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For those who can't come up with 20% down, please do the math and see how much more you're paying with PMI. In this particular case, would it kill you to "settle" for a $200k house instead of a $400k house? Just food for thought.
Maybe it won't kill you, but this is from another C-D thread
"However about about 6 months ago the pest problem in our apartment building got really, really bad. Also, we live in a high crime area (3 murders in the last 8 months within a few blocks of where we live) which"
For me it was all about having my personal space and not having to share it with people who I have no control over. SFH was the only thing I wanted, not a condo or a place that shared walls. Some people like property, my BIL was annoyed that he could see a corner of his closest neighbors roof from the end of his driveway and planted a tree! LOL!
I was fortunate to get into real estate before it went bonkers. I've been through ups and downs and bubbles and bursts but it doesn't change my mortgage payment or my reason for being here. I've actually had thoughts lately that I might not want to be a homeowner anymore, the house gives me fewer options in life. But financially I'm better off keeping it.
PMI is insurance that lenders require if you your loan to value exceeds 80%. Unlike interest, is was not deductible unlike the market down turn where they made it deductible until 2014.
There are sometime ways getting around paying a monthly pmi payment
Its not about straight profit...... its about comparing renting to owning. You need to live somewhere.
Say at the end of the day that person who bought in 1978 simply broke even at the end of 30 years. He still lived there for 30 years and now he has $300,000 in his pocket to go do something else with his life.
The renter, has paid $300,000 in rent over 30 years and walks away with $0.
Who would you rather be?
You're forgetting the $150,000 in property taxes the guy with the $300k house paid over 30 years, as well as the likely $50,000 in maintenance costs over that period of time. Also, add in the $25,000 in homeowner's insurance, as well as the $75,000 in mortgage interest over that 30 years. Then there is the down payment tied up in the house.
People **** away all sorts of money on houses. They aren't investments. They are money pits.
If you want to get rich, you won't get there by buying a house. You can build wealth by investing whatever you have left over each month in stock index funds, starting in your 20s and continuing until you are in your 50s. Stock returns have historically beaten inflation by a long shot, unlike real estate which has typically only kept pace with inflation.
Last edited by statisticsnerd; 02-19-2014 at 09:56 PM..
That's ridiculous. How are you supposed to save up $100k for a $400k house when you're pissing away your money on rent?
20% down on a 400k home is 80K... much easier to save up for than 100k
I looked for the cheapest home that was listed and offered less than half of the listing price... bought right out of college... a shack that was set for a condemnation hearing... I wanted to buy a decent home and found I lacked sufficient employment history to qualify... they actually checked those things once upon a time.
Anyway, I took my down payment money and bought a home for cash... money I had earned working since age 12... that bought me 650 square feet cottage on a 25 x 100 city lot and built in 1910.
Everyone thought I was crazy... I was so happy at owning I couldn't care what they thought.
Over the next year I repaired the foundation, put up drywall, replaced the roof, windows and doors plus did the bath and kitchen...
I still own the home today and only two families have rented from me...
The first two weekends I had fixed the broken windows and the front door, hauled away trash, cut the weeds and fixed the fence... did enough so the hearing was cancelled.
Renting out my rent my 100% free and clear home let me buy the next home and do the same thing... several of my High School friends did the same... took several moves until we got where we wanted to stay...
Last home I bought was 600k and I put down 300k...
I would not have any wealth if it was not for Real Estate... my day job as an Engineer is just that... a job.
Owning is a lifestyle choice that isn't right for everyone.
By the way, I bought this home in the heart of the San Francisco Bay Area... Oakland California.
You are not paying your mortgage and about to be foreclosed on but you advocate home ownership? What will you do after you sell your house or the bank takes it?
If your mortgage is so cheap you should be able to pay it.
Actually...the whole story is this:
I am living in my mother's house. SHE is not paying the mortgage.
She is a widow for fourteen years, and, until she was laid off from both of her jobs, she WAS paying the mortgage, all by herself, for twelve years...because my useless, worthless, alcoholic father left her with jack shyt.
