuf, hath an alchemy whereby he will extract the third nettle and call it rent. ~ Carlyle

  10. #24
    Viva la Rolen kaldaniels's Avatar
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    Re: New home buyers?

    Subjectively, 3 years ago was a great time to buy a home...it just felt good, everyone was making a mint on their homes.

    Objectively, now is the time to buy.

    As tough as it may seem, unless your timing is impeccable...the best way to come out ahead on any financial/investment decision is to buck the current trend...i.e., buy low, sell high.

    Good luck with your decision.

  11. #25
    Viva la Rolen kaldaniels's Avatar
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    Re: New home buyers?

    Quote Originally Posted by MWM View Post
    I don't care what you want to call it, but I owe a hell of a lot more right now than I could sell the house for. I couldn't care less the official term for it. And it really doesn't matter if I'm trying to sell it or not. It influences the options I have right now for my family and it makes it to where I have no choice but to stay. That's the reality. I don't care about the semantics. There are lots of people who have it a lot worse than me, so I'm not crying in my beer over it. But it still sucks that in a time when I should be building equity (yes, I know what the term really means), I'm going the opposite direction. I have future colleges to pay for, a retirement to fund, etc... I need a recovery quickly, but I'm not optimistic that it's going to happen.
    Great post, best wishes as well, and if I could possibly help sum it up for those who were wondering what you are talking about and were questioning you...two words.

    Net worth.

    That is the number that counts.

  12. #26
    2009: Fail Ltlabner's Avatar
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    Re: New home buyers?

    Quote Originally Posted by kaldaniels View Post
    As tough as it may seem, unless your timing is impeccable...the best way to come out ahead on any financial/investment decision is to buck the current trend...i.e., buy low, sell high.
    A winner!

    3 years ago was a horrible time to buy a home unless you were very conservative and chose very wisely. The vast majority of people saw it as an opportunity to buy more home than they otherwise could afford. Now, the roosters have returned home.

    Now is a decent time to buy a home as a FTHB as long as you are conservative and chose very wisely. You can accrue the tax benefits of owning plus the FTHB credit. More importantly, prices are depressed and money is still cheep.

    But you must be conservative and chose wisely. That's where people fall down. They over do it, or they buy a home that will be difficult to resell. Most people buy a home for what they like. Very few buy a home considering what other people will like about it in 10 years when it's on the market. Buying stupid now is just a bad as buying stupid 5 years ago.

    Oneupper is exactly right. Inflation is coming and coming in a big way. Guess what, money is going to go from 5%ish to 10+%. And at the same time, rents are going to increase as landlords fight to keep pace with inflation. So there's a huge advantage to locking in your housing costs now with low-cost money. Low fixed long-term costs always beats out rising variable short-term costs.

    Just imagine the advantage you'll have with your $700/mo house payment when most others are paying $1400.
    a super volcano of ridonkulous suckitude.

    I simply don't have access to a "cares about RBI" place in my psyche. There is a "mildly curious about OBI%" alcove just before the acid filled lake guarded by robot snipers with lasers which leads to the "cares about RBI" antechamber though. - Nate

  13. #27
    2009: Fail Ltlabner's Avatar
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    Re: New home buyers?

    Not to get totally off-track but you already have a low cost home with a fixed mortgage, I'd be looking hard to buy land or precious metals.

    Not a particularly creative move, but with where this thing is headed I'd want tangible assets.
    a super volcano of ridonkulous suckitude.

    I simply don't have access to a "cares about RBI" place in my psyche. There is a "mildly curious about OBI%" alcove just before the acid filled lake guarded by robot snipers with lasers which leads to the "cares about RBI" antechamber though. - Nate

  14. #28
    First Time Caller SunDeck's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Rojo View Post
    Not with rent control.
    Ha! I had a feeling you'd say that!
    Next Reds manager, second shooter. --Confirmed on Redszone.

  15. #29
    Waitin til next year bucksfan2's Avatar
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    Re: New home buyers?

    Quote Originally Posted by MWM View Post
    I don't care what you want to call it, but I owe a hell of a lot more right now than I could sell the house for. I couldn't care less the official term for it. And it really doesn't matter if I'm trying to sell it or not. It influences the options I have right now for my family and it makes it to where I have no choice but to stay. That's the reality. I don't care about the semantics. There are lots of people who have it a lot worse than me, so I'm not crying in my beer over it. But it still sucks that in a time when I should be building equity (yes, I know what the term really means), I'm going the opposite direction. I have future colleges to pay for, a retirement to fund, etc... I need a recovery quickly, but I'm not optimistic that it's going to happen.
    I meant no disrespect to you MWM. From what I understand you are like many of us who have made the right decisions yet are feeling the pinch of the economy. I believe/hope that the housing market will rebound within the next couple of years and we will see prices rise again.

  16. #30
    Waitin til next year bucksfan2's Avatar
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    Re: New home buyers?

    Quote Originally Posted by Rojo View Post
    It's thrown around a lot because its pervasive. A whole generation is caught in a wealth spiral and it ain't pretty.
    Im 26 so my age group has just entered the housing cycle within the past few years. I was fortunate enough to be able to put 20% down on a house almost 2 years ago when the wife and I bought the house. As soon as we signed the papers we began to get home equity applications in the mail. They came almost weekly from 5/3 bank. They came from individual banking centers, I got phone calls from the corporate banking center, and I have a friend who is a branch manager who said that if I needed one she could set me up with one. The problem is home equity lines of credit aren't free.


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