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Old 02-10-2018, 02:35 PM
 
Location: Denver CO
15,288 posts, read 7,918,948 times
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Quote:
Originally Posted by gg View Post
You are always better off if you can afford it to be debt free. Banks aren't your friend. I have NO debt and live within my means. People say, "tax write-offs" and blah, blah, blah, but banks get their cut one way or another. Fees are there and lumped into financing. Cash is king. Now all this is in response to the quote above. I DON'T like debt and you stated you don't either. Now if I was going to get a loan, it would be leaned on a home due to tax advantages, but no need here.
Well, they have to pay housing expenses either way. So "no need" is debatable as there are valid reasons to go ahead and buy sooner rather than later if the ultimate goal is to own a paid off home and putting money towards that house via a mortgage rather than the smaller amount that can be saved after paying rent is often a more effective way to get there.

But everyone has to analyze their own particulars, including the rental and housing market where they live. Where I am, a comparable rental to what I own goes for $500 per month more than my mortgage including PITI (and that's on a 20 year mortgage, so the difference would be even larger on a 30 year mortgage) so I'd have no savings to put towards being able to pay 100% cash for a home.
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Old 02-10-2018, 04:08 PM
 
1,760 posts, read 683,219 times
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Quote:
Originally Posted by emm74 View Post
Well, they have to pay housing expenses either way. So "no need" is debatable as there are valid reasons to go ahead and buy sooner rather than later if the ultimate goal is to own a paid off home and putting money towards that house via a mortgage rather than the smaller amount that can be saved after paying rent is often a more effective way to get there.

But everyone has to analyze their own particulars, including the rental and housing market where they live. Where I am, a comparable rental to what I own goes for $500 per month more than my mortgage including PITI (and that's on a 20 year mortgage, so the difference would be even larger on a 30 year mortgage) so I'd have no savings to put towards being able to pay 100% cash for a home.
Agreed. What might be true for one person might not be true for another person. My sister is in Silicon Valley and has an inexpensive rental property from an individual who raises the rent only a little each year. Meanwhile, housing prices are out of control and she’d probably spend at least 50% more to buy something comparable and even 100-150% more if she wanted to upgrade to a single family home.

My neighborhood is generally cheaper to buy, but the market is not very strong so you don’t know whether you’d actually end up making money if you bought. The taxes are also really high and variable. If the market isn’t going anywhere or is going up so slowly that your wages are outpacing inflation and the increased home prices, it seems to make sense to rent a while until you can buy cash. The same or similar options would be around later.
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Old 02-10-2018, 06:59 PM
Status: "If ignorance is bliss, why aren't more people happy?" (set 9 days ago)
 
163 posts, read 51,339 times
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Quote:
Originally Posted by foodyum View Post
Well there are often tax advantages in taking out a mortgage and you may do better investing the cash. Run the numbers both ways.
The tax advantages for such a small mortgage are very iffy considering the new, higher std deduction amounts as well as the likelihood of them being phased out completely.

OP, Sounds like you live in a modest COL area, so with discipline it should not be too hard to save up a down payment sufficiently large that the total carrying costs of a home are not in any way burdensome.

Then you buy the house you love.

Last edited by PamelaIamela; 02-10-2018 at 07:18 PM..
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Old 02-10-2018, 07:14 PM
 
4,513 posts, read 6,079,393 times
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It is a good idea to own a home free and clear, but I don't know if I'd count on the house prices not exceeding pace with your savings - you would probably do just as well or better to go ahead and get your starter/ender home now with a 15 year low rate mortgage and pay extra payments on it so that you pay it off as early as possible.
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Old 02-10-2018, 07:19 PM
 
Location: Back and Beyond
2,458 posts, read 2,050,899 times
Reputation: 5439
Why would you give 10% of your money away every year when you don't own a house for yourself yet? $13,500 every year will almost pay the entire mortgage payment in full.