The mortgage is way too high for her to handle, living on Social Security only. Her mortgage would be equivalent to roughly 100 percent of her income.
She recently declared bankruptcy. Nobody I know in my life did more on her own than my mom.
But, now...it's just too much. And neither of us wants to stay up in the cold North anyway.
since the banks crashed our economy purposefully for their own profit...and hurt everyone (especially and including my mom) in the process, I really don't feel too damn bad for the banks when people do exactly what we are now doing.
since we don't want this place anyway...why throw all our resources at paying for it?
Why not try to sell it...and meanwhile, squat and pay nothing?
Save the resources towards a new house in a place we WANT to be in?
And the deal is this: I am buying the new house when we move. I will be the homeowner...a first-time homeowner, I might add. and mom will be living with me.
By not paying the current mortgage, we can save up the money needed for the down payment on a new place.
Screw the banks, they screwed us...turnabout is fair play. We are operating within the constraints of the law.
Please tell me that I can't be the only one bothered by this statement from this supposed homeowner.
Be bothered by it all you want.
Nothing we are doing is illegal in any way.
The truth is the truth.
My mother is the current homeowner...not me. I have never been a homeowner.
When we move, I will be, because I am buying the new house.
I do NOT advocate doing what we are doing...really, but the way I see it, the banks left us no choice.
We TRIED to get HARP, we TRIED to get mortgage modification...and at every turn, the bank opposed us and opposed us.
This, after my mother worked two jobs - as a widow...for twelve years...to keep the house, because my alcoholic, worthless, useless father left her with jack shyt.
And she was doing fine and STILL would be doing just fine...if the banks hadn't PURPOSEFULLY crashed our economy in order to enrich themselves at the expense of the rest of us.
In that economic downturn (CAUSED BY THE BANKS), my mother lost both her jobs, and is now only on Social Security - and the amount of the mortgage would be 100 percent of her Social Security.
The banks have totally refused to work with us....in spite of our trying.
So, sorry, no, I don't feel the slightest bit bad in screwing the bank back a little bit.
We don't want to stay in Pennsylvania anyway.
So here's the deal:
A - We sell the house. The original mortgage gets paid off, the back taxes get paid off...any profit becomes ours for a downpayment on the new house - assuming there is any profit left.
B - Bank forecloses. they get the house and sell it to recover their money. If they do not recover full value of the original mortgage, Uncle Sam bails them out (bet y'all didn't know the banks got THAT sweetheart deal...known as the Secret Bailout...did ya?)
Now, in situation A or B...the bank STILL GETS ALL THEIR MONEY. Maybe not as soon as they would like to have it, but oh, too bad, cry me a freaking river for the poor poor banks!!
In the end, nobody actually gets screwed out of a cent...unless the foreclosure happens, and then you could argue Uncle Sam gets stuck with the tab...but nobody told Uncle Sam they HAD to do that...that was a gift to the banks....and many of us were against the banks getting bailed out. But Uncle Sam chose to do so.
In the end...the bank totally has their assets covered. The way the system now works: Banks get all the profit and take none of the risk....or loss.
The banks and our government set it up that way.
Don't blame people if they take advantage of it.
We'd much rather sell the place before the foreclosure happens, and pay off the original mortgage with the proceeds. But if that does not come to pass...oh well.
It is NOT like we didn't TRY to work with the banks...they simply refused to help us at every single turn...after THEY were the ones who created the economic downturn that ruined us. Until THEY screwed the economy WE were doing JUST FINE.
We TRIED to get HARP, we TRIED to get mortgage modification...and at every turn, the bank opposed us and opposed us. This, after my mother worked two jobs - as a widow...for twelve years...to keep the house, because my alcoholic, worthless, useless father left her with jack shyt.
The government is bailing out the banks. Its not a homeowner bailout. The news always talks about modifications, but the hard reality is, almost no one gets one. Its like winning the lottery. Your mother should have sold the house and moved into something she could afford.
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