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Old 01-17-2008, 12:57 AM
 
3,459 posts, read 5,759,960 times
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I've been reading the 15 vs 30 year mortgage thread, and the good points brought up for both sides got me to wondering about something else.

Would you rather buy a less expensive house to decrease your mortgage payment or stretch your budget to get into a better house?
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Old 01-17-2008, 08:34 AM
 
Location: Culloden WV
78 posts, read 423,455 times
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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.
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Old 01-17-2008, 10:42 AM
 
Location: mississippi
80 posts, read 276,260 times
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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.
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Old 01-17-2008, 10:43 AM
 
Location: Land of 10000 Lakes + some
2,885 posts, read 1,970,484 times
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The time is ripe for living within your means. Take advantage of it. Foreclosures are the reason for people not living within their means.
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Old 01-17-2008, 11:00 AM
 
Location: NJ
12,283 posts, read 35,590,033 times
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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.
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Old 01-17-2008, 09:11 PM
 
3,459 posts, read 5,759,960 times
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Quote:
Originally Posted by tahiti View Post
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.
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Old 01-17-2008, 10:43 PM
 
69,368 posts, read 63,858,157 times
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Quote:
Originally Posted by sterlinggirl View Post
I've been reading the 15 vs 30 year mortgage thread, and the good points brought up for both sides got me to wondering about something else.

Would you rather buy a less expensive house to decrease your mortgage payment or stretch your budget to get into a better house?
100% buy a less expensive house, then pay it off quickly, sell it, and then buy a larger home.

The less money one pays to the bank in interest, the better financial stability they will have.
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Old 01-17-2008, 11:00 PM
 
69,368 posts, read 63,858,157 times
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Quote:
Originally Posted by sterlinggirl View Post
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.
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.
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Old 01-18-2008, 05:24 PM
 
Location: Chaos Central
1,122 posts, read 4,095,621 times
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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.
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Old 01-31-2008, 01:44 PM
 
5,747 posts, read 12,014,128 times
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Quote:
Originally Posted by Boomerang View Post
Nobody needs a McMansion.
So true. I wish people in my community also understood that nobody needs a Hummer.
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