by Elsewhere 44 Replies latest jw friends
Even with out the tax advantages in the US it is always better to buy. I have bought 19 houses in my life and always made money. The house we are in now $408,000.00 when we bought it 2004, and now they want to list it for $569,000.00.
No doubt BUY....
BREEZE
Mortgage lenders will gladly approve you for a dollar amount that is really beyond what is wise. Make sure that your house payment isn't more than 25% of your take-home pay, or else you'll find that you won't have the funds to make improvements and repairs. Or else that's *all* you'll have money for.
Also, I think that buying a house in an urban-sprawl area can be risky. "Build houses everywhere there's space" seems to be the mantra where I live, and the result has been a fair number of communities with unoccupied and unappreciating houses. A sign of our very very capitalist times I guess. It's like, just build everywhere or somebody else will, and if a few communities go sour, well, we might lose a little but mainly it's going to be the suckas who bought houses in those communities that will lose out.
Here in Dakota it takes about 5 years to get rightside up after buying a house with zero down payment. It costs about 10% to sell a house here. In areas where there is 10% or more increases in property values that time is reduces. Here we might have 3% inflation of home prices a year. Some areas we have no raise in value at all.
Just buy a HP10B calculator and do some time value of money calculations. I advise clients to rent if they will be in a home for less than 3 years for sure. If they pay 10% down they are right side up on the first day, then it's a matter of convenience, not money. Payments should never be more than 25% of net monthly income.
Some people have family animals that are hard to rent for. They tend to buy just so they can have their house animals. There are other factors to renting vs buying than just money.
I'm conservative with debt. I like Dave Ramsey's money philosophy. http://www.daveramsey.com/
HI Elsewhere,
You live in the Dallas area, right?
On the plus side for home ownership is property value appreciation. There are only a few places here where home appreciation is more than 3-4 % year, on pre-owned homes. There are also tax advantages of mortgage interest and property tax. For me it was only about $1200/year. I'm a single parent, so it may be a bit more for someone with no kids. (Mortgage of $110K. It would be more on a higher mortgage. I think I was in the 28% bracket when I calculated this.)
Home ownership has a higher cost than renting. If you don't put down at least 20%, you'll have to pay mortgage insurance which was around$40/month on my mortgage. Once you build up 20% equity, you can drop that. Utilities are more than double what they were in an apartment. Homeowner's insurance is going to be at least double renter's insurance. Then there's maintenance and repairs, especially as the homes age. Also, at some point, if a person stays in the house, they'll want to remodel something. That's not cheap.
I'm in a home and plan to sell and move back to an apartment. It will be at least $400 month cheaper. I plan to take that money and invest in the stock market. I'll make more than 3-4% annually there. Renting is just a lot less headache too. I can also live closer to work, saving time and money on gas.
If you still want to go ahead, don't take the money out of your 401K. And keep an eye out for my 'House for Sale' sign.
Hi Elsewhere,
I owned a house, which I sold before going back to school. What galled me were property taxes, which seemed to rise exponentially (at least in upstate NY). Property taxes ran ~3% of assested value in that area or $30 per $1000 assested value when school, county, and city taxes were combined.
Personally, I will never buy a house again. I may buy a condo or town house at some point. But, since I'm moving to San Jose next fall (for the next few years at least), buying will likely not be an option. :-(
-silent
In my hometown, if you were planning on living there for quite some time, you were better off buying a home since mortage payments was so much less than what people were paying in rent. Where I live in Little Rock, I couldn't possibly afford the mortage payments on the houses in the area where my apartment is located. There are so many variables to look at buying versus renting. I would like to be able to to afford to buy a home right now but right now I cant; but I do like where I live now :)
The following link is to a RENT vs. OWN calculator:
It really depends on your personality type. of all the people I know not one would ever say that renting is a better long term alternative to having your space. For my personality renting just isn't right for me. It gives me a sense of subjugation to the Landlord and that just doesn't sit well with me. In general I think owning your own property, your own little castle and doing as you wish with it negates any shortfalls of owning your own place.
All your questions are money based try thinking of it from a different angle.
As witnesses we were encouraged to make stupid long-term financial decisions. On the other hand, look at what the WTB&TS does - they buy property, because they know:
A. Armageddon is NOT weeks or months away from 1975 (or any other date), and
B. God stopped creating dry habitable land a long time ago - it is a limited resource. Following the law of supply and demand, as population increases, demand goes up, and values rise.
So I agree with everyone who came down on the BUY side of the equation, and I think Talley did a great job of explaining the benefits.
Add to those:
Back to what talley said - get a mortgage you could afford in "the worst of times." What if you had signed on to a mansion-sized mortgage just before the internet bubble popped? ouch! People did. Real estate agents will encourage you to buy the biggest thing they can squeeze you into. Do you think their commission might be part of their motivation? oh, here's another tip - the real estate agent may be nice, or pretty, or friendly, but they are not YOUR friend (unless they are a "real life" friend like Gary B.). They work for the seller, because it is the seller who pays them when they close the deal. Do not be deceived.
Being a land baron - having property - will make you irresistably attractive to all kinds of bimbos who will want to benefit via osmosis from your labor. Be sure your playing skills are well honed. You may even want to form a corporation for purposes of property ownership and you will be the sole employee of that corporation.
That's my 2ยข
I took a look at the calculator. I don't see where the repairs and insurance are being considered.
