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Old 06-30-2020, 06:35 PM
 
13,898 posts, read 12,652,658 times
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House prices in this country run the gamut from cities that will pay you to take a home off their hands to $1 for a burnt out wreck in Detroit to $75,000 for a decent home in a small town in Nowheresville, Iowa to multi-million$$$ mansions here in the Southland. Somewhere sandwiched in between all that is the right home for you at an affordable price. It just requires a ton of searching. That's the hard part.
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Old 06-30-2020, 06:58 PM
 
1,144 posts, read 676,511 times
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I did Dave Ramsey's "Peace University". His program is good, but I always disagreed with his super-conservative approach to buying a house. When I listened to him I thought yeah, you are in a cheap area of the US (at the time Tennessee) but good luck following your rules if you live anywhere else that is expensive.

The reality is most metro areas in the US the minimum price for a decent starter house runs on average $400k. To follow his rule of only buying on 15 years/20% down is impossible for most unless mom and dad help you with the down payment. I believe there is no shame to buy on 30 years especially with the low interest rates we have now. The alternative is paying high rent which gets you nothing in the long run. And you can always refi later, or throw extra money toward your principle to pay it down faster.
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Old 06-30-2020, 07:07 PM
 
Location: Sacramento CA
1,076 posts, read 222,490 times
Reputation: 2215
Quote:
Originally Posted by Coloradomom22 View Post
I did Dave Ramsey's "Peace University". His program is good, but I always disagreed with his super-conservative approach to buying a house. When I listened to him I thought yeah, you are in a cheap area of the US (at the time Tennessee) but good luck following your rules if you live anywhere else that is expensive.

The reality is most metro areas in the US the minimum price for a decent starter house runs on average $400k. To follow his rule of only buying on 15 years/20% down is impossible for most unless mom and dad help you with the down payment. I believe there is no shame to buy on 30 years especially with the low interest rates we have now. The alternative is paying high rent which gets you nothing in the long run. And you can always refi later, or throw extra money toward your principle to pay it down faster.
Great point about interest rates. My first home was at 9 1/2%. Big difference from 4%.

My last home was a 15-year loan, and it was wonderful, as 7 years in, you can just see the principal pouring into your home. By 10 years, the interest portion was so small, it was obscene.

After 15 years on a 30-year loan, you are still getting killed on interest. Move after 10 years of a 30 year loan, and you have barely payed down the principal at all. Sucks.

You are still right in that, if all you can swing is a 30-year mortgage payment, and you could not buy a house otherwise, then at 4% interest that is a no-brainer. And you can always re-finance into a 15-year mortgage later as your income goes up.
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Old 06-30-2020, 07:39 PM
 
144 posts, read 46,020 times
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And if you have already have a great rate on the 30yr, there's not even a need to refinance. You can pay it off like a 15. Or a 10. Or a 26.


There is always going to be uncertainty. There is no perfect time to buy a house. Will prices go up or down? Will interest rates go up or down? What if I get a great job offer but have to move? What if I lose my job? If buying a home is something you want to do, don't let yourself be paralyzed by what-ifs.
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Old 06-30-2020, 08:35 PM
 
6,232 posts, read 2,753,179 times
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Quote:
Originally Posted by simplechamp View Post
And if you have already have a great rate on the 30yr, there's not even a need to refinance. You can pay it off like a 15. Or a 10. Or a 26.


There is always going to be uncertainty. There is no perfect time to buy a house. Will prices go up or down? Will interest rates go up or down? What if I get a great job offer but have to move? What if I lose my job? If buying a home is something you want to do, don't let yourself be paralyzed by what-ifs.
Exactly. Unless you get weird loan terms, you can usually prepay your loan without penalty. With rates as low as they are now, why not get a 30-year and make larger payments?

