Asshat wormie
2023 Asshat Award Winner
- 16,820
- 30,968
But the argument against renting is that you are paying other people's expenses. Which is exactly what PMI is.
Home buying thread
- Thread starter Pasteton
- Start date
-
Guest, it's time once again for the massively important and exciting FoH Asshat Tournament!
Go here and give us your nominations!Who's been the biggest Asshat in the last year? Give us your worst ones!
This is technically what I did with my loan. I had to get my primary loan down to $420k to avoid a jumbo loan and have a second taken out to accomodate this. Long-term it was a better option. I also paid a point on my second (was super cheap like $600 or something) to match the interest rate on my primary.
alavaz
Trakanon Raider
- 2,004
- 714
Asshat wormie
2023 Asshat Award Winner
- 16,820
- 30,968
Its understandable. I too would have a tough time explaining two conflicting things i believed at the same time.
Qhue
Tranny Chaser
- 7,647
- 4,617
So let us talk about the proposed $500k cap on mortgage deductions. I know many people will be going "pfffft that don't mean shit" but in many parts of the country, like Massachusetts, $500k is the normative price for a decent sized family home in the 2nd tier suburbs with the prime city and 1st tier going for much higher than that.
If, and this is a BIG if, this tax proposal goes live then I forsee a big delta in home prices and sales right before it takes effect as everyone tries to 'trade up' as high as they can get and still secure that mortgage deduction and then values drop off a small cliff right afterwards for any property valued north of $500k. This could serve as a significant braking mechanism for the out-of-control housing price increases in areas such as this, but that would also serve to dull the financial windfall of home ownership.
If, and this is a BIG if, this tax proposal goes live then I forsee a big delta in home prices and sales right before it takes effect as everyone tries to 'trade up' as high as they can get and still secure that mortgage deduction and then values drop off a small cliff right afterwards for any property valued north of $500k. This could serve as a significant braking mechanism for the out-of-control housing price increases in areas such as this, but that would also serve to dull the financial windfall of home ownership.
That's not even the biggest argument about renting, that is one of probably at least 100 arguments about renting vs. buying. Not even a super persuasive one.
Quit being obtuse.
If I have to pay $2100/mo to rent and $2100/mo to own with PMI the owning is a billion times better for me in every way. To say otherwise is just to be obstinate or make some kind of point about how bad you think PMI is. PMI does suck and it does spend a lot of your money. There are scenarios for lots of people where it isn't the detriment you are making it out to be.
Asshat wormie
2023 Asshat Award Winner
- 16,820
- 30,968
My point was
"PMI does suck and it does spend a lot of your money."
The argument against it was that its better to pay PMI because paying rent is paying someone else. Nothing more than that. If one wants to argue using average rent vs mortgage + pmi numbers, we can get into that but that is a different argument.
It's the same argument though. Paying someone else for their mortgage (and they might have PMI also) is worse than paying PMI on your own mortgage was his very first statement. Full stop. That is it.
I need to live somewhere. I need to pay to live somewhere. I can pay $2100 to rent, I can pay $2100 to own. I am going to be doing that for the next 25 years as long as I am alive. I can wait 5 years to get 15% saved instead of 5-12% or whatever or I can start the process now and the money I would be saving in that 5 years and still giving away money to pay someone else's mortgage instead goes toward my PMI and I probably hit the same timelines. In the meantime those 5 years weren't wasted paying Johnny Rotten the shitty landlord's mortgage.
Keystone
Lord Nagafen Raider
- 470
- 256
~1200 in rent every month after 5 years you have 0 to show for it.
~1200 in a mortgage including pmi for 5 years you have ~$17,000 in equity to show for it. + any appreciation in value of the home. + potential tax breaks as a result of ownership along the way
~1200 in a mortgage including pmi for 5 years you have ~$17,000 in equity to show for it. + any appreciation in value of the home. + potential tax breaks as a result of ownership along the way
Keystone
Lord Nagafen Raider
- 470
- 256
Except that isn't how it works, if you compare apples to apples renting a house is actually more expensive than buying it. But even if they are identical buying is clearly vastly superior if you're in the location long'ish term.
You are right though you CAN pay less and rent and save and it's a viable option... if you want to live in a 1 bedroom apartment for those 5 years. The problem is even then you're not really coming out much if any ahead. Take the ~1200 mortgage for example with $270ish going to principle.. that's essentially a forced savings plan, back that out and you're looking at $930/month which would be a comperable number to compare for rent. Around here you could probably get a two bedroom apartment for that and put the difference into the market or whatever and come out slightly ahead if savings is your only goal and you're discounting appreciation of the home / tax benefits of ownership. So if you want to actually come out ahead you would need to be more in the $700/month range which puts you in a completely non comperable living situation for those years.
Yes PMI is bad, but it's not like people are choosing to go get it, it's just a requirement unless you have the 20% to put down, which many don't. Even with that in place it's still very often beneficial to suck it up and pay it as required versus gimping your quality of life for years in an attempt to avoid it down the road.
You are right though you CAN pay less and rent and save and it's a viable option... if you want to live in a 1 bedroom apartment for those 5 years. The problem is even then you're not really coming out much if any ahead. Take the ~1200 mortgage for example with $270ish going to principle.. that's essentially a forced savings plan, back that out and you're looking at $930/month which would be a comperable number to compare for rent. Around here you could probably get a two bedroom apartment for that and put the difference into the market or whatever and come out slightly ahead if savings is your only goal and you're discounting appreciation of the home / tax benefits of ownership. So if you want to actually come out ahead you would need to be more in the $700/month range which puts you in a completely non comperable living situation for those years.
Yes PMI is bad, but it's not like people are choosing to go get it, it's just a requirement unless you have the 20% to put down, which many don't. Even with that in place it's still very often beneficial to suck it up and pay it as required versus gimping your quality of life for years in an attempt to avoid it down the road.
These aren't my imaginary numbers. I paid $2100 for rent where I live. I bought a bigger house than I was renting for $2150 and put 12% down. I am in a nicer area and my house was custom built.
I get that you work in the industry and have 34,000 mortgages under your belt and were Mortgager of the Year for 2013.
Asshat wormie
2023 Asshat Award Winner
- 16,820
- 30,968
Would have been so much better if you paid 1800 dollars or whatever a month but put down another 8%. And i dont do mortgages, wtf does that have to do with anything.
Where am I going to pay $1800/mo? How the fuck do you think I am going to find a house to rent for an entire $300/mo cheaper without moving into a literal ghetto compared? What school district? What increase to my commute causing more money spent on gas? What is the new tax rate for that county for vehicle registration? What grocery stores are nearby that are more expensive making me choose between spending more on food or driving further and spending more on gas?
"Just spend $300 less and all is solved man"
Asshat wormie
2023 Asshat Award Winner
- 16,820
- 30,968
So instead of buying the house I "need" or want in order to fit my family and might be the perfect price to value ratio that I can find I should go find a starter house and ladder up for the next 37 years? Do I move immediately when I have the 20% ready for the next higher house? What square footage jump do I maximize moving at? Do I just keep moving even if I find the house I love so that I maximize my mortage to lack of PMI ratio at all times?
You should do stand up.