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Captain is wrong of course but you and everyone is free to do as they please. Study economics and money creation before signing up for half a mil in debt in an up cycle however!
As for real numbers....interest rates are low...this is the worst time to buy because as rates rise, the amount people can afford to pay per month stays the same so if a greater share of their paycheck is going to interest there is less for principal and the prcie of the home falls. If we get an inflationary wage cycle then it is a good time to buy and then only but this is just another bubble and the proof is that the Fed funds has been at zero for five plus years.
When the economy is growing at 4 pct with normalized rates (not the Fed pulling out all the stops and printing Trillions) in the 5 pct to 8 pct range you will get price discovery.
Captain is wrong of course but you and everyone is free to do as they please. Study economics and money creation before signing up for half a mil in debt in an up cycle however!
As for real numbers....interest rates are low...this is the worst time to buy because as rates rise, the amount people can afford to pay per month stays the same so if a greater share of their paycheck is going to interest there is less for principal and the prcie of the home falls. If we get an inflationary wage cycle then it is a good time to buy and then only but this is just another bubble and the proof is that the Fed funds has been at zero for five plus years.
When the economy is growing at 4 pct with normalized rates (not the Fed pulling out all the stops and printing Trillions) in the 5 pct to 8 pct range you will get price discovery.
you are confusing two different things (not that you are necessarily right about either of them). whether or not now is a good time to buy is a different issue from whether or not to use debt to buy. so all your talk about "this is the worst time" is not relevant. also, if you make the choice to use debt, you still have the money its just in another asset rather than stuck in your house. so you always have the option to move that money into the house if it makes more sense in the future. today, you should use debt if you buy. if you don't think now is a good time to buy, well then I guess you shouldn't use debt or cash to purchase; you should rent.
but once again, this is all factual stuff. what annoys me about finance discussions is when people think their opinions can trump math.
Poor try. If you have $500k and can earn a higher than mortgage interest rate in a secure fashion (which no one can do btw presently) then it is smart....why not get a $500k loan and collect the spread?
Duh.
But being in debt for a postage sized stamp of property with an avg $9k+ tax bill is why people like the captain here fall way towards the bottom of the wealth distribution curve.
Housing values are an illusion....the illusion that you have an asset. In truth ...YOU the worker are the asset and the home is a huge liability. Adding tons of interest to that equation makes the liability portion unsustainable across a couple of business cycles.
I haven't read Captain's earlier posts nor will I. Best of luck to you.
Poor try. If you have $500k and can earn a higher than mortgage interest rate in a secure fashion (which no one can do btw presently) then it is smart....why not get a $500k loan and collect the spread?
Duh.
But being in debt for a postage sized stamp of property with an avg $9k+ tax bill is why people like the captain here fall way towards the bottom of the wealth distribution curve.
Housing values are an illusion....the illusion that you have an asset. In truth ...YOU the worker are the asset and the home is a huge liability. Adding tons of interest to that equation makes the liability portion unsustainable across a couple of business cycles.
I haven't read Captain's earlier posts nor will I. Best of luck to you.
one of your major problems is that you have philosophical beliefs that you seem to think matter in a financial discussion. the size of the property means nothing, bringing it up shows you are silly. the concept of housing values being an illusion means nothing, once again you are silly. a house is worth what someone is willing to pay for it, just like any other asset. if you think property values will tank, then you shouldn't buy a home whether it be with cash or debt. but I shouldn't try to address the silly things you said because they aren't relevant. I can only imagine someone who is very naïve may mistake your post as something written by someone who seems to know something. let me assure everyone that mayorquimby is just spitting out random bits of info he has heard and doesn't have much understanding of any of it.
one of your major problems is that you have philosophical beliefs that you seem to think matter in a financial discussion. the size of the property means nothing, bringing it up shows you are silly. the concept of housing values being an illusion means nothing, once again you are silly. a house is worth what someone is willing to pay for it, just like any other asset. if you think property values will tank, then you shouldn't buy a home whether it be with cash or debt. but I shouldn't try to address the silly things you said because they aren't relevant. I can only imagine someone who is very naïve may mistake your post as something written by someone who seems to know something. let me assure everyone that mayorquimby is just spitting out random bits of info he has heard and doesn't have much understanding of any of it.
these simple minded dave ramsey fans read a book written for simple minded people and they turn around and think they are experts. don't they realize that they just got a lesson in finance that was produced for the lowest common denominator??? you aren't qualified to give advice!
these simple minded dave ramsey fans read a book written for simple minded people and they turn around and think they are experts. don't they realize that they just got a lesson in finance that was produced for the lowest common denominator??? you aren't qualified to give advice!
Do you really think its the Ramsey influence? I have heard his show on occasion and for the most part he teaches economics to babies. While that may not apply to me some people do need that type of education or baby sitting in regards to their money.
Seems this thread has taken on a life of its own-died and then revived. I didn't end up buying this house or any house for that matter. I've since tempered my expectations a bit-currently looking in the 400-450k range. I also have more saved up and I now make around 130k.
I'd also like to add, the market has picked up alot since 2012 so home prices are a bit higher. While it was probably a good idea to not purchase this particular property, I should have bought something.
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