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No it is relevant to the discussion. When I sell I get rid of the housing expense AND I get all the money I paid during ownership PLUS a handsome amount for appreciation. If you rent you got butkiss.
Wwwhhaaatttt. If you rent you get your but kiss? Mathjak you get your but kissed?
Quote:
Originally Posted by honobob
It's just a small additional expense that is still less than renting and will be reimbursed by my appreciation gains. I'm being PAID to live in the property. Try doing that with a rental. I can continue to keep my "housing" expense less than renting and pull out hundreds of thousands of dollars of appreciation every few years. And If I ever decide I want to be a renter for what ever reason I can sell and pay off the bank with the appreciated value and KEEP all the hundreds of thousands of dollars.
Sorry man but what you're describing is in a perfect world where you not not time the market right you bought at the right price too in order to tan hundreds of thousands in equity. You're NOT going to keep your housing expenses less than renting by pulling out hundreds of thousands of dollars of equity. Hundreds of thousands in equity pulled out equals hundreds maybe thousands of dollars a month for 10-15-30 years. (Obviously depends on actual borrowed amount) I mean what happens when you want out after borrowing those "hundreds of thousands" and your house is worth A hundred thousand? You're sccaaaarewed. Now your precious house isn't going to pay off your hundreds of thousands of debt. Lots of people tried playing that ponzi game like you talk about. Just ask anyone who played it in 02-08. You're making a mistake by assuming your house will always appreciate and pay off your debt. Lots of risk with that type of thinking. And lots of people caught with their pants down when the housing market took a dump. There are still people today with underwater loans.
How are you being paid to live in the property? You are talking about equity? Equity is effervescent numbers on paper which you sell to get or you're borrowing/carrying debt.
It is just a case of taking a loan out . The house only qualifies you. No different then if the bank gave you the loan without the house based on other criteria.
You didn't take a penny of equity out of the house . You have the house as it was and a loan you owe now.
Not until you sell does the equity go in to your pocket. It is no different then real estate investors who invest for appreciation vs those that invest for the income . They can only see one of those things . They have to sell to reap the appreciation or keep the property for the income.
Anything else would just be asking the bank for a loan and telling them it is ok to take the property if you don't pay them.
It is just a case of taking a loan out . The house only qualifies you. No different then if the bank gave you the loan without the house based on other criteria.
This is pretty basic Mathjak but it seems to be completely over your head so I'll type real slow.
If I take out a $400,000 unsecured loan. I trade a promise to pay for 30 years to get a lump sum now. If I tire of the payments I have to give the money back to get rid of the payments.
In my case my property has earned $400,000 in appreciation. I have traded access to that money in exchange for 30 years of payments. If I tire of the payments I can sell my property and get all my money back PLUS keep the $400,000 and no longer have payments. I can use my money to buy another house and STILL have $400,000!
Guess what the difference is between the two situations that in your naivety YOU think are the same. Hint, it's larger than $399,000!
whether you put the collateral of the home up or not if the bank was willing to give you a 400k loan based on other criteria the situation is the same , go buy another house with it .
the house is just getting you approved for a loan not providing any money itself . the qualifier could be any source the bank accepts .
in fact if we take the mortgage for the co-op i want to buy , our portfolio will be what qualifies us since we do not work or collect social security yet . the loan is still the same as if it was a house getting us approved , the only difference is what gets us approved . .
which goes back to what i am telling you , you cannot pull appreciation out of the house until it is sold . you are free to take all the loans you want , the same as any loan would be without a house . the house is only qualifying you the same as the loan i am taking is being qualified by my portfolio .
what you have is a 400k house that is still paid for and in a totally separate deal you borrowed 400k from the bank for a total of 800k in assets . you then have a 200k liability for a loan . .
anyone could have borrowed that 400k without a house assuming the bank qualified them . it could be a business or portfolio or even a pension or annuity and social security that gets them qualified . it does not take a house to qualify for a loan , there certainly is other criteria . .
you are mixing up the fact that all you are doing is just plain and simply borrowing money for another use . it has nothing to do with the house itself other than saying if i don't pay the loan off take the house .
we all borrow money all the time for things whether we have a house or not , i did it to buy my way in to the real estate venture since i didn't have enough of my own money . since i didn't have a house we qualified with the assets i was buying .
taking a loan is taking a loan . what gets you approved is irrelevant .
