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I would say, in the current economy, live within your means. I would also be mindful of where you buy to make sure your area has a long term history of a stable valuation market.
I agree with live in your means. With the RE market as it is, I would really look at the area. Find a price range and then search for the HOT area. What I mean is an area that still has upward mobility (not completely built, good values psf). Two ways to buy. One, is the I just love it and have to have it.....the other is, what some would consider the boring way,,,,,,IS it a good economic decision. Some say,,, stretch and buy. I personally like, living within a budget, making a good decision.
least expensive house in the most desirable neighborhood
i know that doesn't really answer the question.
after paying a mortgage for forever and a day , i'm all for the smaller mortgage, it's a great feeling to know you're not living and working for that mortgage payment while sustaining on mac and cheese.
least expensive house in the most desirable neighborhood
That's always good advice.
I agree with everybody, but asked the question because I remembered some conversations several years ago where people were insisting that it was best to buy the largest house possible. They reasoned that the price appreciation would outpace the mortgage interest and a 400K house would build equity faster than a 200K house.
I agree with everybody, but asked the question because I remembered some conversations several years ago where people were insisting that it was best to buy the largest house possible. They reasoned that the price appreciation would outpace the mortgage interest and a 400K house would build equity faster than a 200K house.
When price appreciations outpace the mortgage interest, (as it has over the last 6-7 years) it means that the property values are over inflated and its bound to level out and go into recession, and that $400K home also depreciates faster then the $200K home.
It totally amazes me that I think most people understand the idea behind compounded interest when it comes down to saving money. Put $100 away every month and over so many years, you easily get $100K in the bank, but I get confused over peoples lack of understanding that its this compounded interest that costs them the most when they borrow funds.
People are always safer buying a smaller home then they can afford, paying it off quickly, then using the sales proceed from property 1, to buy their new larger home. This minimizes any interest paid to the bank, and if your not paying the bank, then your paying yourself. The savings will outpace inflation every day.
Buy the less expensive house and
- pay off debt, pay cash for items or in-full at end of each month for anything purchased with credit card
- put some $$$ away for retirement
- enjoy some of your hard-earned money by travelling, enjoying a hobby, etc.
Nobody needs a McMansion.
So true. I wish people in my community also understood that nobody needs a Hummer.
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