The reality is that most people still don’t get everything they want in a home. It would be great if you could find that perfect new, move-in ready home in the desirable area with the number of bedrooms and bathrooms and big lots you want. The reality is that most people end up making compromises. They get one bathroom, might have a smaller floor plan, might buy something farther out, not as up to date, etc.
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Old 06-30-2020, 08:48 PM
 
1,144 posts, read 676,511 times
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One of the problems with Ramsey's house-buying advice is that things have changed. I remember when interest rates were 8 or 9%, now they have gotten as low as under 4%. Having high debt is normal for a lot of Americans which means a conservative home-buyer has to compete. Prices are higher because the cost of getting into that house on 30 years is a lot lower interest-rate/payment wise. Look how you can even buy cars now on 7 year loans.Cheap money has made following Ramsey's conservative never-have-debt rules much harder.
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Old 07-01-2020, 07:31 AM
 
2,567 posts, read 1,905,147 times
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Quote:
Originally Posted by Igor Blevin View Post

By 1987, home prices peaked. People said, "homes will never be affordable again. We missed out".

By 1992, falling house prices were near the bottom. People said, "homes will never be a good investment again.

By 2005, house prices were soaring and people said, "I have to buy NOW before I can never afford a house again!"

By 2011, house prices bottomed out after 5 years without new home starts, and people said, "Houses will never be a good investment ever again".

Do you see the trend here. Do you see how home prices ALWAYS cycle. They always have peaks and valleys.

In 2011, people I know were saying "Millenials won't buy homes. Homes will never go up again because demographics like Boomers dying will flood the market with empty homes."

Right.

Now it is 2020 and home prices are sky high.

Wait for a while, and you will catch the next bottom.
how accurate are those years. Because based on the years you provided, its: 5 years down, 13 years up, 6 years down, 9 years up (still counting). based on this trend we have few more years of price hike before it shifts down.


i don't remember the 80s or 90s, but I recall price hit bottom in 2009 not 2011 (maybe I am wrong). If I switch 2011 for 2009, then the trend is: 5 yrs down, 13 up, 4 down, 11 up. Means we should see downturn next year as many prediction is saying. Just number play
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Old 07-01-2020, 07:41 AM
 
Location: Sacramento CA
1,076 posts, read 222,490 times
Reputation: 2215
Quote:
Originally Posted by keraT View Post
how accurate are those years. Because based on the years you provided, its: 5 years down, 13 years up, 6 years down, 9 years up (still counting). based on this trend we have few more years of price hike before it shifts down.


i don't remember the 80s or 90s, but I recall price hit bottom in 2009 not 2011 (maybe I am wrong). If I switch 2011 for 2009, then the trend is: 5 yrs down, 13 up, 4 down, 11 up. Means we should see downturn next year as many prediction is saying. Just number play
I lived in Sacramento, CA. Your city may be different. I was just offering an example of housing boom/bust cycles.. It is never "different this time" as so many people tried to convince me at the extremes of each cycle for the 2 boom/bust periods I went through in Sacramento.

I didn't mean to try to describe national housing trends or trends in other locations than Sacramento. I could well have some of the years wrong as I am just going off memory and tops and bottoms are always disputed anyway.

I only meant to convey the principle that housing prices always cycle, using my example for Sacramento.
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Old 07-01-2020, 08:37 AM
46H
 
1,184 posts, read 755,438 times
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Forget the 15 year mortgage and go with the 30 year. You can always prepay as your income goes up. However, with money so cheap (30 yr getting down near 3%), there is no real reason to prepay a mortgage. Also, 20% down still leaves you with the bulk of your savings not buried in the basement of your house.

So as you sit there locked into a Dave Ramsey driven panic, you are still not living in your own place.

$180K purchase price less 20% down is $144k.
$144K for 30 years at 3.2% is a monthly mortgage payment of $623. If you can afford $623, you should go buy your house.
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Old 07-01-2020, 08:59 AM
KB4
 
Location: New York
621 posts, read 1,217,238 times
Reputation: 614
I used to feel priced out in Manhattan. Once we started looking at other areas, we were no longer priced out. I don't follow any hard rules as to how much I should spend on a house or a car, etc. It was enough that my monthly mortgage payment is lower than the rent I used to pay.
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