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Old 12-20-2014, 11:24 AM
 
3,492 posts, read 4,940,032 times
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Quote:
Originally Posted by ayoitzrimz View Post
Could we have taken PMI and refinanced later? Sure, if property value keep rising as they have been (unlikely) but we would end up with whatever interest rates are available at that time. In our case, appreciation cannot be taken into account in the 78% loan to value ratio (in other words, we would need to pay down to 22% of the original home price to remove PMI without refinancing) so for us to get what is still historically low interest rate, with no PMI, and 5% down allows us to stay well within our means and have money left over for emergencies.
Are you sure about that appreciation rule? Several professionals I've spoken to have indicated that such an arrangement (ignoring appreciation) would be illegal.
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Old 12-20-2014, 01:47 PM
 
2,409 posts, read 2,631,006 times
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Quote:
Originally Posted by lurtsman View Post
If you bought a condo that was roughly equal to your current apartment, the condo payment (all costs included) should be less than the rent payment would be given current mortgage rates on 30 year loans.
All costs included including HOA fees, property taxes and insurance? I doubt you can achieve this with 5% down, or even with 20% down.

A downtown condo valued at 250k would rent for about 1.2k a month. At 4% and 20% down payment, the total monthly payment would be 1.06k of P&I + 0.2k of HOA fees + 0.1k of property tax + 0.04k of insurance = 1.4k.
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Old 12-20-2014, 03:01 PM
 
Location: Arvada, CO
13,228 posts, read 24,345,041 times
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Quote:
Originally Posted by AmFest View Post
All costs included including HOA fees, property taxes and insurance? I doubt you can achieve this with 5% down, or even with 20% down.

A downtown condo valued at 250k would rent for about 1.2k a month. At 4% and 20% down payment, the total monthly payment would be 1.06k of P&I + 0.2k of HOA fees + 0.1k of property tax + 0.04k of insurance = 1.4k.
But what would that condo rent for in 1, 3, or 5 years?


For example, I bought my house in Feb 2014. My PITI is $1550. A house literally a block away recently rented for $1800. It has one less bedroom, one less bathroom, and about 900 sq ft less than my house. And it doesn't have the mountain and city/lights views my house has.

^That's a good feeling.
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Old 12-22-2014, 08:58 AM
 
Location: Denver, CO
2,391 posts, read 1,799,403 times
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Quote:
Originally Posted by lurtsman View Post
If you're making 60 to 70k per year, paying 750 in rent, and not putting at least 15 to 20k into retirement or savings each year, you're not good at managing money and you should reconsider your priorities.
I have been saving, but not much. I've been trying to pay off my student loans so I can be debt free. I've already paid a huge chunk off. I've also moved across country a couple times for jobs, so that has been somewhat costly. I usually have about $800-$1,100 left over each month with my current expenses.
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Old 01-05-2015, 09:17 AM
 
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Another solution is to find a lender that is willing to do an 80/15/5 "piggyback" loan program.
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Old 01-05-2015, 08:40 PM
 
36 posts, read 50,380 times
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Quote:
Originally Posted by lurtsman View Post
My house was 230k. I am paying 1217/month. All costs included.

If you would be paying $1500/month, the property should be massively nicer than what you are renting. When you buy a home, you either take a large step up in quality of the property, or you gain monthly savings. If you bought a condo that was roughly equal to your current apartment, the condo payment (all costs included) should be less than the rent payment would be given current mortgage rates on 30 year loans.

When I bought the house @ 230k, our annual income was about $50k. We were approved up to 275k because of our good credit. For us, 1217/month on 50k a year was not "tight" or near the top of what we would be able to afford because we are dramatically better at saving than the vast majority of the population. The one area where we allowed ourselves to spend more was on buying a better home.

Our annual income is higher now because we are both working, but most of the extra money just goes into tax advantaged retirement accounts. No new cars, no new expensive hobbies, no need to burn through any cash we acquire.

If you're making 60 to 70k per year, paying 750 in rent, and not putting at least 15 to 20k into retirement or savings each year, you're not good at managing money and you should reconsider your priorities.
I disagree with the above statement - purchasing a home of your own, even if you are paying significantly more then rent and its not quite as luxurious is still a far better long term investment then just renting. 10 years down the line - if something happens like a family member becomes ill or a major expense comes up you will have equity built. I'm not saying that people should use their homes as emergency funds - quite the contrary - but if you continue to rent for the next 10 years, you will have absolutely nothing to show for it except a bunch of your hard earned money gone in a gritty landlords hands. And with the way the denver market is now - more then likely you will turn a profit if you decide to sell it years down the line.