I'd funnel my 10% giving right over to my mortgage if it was me.
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Old 02-10-2018, 08:00 PM
 
31 posts, read 6,108 times
Reputation: 75
Jumping over all the previous posts and looking just at OP's post, I'd ask why they are working? If the answer is to live reasonably well, IMO they should buy their own home, with as much down as possible. At 135, I assume thousand/yr, they can purchase the average house without stretching their budget, assuming they don't live where I live. If they add a year of charitable contributions to their 45k, they'll have a good down payment on a 300k house. Their mortgage, assuming a fixed year plan, will remain constant, unlike their rent, which in all likelihood will increase annually.

Aside from possibly some additional maintenance expenses, they won't have much in the way of new costs. They'll just pay separately what is now rolled into their rental payments. I mention that as I've found a few renters who don't believe they pay real estate taxes, property/casualty insurance, etc.

Paying up front and avoiding a mortgage is a personal choice. If a mortgage is "oppressive," don't get one. But keep in mind the price you'll pay for having that feeling. 2008 notwithstanding, housing prices rise at or above inflation. So that 300k house you like today will be years older, in need of updating, and cost tens of thousands of dollars more when you have the ability to pay in cash. On top of that, you will not have opportunity for the money you pay for the house to grow in value. The house will likely appreciate at the same rate whether you own all of it or just a part of it. I'd rather have my 60k down payment growing at the increased value of the 300k house and have 240k growing elsewhere, nearly doubling my gain. Okay, oversimplifying. But you get the point.

Having said all that in favor of buying, another drop in housing prices in '18 or '19 is seen by many, including myself. But personally I don't expect the decline to be devastating.

Last edited by SFSGood; 02-10-2018 at 08:12 PM..
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Old 02-11-2018, 10:49 PM
 
Location: Southwest Washington State
12,080 posts, read 10,714,059 times
Reputation: 18804
Quote:
Originally Posted by Hemlock140 View Post
By the time you save the money, that house can be 25% more expensive than now. With a mortgage, your house payment would remain the same during those years, while the value goes up, and you would be missing that increase in equity. Meanwhile your rent is likely to increase every year. I wouldn't count on the tax deduct-ability lasting forever, but even after the new 2018 tax plan it is still a big help with up to 10,000 of mortgage interest deductible.
This. If you want a house, get together a sizeable down payment and find a house. Build equity, and invest wisely. If the house appreciates over, say 15 years, and you have have kept it up, you should make money when you sell.
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Old 02-11-2018, 11:50 PM
 
4,426 posts, read 2,121,223 times
Reputation: 2814
Quote:
Originally Posted by JC4E View Post
Hi,


My wife and I currently make $135 between us, and we do not plan to have children. We give 10%, invest 11% into retirement, both have no debt, and currently share a 700 sq ft apartment for $1,200 all-in.


We do not want anything ridiculously large, and are fine with a 'starter home' as our 'end home' as well. In our area, this would be about $200-$225 for a 1,400 sq ft ranch style which we would like.


If we currently have $45 saved, how absurd is it to want to save the full amount? We both do not like debt, and we are (realistically) happy in our current setting. But, it would be nice to own and have something permanent and not owe anything other than property taxes.


We just don't know if it's stupid to do this instead of, say, putting the usual 20% down and carrying a rather large (160-180 ish) mortgage that will be oppressive.


Thanks for all input!
Do it. Don't pay the bank a dollar to save 30 cents on your taxes. Think of how much you can save when your house is paid off!
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Old 02-15-2018, 06:24 AM
 
3,583 posts, read 2,595,325 times
Reputation: 11185
On the same day you post about this mortgage, you post if your relationship is salvageable. Not with a wife, but a girlfriend. Sounds like you should probably put the mortgage talk aside until you can figure out if you have a girlfriend or a wife, and if you plan on being with her tomorrow.
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Old 02-17-2018, 12:09 PM
 
1,952 posts, read 959,391 times
Reputation: 1549
Quote:
Originally Posted by carnivalday View Post
On the same day you post about this mortgage, you post if your relationship is salvageable. Not with a wife, but a girlfriend. Sounds like you should probably put the mortgage talk aside until you can figure out if you have a girlfriend or a wife, and if you plan on being with her tomorrow.
Agreed. And make these sort of important life decisions well outside of AA/substance abuse type interventions, to be on the safer side.
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