Home buying thread
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Apparently 16.5% is the difference between a free man and slave.... hey at least its down from 40%, god knows I couldn"t stop buying shiny shit long enough to save that up.
Cad
scientia potentia est
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No, the ability to accumulate wealth rather than making monthly payments on non-appreciating possessions is the difference between a free man and a slave. If you don"t have enough wiggle room in your budget/assets to allow you to put 20% down on your house, you probably can"t afford it. You can buy it, but you can"t afford it. Understanding that difference escapes you though, clearly.Picasso said:
An aversion to making payments on non appreciating items really surprises me considering you just recommended renting over owning.
I guess we can"t afford it though guys, pack it up, take the light bulbs, those fuckers from wall street are taking our shit.
if I buy immediately with 3% down instead of saving until 20% down but make the same payments as I would have been saving wouldn"t we effectively reach 20% equity simultaneously excluding pmi which would definitely be a smaller loss than renting for that period?
I"m not sure, because I don"t study money all my life... I tend to focus of what it gets me.
I guess we can"t afford it though guys, pack it up, take the light bulbs, those fuckers from wall street are taking our shit.
if I buy immediately with 3% down instead of saving until 20% down but make the same payments as I would have been saving wouldn"t we effectively reach 20% equity simultaneously excluding pmi which would definitely be a smaller loss than renting for that period?
I"m not sure, because I don"t study money all my life... I tend to focus of what it gets me.
Cutlery
Kill All the White People
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Unless you have 20%, you"re not entitled to LOL free money low interest rates. Save up 50k and in 10 years when the interest rates are back to 35%, that"s the smart time to buy.Cad said:
See, my beef with Cad is his fucking genuine inability to realize that most of the world didn"t have the benefits he had. He"ll deny it till his dying breath, but everything he has now is because his parents were well enough off to set him off right. And if you didn"t have that benefit, well you"re just a fucking scrub, you shouldda tried harder then.
At least Eomer is fucking tolerable about the fact that he"s got more money than everyone else. Cad"s just an insufferable prick about it, and it"s too bad, because he"s got some good things to say, he just can"t figure out how to say it without coming off like a pompous ass.
Cad
scientia potentia est
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Cutlery is retarded because my parents are not and were not wealthy. I had to work full time throughout undergrad which was at a public university while also on scholarship. I got exactly zero support from my parents. Eomer"s the one with rich parents.Picasso said:
And no, buying at 3% and just making payments minus PMI isn"t the same as saving up to 20% and then buying, for a couple of reasons:
Your overall payment will be higher, forever. For the same 30 year note, if you finance 96.5% of the property, your payment will always be higher than if you financed 80% or 70% or whatever. Unless you get 2 loans and do an 80/16.5/3.5 thing, but have fun with double closing costs. Also the interest rate on your second mortgage would be considerably higher than the market rate.
You will also be paying interest on the 16.5% while trying to pay it down, rather than... not paying interest on it.
From a purely behavioral point of view, learning how to live below your means (which will allow you to trivially acquire the 20% you"d need for a house in your income range) while saving for the 20% will eventually, depending on your income and discipline, make you financially independent. Now I"m all about buying cool shit, taking vacations, eating nice meals, etc - just do so comfortably within what you can afford, and have a 5 and 10 year plan for where you want to be. Your goal should be to have several years of living expenses in semi-liquid investments, debt-free or close to it, maintaining only that debt which is advantageous to you (reference Cutlery"s mocking of my mortgage: that is free money, and when you have opportunities like that, pay that shit off slowly.)
Anyway, apparently telling people not to spend so much and you"ll have more money makes me elitist, so whatever.
Lets take a 40k/yr person buying a 100k house
Say rent in the area is 700/mo (conservative)
utils are a wash.
Saving 500/mo for a downpayment is realistic I think.
It takes you 3.33 (we"ll say 3, cuz we live below our means extra good) years to save for 20,000
In 3 years you"ll have a loan worth 80 thousand
and you"ve paid 25000 in rent.
So you"ll owe 80k on your house 45k in.
Getting the mortgage at 3.5% and paying an additional 700 a month (to make a total payment around 1200 of your rent plus your savings subtracting out 200/mo for tax, ins, and pmi) you"ll have a balance of 73000 on your house paying 44k.
You"re theory is dandy on paper, ignoring small exclusions like actually living.
*This may contain errors
Say rent in the area is 700/mo (conservative)
utils are a wash.
Saving 500/mo for a downpayment is realistic I think.
It takes you 3.33 (we"ll say 3, cuz we live below our means extra good) years to save for 20,000
In 3 years you"ll have a loan worth 80 thousand
and you"ve paid 25000 in rent.
So you"ll owe 80k on your house 45k in.
Getting the mortgage at 3.5% and paying an additional 700 a month (to make a total payment around 1200 of your rent plus your savings subtracting out 200/mo for tax, ins, and pmi) you"ll have a balance of 73000 on your house paying 44k.
You"re theory is dandy on paper, ignoring small exclusions like actually living.