I say - if you can afford it - bite the bullet and buy.
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Old 01-05-2015, 11:15 PM
 
2,409 posts, read 2,631,006 times
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Quote:
Originally Posted by summergrl227 View Post
I disagree with the above statement - purchasing a home of your own, even if you are paying significantly more then rent and its not quite as luxurious is still a far better long term investment then just renting. 10 years down the line - if something happens like a family member becomes ill or a major expense comes up you will have equity built. I'm not saying that people should use their homes as emergency funds - quite the contrary - but if you continue to rent for the next 10 years, you will have absolutely nothing to show for it except a bunch of your hard earned money gone in a gritty landlords hands. And with the way the denver market is now - more then likely you will turn a profit if you decide to sell it years down the line.

I say - if you can afford it - bite the bullet and buy.
You have equity built, but that equity is costly and time consuming to liquidate. And for the first few years, most of your payments will go to interest with little left over for equity. You own a home because you want to own. Unless you see the real estate market booming in the future, buying a home is generally not a good investment strategy compared to renting and investing.
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Old 01-06-2015, 10:32 AM
 
36 posts, read 50,380 times
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Quote:
Originally Posted by AmFest View Post
You have equity built, but that equity is costly and time consuming to liquidate. And for the first few years, most of your payments will go to interest with little left over for equity. You own a home because you want to own. Unless you see the real estate market booming in the future, buying a home is generally not a good investment strategy compared to renting and investing.
And renting and moving out every other year when your rent is raised is
not costly or time consuming either? Landlords are raising rents like crazy in Denver and will likely continue to do so for years to come. Security deposits, moving trucks, rent hikes - they add up. It is a known fact that real estate generally appreciates positively over time. I don't think the OP is looking to buy a home and sell it after a few years - he's looking to stay in Denver long term. In that case, buying is a better long term investment then renting - period. What will the op have to show for his rental in 10 years? I've rented for the past 9 years and I strongly REGRET not buying earlier due to fear and insecurity. I have nothing to show for all the money I've wasted on rent in the past 9 years and I encourage others not to make the same mistake or be swayed by negative comments.
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Old 01-06-2015, 12:31 PM
 
2,409 posts, read 2,631,006 times
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Quote:
Originally Posted by summergrl227 View Post
And renting and moving out every other year when your rent is raised is
not costly or time consuming either? Landlords are raising rents like crazy in Denver and will likely continue to do so for years to come. Security deposits, moving trucks, rent hikes - they add up. It is a known fact that real estate generally appreciates positively over time. I don't think the OP is looking to buy a home and sell it after a few years - he's looking to stay in Denver long term. In that case, buying is a better long term investment then renting - period. What will the op have to show for his rental in 10 years? I've rented for the past 9 years and I strongly REGRET not buying earlier due to fear and insecurity. I have nothing to show for all the money I've wasted on rent in the past 9 years and I encourage others not to make the same mistake or be swayed by negative comments.
Not nearly as much as selling a home. Not at all.

You don't have anything to show for paying mortgage interests either. What did you do with the money saved from renting instead of buying? If you invested, that's what to show.

I can give you a list of other reasons to not buy, but I think these threads summarize it all:

Rent vs Owning?
How many here plan on renting forever?
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Old 01-06-2015, 12:47 PM
 
Location: Denver CO
21,047 posts, read 11,676,612 times
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Quote:
Originally Posted by AmFest View Post
You don't have anything to show for paying mortgage interests either. What did you do with the money saved from renting instead of buying? If you invested, that's what to show.
That presumes there is money left over to invest after renting. Rents in Denver are very high and for the last home I owned plus the one we just moved into, renting a comparable property would be more expensive than my mortgage, taxes, interest, HOA and insurance combined. No money left to invest if I wanted the same standard of living.

I'm not suggesting that home ownership is right for everyone, there are lots of reasons why it may not be. But in the Denver housing market in 2015, "because you can save lots of money to invest elsewhere" isn't really a terribly valid argument in favor of renting.
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