Home Ownership, not all it's cracked up to be...

[ATOMonkey]

It's that time of year again when my mortgage company sends me the statement telling me how much money I wasted.

~ $8k interest
~ $1200 taxes
~ $1200 PMI

For a grand total of $10,400 ish (rounding up) paid to other people. Sheesh...

Buying a house right out of school is some of THE WORST advice I've ever been given. I'd be so much further ahead had I rented a house for 5 or 10 years first.

Live and learn...

 

[38special]

No arguments there. I hate the idea of paying so much interest to other people, so I bought really cheap and I'm paying it off FAST. We're closing next week on a condo in Greenwood and I should have it paid off within 4 years. Screw paying 30 years of interest to banks!

Thanks, Dave Ramsey

 

[shibumiseeker]

I finished paying for my first tract of land by the time I was 26, and built my own place as I could afford it. Then that place burned to the ground and I built another as I could afford it and with a little help from friends and acquaintances. I own it free and clear and other than property taxes it doesn't cost much. I think my new cabin cost what you paid in interest and PMI for two years.

It's not fancy, but I'm always making it nicer, just finished concrete flooring for the addition's basement a couple weeks ago.

Buying as small and cheap a house as you can fit into is a good bet, especially now.

 

[cburnworth]

huge down payment. 15 year loans. no accident insurance. no pmi. pay the insurance & taxes yourself. pay an extra amount every month. you can have that sucker down in no time flat. i refied 4 years ago for 100k & am down to 83 k.

 

[eldirector]

Yeah, rent until you can afford a house, that's for sure. No reason to pay PMI. Save until you can put 20% down. Set aside your tax $$$ in an interest-bearing account until taxes are due. At least YOU can earn some interest on your money, rather than the mortgage company or state.

We got our mortgage stuff in the mail the other day, too. Yay.....

Our over-payments are making a nice dent, though! We round up (way up) when we write the check every month.

 

[rich8483]

well, yes and no. had you waited a few years, you may have saved up enough for a downpayment large enough to avoid pmi, which is huge, and lower your rate noticably.

but. i did that by living with my parents until i got married at 23.

by renting, you still have a monthly payment. only the money beyond that cost can be sacked away. your area might be different, but around me, a purchased house and a rental house of comparable size go for pretty much the same monthly payment give or take 50 bucks or so.

my BIL bought a dublex last year. the payments come out to about 800/month for the whole building and he just rented out the other HALF, a two bedroom unit for 900/month. leaving renting not as a low cost option but reserved for those with poor/little credit or those that do not desire the responsibility of repairs.

and you cant sell your apartment in 5 or 10 years so that is really throw away money.

actual apartment units by me can rarely be had for less than 600/month for a 1 bedroom **** hole in questionable repair.

i'll gladly take my 1.5 acres and home and 3 outbuildings for 780/month on a 15 year.

 

[steveh_131]

It's that time of year again when my mortgage company sends me the statement telling me how much money I wasted.

~ $8k interest
~ $1200 taxes
~ $1200 PMI

For a grand total of $10,400 ish (rounding up) paid to other people. Sheesh...

Buying a house right out of school is some of THE WORST advice I've ever been given. I'd be so much further ahead had I rented a house for 5 or 10 years first.

Live and learn...

Thanks for the perspective. I'm so tired of people criticizing me for renting right now. Yes, I know that rent is money down the drain. But so is PMI and interest and taxes and repair/maintenance costs, etc. Until I'm ready to put 20% down and have budgeted for larger payments, no thank you.

Purchase a home when you are financially prepared for it.

 

[DissonantEscapist]

Speaking as a renter who is completely out of the loop on buying, what is PMI?

 

[Woodsman]

Buying as small and cheap a house as you can fit into is a good bet, especially now.

That's the best advice at this time. Put the money in land and what you absolutely need to survive comfortably. I'm at the point where a lot of forested land and a small cabin sounds like an ideal way to make a go of it. Lesson learned....

 

[pjcalla]

It's that time of year again when my mortgage company sends me the statement telling me how much money I wasted.

~ $8k interest
~ $1200 taxes
~ $1200 PMI

For a grand total of $10,400 ish (rounding up) paid to other people. Sheesh...

Buying a house right out of school is some of THE WORST advice I've ever been given. I'd be so much further ahead had I rented a house for 5 or 10 years first.

Live and learn...

I don't think it's bad advice. In the end you'll OWN, building equity along the way, whereas if you rented, you're essentially just pissing away money. Yea, sucks that you have PMI, but that should go away after you get to 20% equity. As for the taxes, you'd still be paying that if you rented, just disguised as monthly rent. Don't forget you get the mortgage interest deduction if you itemize (for the time being).