*This may contain errors
Cad
scientia potentia est
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It seems like a wash because you"re dealing with an absurdly inexpensive house. I live in Texas and $100k is still below what I"d consider starter home territory. If we"re talking about $100k houses, the math is wonky due to rent overlap. You"d still need to factor in the inevitable realtor fees on resale cutting into your margin though especially if you need to move in only 3-4 years. You could easily end up having to pay in to sell the house after title insurance and realtor fee.Picasso said:
Run it for your numbers lebroski
The point isn"t even you clawing for shit like realtor fees: is it retarded and financially irresponsible.
I know you"ll miss it but
The answer is no.
The point isn"t even you clawing for shit like realtor fees: is it retarded and financially irresponsible.
I know you"ll miss it but
The answer is no.
The average american household income is like 46000 man
Using the 2.5 rule of thumb that"s $115000 houses.
Regardless of you getting desperate because it turns out you"re wrong -- run the numbers for your area.
Using the 2.5 rule of thumb that"s $115000 houses.
Regardless of you getting desperate because it turns out you"re wrong -- run the numbers for your area.
Cad
scientia potentia est
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Which is a specious number because only ~60% of americans are homeowners. The "average" american is an extremely low-end homebuyer, the majority make significantly more than average.Picasso said:
At the extremely low end buying early on low % down makes sense because rents and ownership costs converge at those price points. I"m not even arguing that.
In my area, you can rent a 1920"s duplex which will get you by for ~$2k a month (same school district I live in). Or, you can buy a house. Average house cost is over $1M. I don"t think the math is complex regarding rent vs. buy while you save up to get a better interest rate.
The median home price, the point at which half of all homes are sold for more and half are sold for less, fell across the country in August.
In the Northeast, the median price dropped to $244,100 from $245,600 in July, and it fell 5.1 percent since August 2010.
The median price in the Midwest declined to $141,700 in August from $146,300, and fell 3.5 percent from the previous year.
In the South, the price inched down on a monthly basis to $151,000 from $152,600, and also slipped down 0.8 percent in a year-over-year comparison.
The median price in the West took another big hit, falling to $189,400 from $208,300 in August and fell 20.6 percent from the year before.
America is a trailer park -- who knew besides the rest of the world.
So you put 200k+ down on your house at 24?
In the Northeast, the median price dropped to $244,100 from $245,600 in July, and it fell 5.1 percent since August 2010.
The median price in the Midwest declined to $141,700 in August from $146,300, and fell 3.5 percent from the previous year.
In the South, the price inched down on a monthly basis to $151,000 from $152,600, and also slipped down 0.8 percent in a year-over-year comparison.
The median price in the West took another big hit, falling to $189,400 from $208,300 in August and fell 20.6 percent from the year before.
America is a trailer park -- who knew besides the rest of the world.
So you put 200k+ down on your house at 24?
Oh no -- here we go
I bought a house that was $170k at 24 and put 20% down, yes. I sold my toy car at the time to free up some extra capital.
So you put down 34,000 dollars with a presumed income of 70k/yr probably taking home ~50.
I bought a house that was $170k at 24 and put 20% down, yes. I sold my toy car at the time to free up some extra capital.
So you put down 34,000 dollars with a presumed income of 70k/yr probably taking home ~50.
Cad
scientia potentia est
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I rented from 94-99 while I was in school and after graduation. I paid between 400 and 630 a month for 1 bedroom apartments.Picasso said:
I also built a Toyota Supra Turbo and then sold it to buy my house, the car was worth ~$30k net when I sold it in 99.
So if you had bought in 94 with 3.5% down you"d have had a balance of 150 on your loan costing you 70,000
Compared to a balance of 136000 costing you 64000
A savings of 20000 in 5 years! And all you had to do was live like shit in a 1 bd apt while apparently hand building a supra.
How are the garages at 500/mo apartments, anyway?
Compared to a balance of 136000 costing you 64000
A savings of 20000 in 5 years! And all you had to do was live like shit in a 1 bd apt while apparently hand building a supra.
How are the garages at 500/mo apartments, anyway?
Cad
scientia potentia est
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You apparently don"t calculate interest or taxes or insurance in your figures.Picasso said:
A $164k 30 yr loan in 1994 would have been at ~9%, making the principal/interest payment ~$1320/mo. Property Tax in Texas runs ~2.2-2.7% depending on the municipality, lets just say it"s 2.2%. Thats $3740/yr or $311/mo. Insurance would be about $1000-1200/yr, lets just say 1000. Another $83/mo. Then you have $60/mo for PMI. So you"re looking at $1320+311+83+60=1774/mo, *12 = $21288/yr, *5 = $106k.
And in 5 years I"d only pay off ~7k of the balance, so I"d have paid $106k in PITI to gain $7k of equity. Which I would have lost to realtor fees because I went to school in Austin.
Or I could pay the ~600/mo for apartments for 5 years which cost me $35k.
Your way: $106k in outlay, $0 equity, but I"ve been a "homeowner" for 5 years.
My way: $35k in outlay, $0 equity, and I have ~$70k in savings over your way.
Hmmm..... it"s tempting, I know. You"ve sold me. Where do I sign? OOOH SHINY.