Posted by victor on July 10, 2004, 5:19 am
Ok, ok, ok. My friends and family keep nagging at me to stop renting
and buy a house. I'm so sick of them droning on about points-this and
closing costs-that. But the more I think about, the less sense it seems
to make for me. Here's why:
1. "You'll save a fortune on taxes." True. But the property taxes
will pretty much cancel out any savings you got on the income taxes.
2. "You're throwing rent money down the toilet." True. In all
likelihood, your mortgage payment will be twice your rent. By the time
you pay it off, you'll be drinking Ensure, wearing Depends, and too old
to maintain the house. Then you'll be wanting to move back to ... AN
APARTMENT! By that time, an assisted living apartment. And let's be
realistic. You're NOT going to be like those power couples in Money
magazine who claim they're going to pay off the mortgage in 5 years and
retire in 10. Yeah, right.
3. "It's one of the few things you buy that appreciate in value."
Assuming that you find someone who is willing to pay your inflated
selling price. Assuming that the neighborhood doesn't go down the
tubes. Assuming that the new house you buy will end costing as much as
you think it's going to (not!). Too many assumptions.
4. Maintenance. I'm lucky if I have time to clean my apartment, let
alone a house. I've worked customer service for plumbing, HVAC, and
home maintenance companies before, and I hear how much people pay for
this stuff. In an apartment, it's all FREE.
In the end, I suppose it's a matter of personal preference. But I do
wish my home-owning friends would cut out the holier-than-thou attitude.
Posted by SoCalMike on July 10, 2004, 6:00 am
victor wrote:
> Ok, ok, ok. My friends and family keep nagging at me to stop renting
> and buy a house. I'm so sick of them droning on about points-this and
> closing costs-that. But the more I think about, the less sense it seems
> to make for me. Here's why:
>
> 1. "You'll save a fortune on taxes." True. But the property taxes
> will pretty much cancel out any savings you got on the income taxes.
true... in my case, its about even.
>
> 2. "You're throwing rent money down the toilet." True. In all
> likelihood, your mortgage payment will be twice your rent. By the time
all depends... my mortgage is about $400 *less* than a comparable
2br/2ba apartment, with indoor laundry and a garage.
> you pay it off, you'll be drinking Ensure, wearing Depends, and too old
> to maintain the house. Then you'll be wanting to move back to ... AN
not necessarily... i could probably make double payments now, if i
wanted. that would pay it off in about 10 years or so.
> APARTMENT! By that time, an assisted living apartment. And let's be
> realistic. You're NOT going to be like those power couples in Money
> magazine who claim they're going to pay off the mortgage in 5 years and
> retire in 10. Yeah, right.
>
> 3. "It's one of the few things you buy that appreciate in value."
> Assuming that you find someone who is willing to pay your inflated
> selling price.
the price you sell at is set by what comparable properties sell for. if
the selling price of similar houses goes up, yours does too.
>Assuming that the neighborhood doesn't go down the
> tubes.
dude, i already live in "the tubes". theres nowhere to go but up from
here, and this place has *still* appreciated $100k in a little over 2
years.
even when the rates rise, and prices fall, they ARENT going to fall $100k.
granted, thats a "paper profit", but it entitles me to have more
options, if i need them. home equity loans (which are stupid ), or even
the chance to get the hell out of here and have a $100k down payment on
a house somewhere else cheaper in the southwest, if and when the time
comes.
do you have that with your apartment? no.
>Assuming that the new house you buy will end costing as much as
> you think it's going to (not!). Too many assumptions.
mine did. i made a full price offer with the stipulation that the seller
pay closing cost. they did. total out of pocket? $6000 down payment,
which came off the selling price, and a $150 home inspection.
you only get screwed if you WANT to get screwed.
>
> 4. Maintenance. I'm lucky if I have time to clean my apartment, let
> alone a house. I've worked customer service for plumbing, HVAC, and
> home maintenance companies before, and I hear how much people pay for
> this stuff. In an apartment, it's all FREE.
is it really? how much does your rent go up each year? my payments will
be the same 30 years from now as they are today. will your rent
payments? i doubt it. no such thing as FREE, chachi. and if i pay it off
early? its mine. youll still be paying rent forever.
>
> In the end, I suppose it's a matter of personal preference. But I do
> wish my home-owning friends would cut out the holier-than-thou attitude.
yes, they should just let you wallow in your happiness. sounds more like
sour grapes on your part, than them being "holier than thou".