 

[88GT]

I think some of you would complain about anything just to complain.

I've got a renter who's spending $650 a month just in rent. I have no idea what her electric, gas, and water come to. However, I do know based on the market value of the home, even with PMI or MIP from an FHA loan, she'd still be paying at least $100 less than she's renting it for.

Be honest: it wasn't buying right after school that was the bad advice. Not structuring the loan to make it financially beneficial was.

 

[eldirector]

Speaking as a renter who is completely out of the loop on buying, what is PMI?

Mortgage Insurance. Required if you put less than 20% down. Helps protect the bank when they make risky loans. Basically, if you are a higher risk, you have to pay more.

AKA: A big waste of money.

 

[pjcalla]

Speaking as a renter who is completely out of the loop on buying, what is PMI?

Mortgage insurance. Basically if you only have 5%-10% down payment, they'll loan to you, but you have to pay them to make sure you don't default.

 

[88GT]

Speaking as a renter who is completely out of the loop on buying, what is PMI?

Private Mortgage Insurance.

It's a premium paid on top of the principal and interest owed to the lender to counter the (perceived) increased risk of default. You can avoid PMI by putting a minimum percentage of the loan as a down payment. Usually 20%, but not always.

The idea is that those with no down payment have nothing invested in it and therefore nothing to tie them to it, making it easier to walk away and default. Harder to walk away from the ten grand down payment than the $500 closing costs.

FHA has a similar thing, but it goes by a different name. And in some instances you can get some of that back if you sell before it's removed. I don't believe this is an option for non-government backed loans.

 

[abnk]

Mortgage Insurance. Required if you put less than 20% down.

Not if you go with a VA loan.

 

[dom1104]

I pay 400 a month in rent.

I am pretty sure, I should stay RIGHT where I am at for a long as the house works out.... because the numbers people are paying who own a house seem ASTRONOMICAL to me.

And thats if your water heater doesnt break, etc. Sure is nice to call up the landlord and say "Hey.. fix this!"

 

[colt45er]

It's that time of year again when my mortgage company sends me the statement telling me how much money I wasted.

~ $8k interest
~ $1200 taxes
~ $1200 PMI

For a grand total of $10,400 ish (rounding up) paid to other people. Sheesh...

Buying a house right out of school is some of THE WORST advice I've ever been given. I'd be so much further ahead had I rented a house for 5 or 10 years first.

Live and learn...

I see what your saying but I don't. If you can afford the payments you are ok. For one, all of that is tax deductible.

For 98% of th people that own homes, if you had to go rent a place today, you will pay the same if not more than you do for a mortgage. So you are paying the same very month, but you are pratically paying 100% interest because you will never see any of it again.

If you can afford it, buy it. The more money you put down the better. But regardless, buying is good.

At least IMHO

 

[88GT]

I see what your saying but I don't. If you can afford the payments you are ok. For one, all of that is tax deductible.

For 98% of th people that own homes, if you had to go rent a place today, you will pay the same if not more than you do for a mortgage. So you are paying the same very month, but you are pratically paying 100% interest because you will never see any of it again.

If you can afford it, buy it. The more money you put down the better. But regardless, buying is good.

At least IMHO

And let's make this a fair comparison: rent vs buy analysis means using the rent for the same home you intend to buy. Buying a home in Carmel is always going to be less cost effective from a pure dollar spent standpoint than renting at 38th and Keystone or Washington and Belmont. Though you may not live to reap any of those savings.

 

[pjcalla]

And let's make this a fair comparison: rent vs buy analysis means using the rent for the same home you intend to buy. Buying a home in Carmel is always going to be less cost effective from a pure dollar spent standpoint than renting at 38th and Keystone or Washington and Belmont. Though you may not live to reap any of those savings.

I don't know about that. Living in Carmel gives you many more benefits than in the 'hood. Plus, when you decide to sell, you'll see appreciation of your property. Sure, it will cost more upfront, but you'll almost always see a return on your investment. Location, location, location.

 

[Westside]

last year I bought my first home in Avon and it's 1200 sqft on just under a half acre lot. I pay 800 a month for taxes, mortgage, etc... My rent for my 700sqft apartment also in avon was 750 a month. so for me the only real added cost monthly was the extra utility cost and maintenance. It ALL depends on the the terms of your loan and how much you buy whether it a good deal or not. My experience says most people overspend on their house and end up getting more then the need/can afford.