Last edited by mathjak107; 10-04-2015 at 03:11 AM..
be aware too that because tapping equity is really just applying for a loan and does not actually utilize the house's equity except they can take it if you do not pay the loan , new laws went in to effect in 2014.
you need to have good credit scores , and a debt to income ratio that lets you pay the loan back since like any loan it gets paid back with money from outside the equity that sits in the home and can't be taken out until sold . .
you are free to take all the loans you want , the same as any loan would be without a house . the house is only qualifying you the same as the loan i am taking is being qualified by my portfolio .
what you have is a 400k house that is still paid for and in a totally separate deal you borrowed 400k from the bank for a total of 800k in assets . you then have a 200k liability for a loan . .
anyone could have borrowed that 400k without a house assuming the bank qualified them . it could be a business or portfolio or even a pension or annuity and social security that gets them qualified . it does not take a house to qualify for a loan , there certainly is other criteria . .
you are mixing up the fact that all you are doing is just plain and simply borrowing money for another use . it has nothing to do with the house itself other than saying if i don't pay the loan off take the house .
we all borrow money all the time for things whether we have a house or not , i did it to buy my way in to the real estate venture since i didn't have enough of my own money . since i didn't have a house we qualified with the assets i was buying .
"tapping equity" YOUR WORDS
Mathjak107, you are so desperate not to admit you are wrong. Remember how long you fought against LTCi and you could have bought a lifetime policy like me for cheap?
Also your math above sucks. 400 house plus 400 cash loan equals 200 liability??????
Also if I foolishly decide to no make payments or not give the $400,000 back the lender cannot TAKE my house. Where do you get your real estate lending knowledge, The Three Little Pigs book? They can only get the money THEY gave me plus expenses.
You have not addressed the example where I showed the difference in "tapping my appreciation equity" and just taking out a loan. I even had you within $1 of the answer. The difference is that I get to keep the $400,000. That's a big difference.
you can't get the equity out ! you can only borrow more money , period.
so you borrowed money and paid off the house . now you borrow 400k and make payments on 400k , i can do that with my portfolio taking a mortgage just the same . .all your doing is borrowing money the same as any other loan house or not . .
Last edited by mathjak107; 10-04-2015 at 12:00 PM..
you can't get the equity out ! you can only borrow more money , period.
so you borrowed money and paid off the house . now you borrow 400k and make payments on 400k , i can do that with my portfolio taking a mortgage just the same . .all your doing is borrowing money the same as any other loan house or not . .
You are losing it Mathjak107, your typing shows it. LOL I never said anything about paying off the house. I said I traded my appreciation equity, $400,000 for small monthly payments or "tapping" the equity as you named it. What's even better is that the house is still appreciating so I can take even ore money later and my housing expense will still be less than if I was renting the same space. How cool is that to be a real estate owner?
You take out a loan and pay it off you have ZILCH.
I tap my appreciation equity and I can pay it off with the sale proceeds AND keep the $400,000 plus have MY money from the initial purchase! I have $400,000 free money and you don't. Plus a place to live that was lower in expense over time than if I had rented it!
understand you are doing nothing but taking out a new loan on top of having the equity tied up in the house .
you are taking zero out of the house , if you were able to get a dime out you wouldn't be duplicating the amount all over and re-owing the money all over again .
you believe it is anything other than just a loan , that is all that matters , the rest of us know better .
Last edited by mathjak107; 10-04-2015 at 01:37 PM..
understand you are doing nothing but taking out a new loan on top of having the equity tied up in the house .
you are taking zero out of the house , if you were able to get a dime out you wouldn't be duplicating the amount all over and re-owing the money all over again .
you believe it is anything other than just a loan , that is all that matters , the rest of us know better .
Us? Who are you talking for?
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