Posted by JazzMan on July 10, 2004, 11:51 am
SoCalMike wrote:
>
> is it really? how much does your rent go up each year? my payments will
> be the same 30 years from now as they are today. will your rent
> payments? i doubt it. no such thing as FREE, chachi. and if i pay it off
> early? its mine. youll still be paying rent forever.
>
Actually, your payment will be substantially higher due to
property tax increases, assuming you live outside of California
that is. I co-owned a house with my father back in the 80's,
and during those 7 years the house payment (which included
payments into an escrow account for taxes and insurance) went
up from $645 to almost $900, a better than 35% increase. I
can assure you that the family income did not increase by
anywhere near the same amount in that time.
I worked out a formula once that included among other items
the interest paid over the life of the loan, and determined
that it was very unlikely that a house could be sold for
what the interest alone cost, and that was in spite of the
interest deduction.
That being said, the median house price around here is 5.5x
the average annual income and rising.
JazzMan
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Posted by Dan Ganek on July 10, 2004, 12:49 pm
JazzMan wrote:
> SoCalMike wrote:
>
>
>>is it really? how much does your rent go up each year? my payments will
>>be the same 30 years from now as they are today. will your rent
>>payments? i doubt it. no such thing as FREE, chachi. and if i pay it off
>>early? its mine. youll still be paying rent forever.
>>
>
>
> Actually, your payment will be substantially higher due to
> property tax increases, assuming you live outside of California
> that is. I co-owned a house with my father back in the 80's,
> and during those 7 years the house payment (which included
> payments into an escrow account for taxes and insurance) went
> up from $645 to almost $900, a better than 35% increase. I
> can assure you that the family income did not increase by
> anywhere near the same amount in that time.
>
> I worked out a formula once that included among other items
> the interest paid over the life of the loan, and determined
> that it was very unlikely that a house could be sold for
> what the interest alone cost, and that was in spite of the
> interest deduction.
>
But you didn't take into account the rent you weren't paying.
To get an realistic estimate of what it actually cost you need
to subtract your typical rent payment over the years from your PIT.
/dan
Posted by JazzMan on July 10, 2004, 1:39 pm
Dan Ganek wrote:
>
> JazzMan wrote:
> > SoCalMike wrote:
> >
> >
> >>is it really? how much does your rent go up each year? my payments will
> >>be the same 30 years from now as they are today. will your rent
> >>payments? i doubt it. no such thing as FREE, chachi. and if i pay it off
> >>early? its mine. youll still be paying rent forever.
> >>
> >
> >
> > Actually, your payment will be substantially higher due to
> > property tax increases, assuming you live outside of California
> > that is. I co-owned a house with my father back in the 80's,
> > and during those 7 years the house payment (which included
> > payments into an escrow account for taxes and insurance) went
> > up from $645 to almost $900, a better than 35% increase. I
> > can assure you that the family income did not increase by
> > anywhere near the same amount in that time.
> >
> > I worked out a formula once that included among other items
> > the interest paid over the life of the loan, and determined
> > that it was very unlikely that a house could be sold for
> > what the interest alone cost, and that was in spite of the
> > interest deduction.
> >
> But you didn't take into account the rent you weren't paying.
> To get an realistic estimate of what it actually cost you need
> to subtract your typical rent payment over the years from your PIT.
>
> /dan
Rent prices around here tend to say within the same general
range as house payments for equivalent sizes, with the rent
being a little higher most of the time. Unless one pays cash
for a house there will always be a payment due every month for
shelter. Being in a house is better than an apartment from the
sense that a house may or may not break even over the life of
the mortgage, but rent is a total loss. From a strict sense of
just cash outlay from the monthly budget it's a wash either way.
JazzMan
--
**********************************************************
Please reply to jsavage"at"airmail.net.
Curse those darned bulk e-mailers!
**********************************************************
"Rats and roaches live by competition under the laws of
supply and demand. It is the privilege of human beings to
live under the laws of justice and mercy." - Wendell Berry
**********************************************************
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> and buy a house. I'm so sick of them droning on about points-this and
> closing costs-that. But the more I think about, the less sense it seems
> to make for me. Here's why:
>
> 1. "You'll save a fortune on taxes." True. But the property taxes
> will pretty much cancel out any savings you got on the income taxes.