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Old 12-05-2017, 07:53 AM
 
4,537 posts, read 4,288,281 times
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Quote:
Originally Posted by louie0406 View Post
Mortgage payments are fixed, but property tax and home owners insurance arenít.

A good friend of mine who purchased a home in my area said that heís had 3 property tax hikes in the 3yrs that heís been there. According to him, they werenít small hikes either. Heís paying a significant amount more now than he was 3yrs ago.
My friend who took over my old apartment (rental) has had his rent increase every year since he took it over---those property tax hikes are just passed onto him and if they aren't passed onto the renter, then they are lucky. My maintenance has increased on my unit but his rent has increased by a larger amount.


My mortgage and maintenance payments for my unit cost me less than a comparable rental by a few hundred per month. I've had this property for less than five years and I could probably sell it for 100-150K more than what I bought it for based on how things have been selling in my neighborhood. I have continued to watch the RE market since I bought this place.

That puts me WAY ahead versus renting. Obviously, buying vs. renting for me would largely depend on the area. My parents paid off their house years ago and I am glad they did because there is no way they would be able to pay rent on a place in my area now with their income! (Which is now disability.)
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Old 12-05-2017, 12:48 PM
 
Location: Philadelphia/South Jersey area
1,520 posts, read 615,764 times
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Quote:
Originally Posted by louie0406 View Post
Mortgage payments are fixed, but property tax and home owners insurance arenít.

A good friend of mine who purchased a home in my area said that heís had 3 property tax hikes in the 3yrs that heís been there. According to him, they werenít small hikes either. Heís paying a significant amount more now than he was 3yrs ago.
Hey, try living in NJ. by the time I finally moved out, my mortgage was 800 bucks a month but my property taxes had increased almost 33% over 12 years. My property taxes were 1200 bucks a month. It was insane.
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Old 12-05-2017, 12:53 PM
 
Location: Raleigh
7,760 posts, read 4,687,540 times
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You have noted one of the overlooked costs of home ownership vs renting. A calculation of the potential earnings on the down payment versus the gain on the value of the house over your lifetime indicates it is better to invest when interest rates are high. Right now you'd have to invest in stocks which could be more risky.
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Old 12-05-2017, 02:20 PM
 
4,266 posts, read 11,144,488 times
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Back to the original post......I lived in many different apartments through my 20's. Having a single family home is awesome. I hope to never reside in an apartment again for the rest of my life! If I roll with my loan for the whole 30 years, I will pay $174,000 in interest. So be it!!
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Old 12-05-2017, 02:50 PM
 
Location: Martinsville, NJ
6,138 posts, read 10,572,155 times
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Quote:
Originally Posted by louie0406 View Post
My wife and I have been flirting with the idea of purchasing our first home. Both of us are in our late 30ís and have no children, nor do we plan to. We are currently renting in a wonderful gated community in Floridaís gulf coast. We pay $1100/month for a 2br, 2bath, 1200sq ft apt. Amenities include 2 swimming pools, jacuzzi, dog park, fitness center, car garage, and storage room. We can easily afford the rent as we split everything 50/50 and are able to save/invest excess cash.

Weíve been doing some mortgage interest calculations, and it turns out that on a 250k home, we will pay over $100k in interest at 3.75% over 30yr years. Call me crazy, but I just cannot justify that. Is there something that Iím just not understanding? On top of that, youíre on the hook for taxes, insurance and basic maintenance and repairs of your home.

The only benefit that I can see from owning a home is that you have more private space and nobody can evict you (unless you stop mortgage or tax payments). Other than that, I dont see the upside.

I see the argument all the time of how ďyouíre just throwing money away by renting as you build no equity and are just lining someone elseís pocketsĒ. Well arenít you lining the pocket of these banks buy paying an exhorbanant amount of interest over the years?

Why shouldnít I just keep my $50k (20%) down payment in the bank and continue to save and invest while paying an affordable rent instead of locking myself into a long term loan paying an insane amount of interest?

Again, we are new too all of this and are just looking for some information on how buying a home rather than continuing to rent would be financially beneficial to us because I dont see it.

Thanks...
Lets look at some very basic numbers.
You currently pay $1,00 per month. I doubt your rent will stay at that rate for 30 years, but let's suppose it does. 1100 x 360 months is a total expenditure of $396,000.

The monthly payment on the mortgage you described, with a 20% down payment on a $250k property, would be $926.23. Over the life of the loan, you would pay a total of $333,433.23. You will also have property taxes. A cursory look at FL property taxes suggests that $2,500 per year would cover the taxes on a property of that value, so lets use that. $2,500 x 30 years is an additional $75,000. So the principal, interest, and property taxes would have cost you $408,433.23. That's approximately $12,500 more than the rent.
Now, at the end of this 30 year period, what will you have? If you purchased, you will have the property. If we assume it's not gone up in value at all, (an extremely unlikely supposition,) you will have an asset worth $250,000. If you rented, you will have....the right to leave or agree to keep paying?
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Old 12-05-2017, 02:53 PM
 
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When you can pay cash for a 7 figure house, more than afford to own and live there, self-employed with a great business with an excellent income. Have no bills, Everything is paid for, plenty for retirement.

