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Old 02-09-2011, 01:17 PM
 
Location: Lansdowne, VA
31 posts, read 66,480 times
Reputation: 51

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Quote:
Originally Posted by goindownsouth2011 View Post
Buying a home in this falling market is like trying to catch a falling knife without cutting yourself. Be sure to fully consider your rental opportunities. The old addage that renting is like throwing money away, no longer applies these days.

Worst advice ever! Unless you are one of the jerks that ruined the market in the first place by flipping houses. Even if in the end I can only sell my $480,000 house for $200,000 (which is quite likely now lol) its still $200,000 more than I would get back by literally "throwing away money every month" with a rental. Buy Definitely Buy and now is a pretty good time. But only if you are looking for a place to live not an 'investment'. Prices are likely to continue to fall but the interest rates will probably start going up again soon. They are about as low as they can get now. Every dollar you throw at a rental is a dollar you are guaranteed to never see again. By buying even if you only get half of the money back in the end you still get something back. The first few years you pay mostly interest and fees and such but after that you are basically paying yourself. Not to mention the pride of ownership and all that. To me rentals are for people too lazy or otherwise unable or unwilling to take care of their own property.
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Old 02-09-2011, 04:46 PM
 
396 posts, read 929,324 times
Reputation: 331
Quote:
Originally Posted by skyshark75 View Post
Worst advice ever! Unless you are one of the jerks that ruined the market in the first place by flipping houses. Even if in the end I can only sell my $480,000 house for $200,000 (which is quite likely now lol) its still $200,000 more than I would get back by literally "throwing away money every month" with a rental.
Umm, anyone else see the logic failure here? If you are the owner of this potential house and you get divorced, transferred, etc... you would then have to PAY the bank balance back. If you rent, well, you are just out the total of your monthly payment.

For example: Let's say you have a 100,000 dollar down payment, you finance $380,000 to buy this $480,000 house. And, in five years, you have payed mostly interest and maybe a little principle and your house is now worth $200,000. You have to sell, due to divorce or transfer or whatever:
--so you owe the bank $380,000
--new buyers pay $200,000
--you now have to pay the bank approximately $180,000 in order to SELL your house (and you have already made that 100,000 down payment 5 years ago)--so, in this situation, you are out $280,000 and still do not have a place to live.

So, if you would have spent $280,000 on rent during the period you owned the house, only then would you break even. And here, it is possible that you might have spent that much...

Our last house was purchased from a couple who had to bring money to closing to sell the house..was very sad, but beyond their control, and they would have been better off (and several thousand dollars richer) if they had just continued to rent.

And, even though we made a "profit" when we sold the same house, we figured that with all the taxes and upkeep, we would have broken even had we rented for the same period of time...i.e. the monthly payment was the same as renting--we could have just rented, saved the maintenance money we spent, and ended up with the same "profit." And not paid taxes, home owners fees,painting, purchased furniture, etc...

So, after owning 2 houses in other places, we have determined it is still too expensive to buy in this area unless we know we are going to live in the same house for the next 10 years.

You might want to check out:
Is It Better to Buy or Rent? - Interactive Graphic - NYTimes.com
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Old 02-11-2011, 11:27 AM
 
25 posts, read 60,893 times
Reputation: 16
Quote:
WOW Thanks!!!! This was extremely helpful! If you don't mind me asking, how did you meet your realtor and how much did you put down on your house?
You will want to meet a realtor that works in the area you want to buy. The area they work in they know better than any other realtor.

The amount we put down was 3% of the purchase price because we used an FHA loan. 3% of $180,000 is $5,500. However, we spent another $2,000 on upfront costs for insurance, taxes, and inspections.

If you are a first time home buyer, you will most likely want to get an FHA loan. The FHA loan requires only 3% down payment, but adds mortgage insurance to your monthly mortgage payment. The traditional mortgage requires 20% down and does not include mortgage insurance.

At $180,000 home price, and right now our mortgage is $1,230 per month at its regular rate. Of that, roughly $700 of that goes to interest. Roughly $80 goes to mortgage insurance. Roughly $300 goes to taxes. The rest goes to the principal. As time goes on, you end up paying less to interest and more to the principal, and eventually the mortgage insurance goes away.

If you are offered an alternative to a fixed rate 30 year mortgage, make sure you understand the strengths of each (variable rate, ARM, etc). For most people, the traditioanl 30 year fixed rate works. Don't just pick the type of mortgage that offers the lowest initial monthly payment.
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Old 02-11-2011, 01:18 PM
 
Location: Maryland - Howard County
195 posts, read 656,556 times
Reputation: 60
FHA down payment requirements have changed and based on credit scores, begins at a minimum of 3.5% now. It once was 3%.
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Old 02-11-2011, 01:35 PM
 
335 posts, read 570,375 times
Reputation: 297
Quote:
Originally Posted by skyshark75 View Post
Worst advice ever! Unless you are one of the jerks that ruined the market in the first place by flipping houses. Even if in the end I can only sell my $480,000 house for $200,000 (which is quite likely now lol) its still $200,000 more than I would get back by literally "throwing away money every month" with a rental. Buy Definitely Buy and now is a pretty good time. But only if you are looking for a place to live not an 'investment'. Prices are likely to continue to fall but the interest rates will probably start going up again soon. They are about as low as they can get now. Every dollar you throw at a rental is a dollar you are guaranteed to never see again. By buying even if you only get half of the money back in the end you still get something back. The first few years you pay mostly interest and fees and such but after that you are basically paying yourself. Not to mention the pride of ownership and all that. To me rentals are for people too lazy or otherwise unable or unwilling to take care of their own property.
The OP is a first time homebuyer. Using YOUR example, he would be 'throwing away' $280,000 instead of 'throwing away' a monthly rental payment. You are an idiot. Good day.
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