Why would I want to rent? Do spend on an average $30,000 to $50,000 per year for upkeep. LIVING COSTS MONEY.

I get at 30, you might not understand that everyone in this country is NOT at the same level of income etc.

Over the years I have noticed this seems to be an internet issue.

The show Adam Ruins Everything does a show on why renting is best.
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Old 12-05-2017, 08:00 PM
 
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i moved to Florida about 9 years ago, The money I spent on rent before I bought my home for 7 years was more than what my home cost and now my mortgage is less than the lowest that I paid for rent for a 1 bedroom apartment.
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Old 12-05-2017, 08:50 PM
 
Location: Where the sun always shines
1,748 posts, read 2,272,744 times
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Quote:
Originally Posted by Modification Specialist View Post
My $00.02

Paid our 30yr loan off in 14 years.......

At the time - was a struggle sending extra towards principle.

Look back at what we did, glad we did it.

Now no debt - credit 800+.....
Sounds good, but for those 14 years of struggling, you lost out on a lot of disposable income to to other things and enjoy your life. May not be important to you, but to others, having the bulk of every check tied into a mortgage and taxes, ect... is not fun.

Quote:
Originally Posted by dysgenic View Post
I def think most people underestimate maintenance. In the last year alone we've needed a new dishwasher, new cabinets, and a new garage door. We still need a new heating system (8k), new floors (carpets are old) 5k, new windows (10k), new door (1k). We'll probably do one project per year for the next 4-5 years. At the end of that I guarantee will need 2-3 other things.

I don't know why the maintenance gets overlooked in threads like these. Even an alarm system carries a monthly fee.

Quote:
Originally Posted by forzalugano View Post
Rents increase Three percent (3%) to eight percent (8%) every 12 months in accordance with the annual rent increase percentage, which is based on the Consumer Price Index (CPI) average for the twelve (12).

Mortgage payment are fixed for 30 years until paid off, and are tax deductible.

Why would anyone rent? Chances are your paying a mortgage payment anyways, your landlords. I am a property manager and I see so many tenants tell me they lived in the apartment 20 years, they paid the place off for the landlord and get no benefit.
.
Why would anyone rent? A 1 bedroom condo in my neighborhood cost 250K and wants minimum 20% down. My current apartment cost a bit less than 1K a month. To get that condo, i gotta come up with 50k down, and with property tax, interest and monthly maintenance fees, I'd be looking at like 1700 per. I don't know about you but going from $1000 a month and no utilities to 1700 and utilities is a big financial jump. And thats a 30 year bill. Not to mention if lose my job or if I ever want to move.

In this past year, I have had broken pipes; the air unit broke down, and cabinets that fell apart....all repaired within 48 hours and nothing out of my pocket.

It's funny how as the other post said, maintenance gets overlooked by the people who cheer home ownership only. I work with a bunch of teachers who tell me they had no real summer vacation b/c their entire summer check was used to redo the back yard or fix the roof that was leaking or falling apart.
I mean, yeah you can write off the tax, but its not like you get ALL of that money back. If your taxes are $5000, you're not getting $5000 back in a tax return. There are other ways to get tax reductions.

There's arguments on both sides, but if you're one of the individuals with a home somewhere in a really low cost of living like Mississippi, or you are kind of in the middle of nowhere, you can't really compare your situation to people living on the coast or in more desirable areas. Median price on a home in gang infested Compton, LA is $380K. That's a mansion in some of your towns.

Not to mention as I said, people lose their jobs, or maybe at a point just hate their neighborhood. A good friend of mine was so psyched about buying his first home in a crappy area of Atlanta like 2 years ago for like $150K and couldn't understand why the whole world doesn't want to by. Now he doesn't even want to stay there 5 years but feels stuck b/c he can't get much money for the house and has put almost no work into it. And with the area he is in, I wouldn't take that house for free.

People are different with different wants and needs. We all need to remember that.

Last edited by jacktravern; 12-05-2017 at 08:53 PM.. Reason: Spelling
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Old 12-06-2017, 12:42 PM
 
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A person should rent when they expect a turnover (move, transfer, upsizing or downsizing) in five years or less.
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Old 12-06-2017, 12:58 PM
 
Location: Boise, ID
7,917 posts, read 21,438,218 times
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My mortgage (PITI) actually went down by $25 over the first 5 years I owned the house. I refinanced to a 12 year, and it went up by about $125. So small changes overall.

In the same amount of time, rent on an equivalent property went from around $750 to around $1150.

So in the 14 years I've owned the house, my payment is up about $100, and only because I cut time off my mortgage term. Otherwise, it would have gone up by about $25 over that time frame. While rent went up by around $400.

No brainer for me.
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