Rent Vs. Buy housing

Frenzied Wombat · Jul 1, 2013

Cutlery_sl said:
They make 250k. I would have assumed that was obvious.

Herp Derp... The question is WHY would you live there when you have 2.5X the buying power practically anywhere else in the US. Sure, it's Manhattan and makes Dallas almost seem about as fun as a funeral home, but effectively sacrificing that much buying power is nuts.

P.S: Imho 100K/year is what I consider the minimum needed to live decently, especially with a wife and kid, so the thought of having to pull in 250K just to meet the same objective is scary.

Deathwing · Jul 1, 2013

Cad_sl said:
Nothing beats hopping on redfin or your favorite MLS data site and looking at available listings in your area of interest. The rest is smoke & mirrors.

Sure, and if I had said hypothetical offer, I would definitely do that. But what's to prevent a program from doing the same thing?

Burnesto · Jul 1, 2013

Frenzied Wombat_sl said:
Herp Derp... The question is WHY would you live there when you have 2.5X the buying power practically anywhere else in the US. Sure, it's Manhattan and makes Dallas almost seem about as fun as a funeral home, but effectively sacrificing that much buying power is nuts.

P.S: Imho 100K/year is what I consider the minimum needed to live decently, especially with a wife and kid, so the thought of having to pull in 250K just to meet the same objective is scary.

People enjoy different lifestyles. News at 11.

Brando · Jul 1, 2013

Prodigal_sl said:
Did not realize this - I've been looking at 34 acres with an old house I'd probably move/flatten if I purchased the property - no conventional loan if I'm building a primary residence on it?

You cannot get a conventional loan on anything over 5 acres as I already noted. You can get a loan, it's through USDA and I've never done them since it's not common in CA so I have no idea how it differs from your typical Fannie/Freddie loan.

The Ancient_sl · Jul 1, 2013

People who live on the island make a lot of money usually. Plus sometimes the comparisons are off. For instance the "cost of living" in Manhattan shouldn't include a car.

Cad · Jul 1, 2013

Deathwing_sl said:
Sure, and if I had said hypothetical offer, I would definitely do that. But what's to prevent a program from doing the same thing?

Because the average listing price or $/sqft says nothing about the lifestyle you want to live, what neighborhoods you want to live in in any particular city, etc... it's not cut & dry like "manhattan is 450% more expensive than Dallas" because it's not apples/apples.

Unidin · Jul 2, 2013

Cutlery_sl said:
What are you arguing here? You're not even interjecting a wrong point into the conversation, I replied to you personally using the numbers you proposed.

You didn't say shit about 3.5%. You said that if you can't save 10%, you can't pay for repairs. And then you start talking about 3.5%.

Pick a number, and we'll talk about that. Don't change the number mid conversation because you don't like how the math sounds for you.

Let me change the conversation a little bit then. There is no private market for 3.5% down loans. Period. Investors have no appetite for minimal returns where if the housing market takes a shit, they get stuck with houses. So the government has to step in if you want loans with that little amount down. That program costs money to run and cover defaults. The FHA lost billions of dollars in the downturn. That's what the MI covers.

It's important that people have some skin in the game or they will make a business decision and walk away from the house.

Cutlery · Jul 2, 2013

Unidin_sl said:
Let me change the conversation a little bit then. There is no private market for 3.5% down loans. Period. Investors have no appetite for minimal returns where if the housing market takes a shit, they get stuck with houses. So the government has to step in if you want loans with that little amount down. That program costs money to run and cover defaults. The FHA lost billions of dollars in the downturn. That's what the MI covers.

It's important that people have some skin in the game or they will make a business decision and walk away from the house.

Yeah, that has nothing to do with repairs. Thanks for that detailed analysis though.

Picasso3 · Jul 2, 2013

pmi is like a puppy that's lost its way

niss_sl · Jul 2, 2013

A good rule of thumb is to save 1% of house value per year for repairs/renos. This thought that you could buy a house and then 50 years later have a huge appreciaed asset is misinformed. In that time you've probably replace the furnace 5 times, the roof twice and would have probably renovated a million other things countless times. Try and find a home with the 50's style kitchen and bath and see how much they are worth.

Brando · Jul 2, 2013

Unidin_sl said:
Let me change the conversation a little bit then. There is no private market for 3.5% down loans. Period. Investors have no appetite for minimal returns where if the housing market takes a shit, they get stuck with houses. So the government has to step in if you want loans with that little amount down. That program costs money to run and cover defaults. The FHA lost billions of dollars in the downturn. That's what the MI covers.

It's important that people have some skin in the game or they will make a business decision and walk away from the house.

Wrong on both counts; 1. Fannie/Freddie go to 97% LTV and have for over a year now except in places like Vegas and Florida and 2. FHA lost money because they were not allowed to price for risk, your 600 FICO borrower got the same pricing as a 770 FICO borrower. Up until recently FHA never even had a FICO requirement.

taebin · Jul 2, 2013

Brando_sl said:
Wrong on both counts; 1. Fannie/Freddie go to 97% LTV and have for over a year now except in places like Vegas and Florida and 2. FHA lost money because they were not allowed to price for risk, your 600 FICO borrower got the same pricing as a 770 FICO borrower. Up until recently FHA never even had a FICO requirement.

Yeah he's definitely wrong. Our lender got us 3.5% down and definitely not FHA.

Draegan_sl · Jul 3, 2013

I skipped to the end of the thread. Buy now. Money is cheap and it's getting more expensive. I got my mortgage at 3.99%. Rates are now around 4.5%. (30 yrfxt) Gogogo.

Picasso3 · Jul 3, 2013

Only buy if you can afford 90% downpayment, if you can't save that up then you can't afford it if your bidet breaks.

Palum · Jul 3, 2013

You know, looking at housing prices locally... I should just buy. If the market doesn't skyrocket and I get sizable bonuses by next March I may just say fuck it and buy something. I don't need a lot of square footage, I can basically get a pretty sweet house for my price range. Thanks, being single, for all the $$$.

Unidin · Jul 3, 2013

Brando_sl said:
Wrong on both counts; 1. Fannie/Freddie go to 97% LTV and have for over a year now except in places like Vegas and Florida and 2. FHA lost money because they were not allowed to price for risk, your 600 FICO borrower got the same pricing as a 770 FICO borrower. Up until recently FHA never even had a FICO requirement.

Yeah because Fannie/Freddie is totally the private market. They're other government organizations buying the loan. And they still charge MI with that little down.

Arakkis · Jul 4, 2013

Just closed on my first house Friday of last week. On Monday the interest rates went up 0.25%. I have also dropped over a grand at Menards (think Lowes) already and still have not even touched the big projects. This shit is expensive, but it is a very different feel working on your own place.

OneofOne · Jul 4, 2013

Grats man, that's a pretty sweet feeling eh? I know what you mean. We bought our house 7 months ago, and even though it feels like there's always shit to do, for the most part I really don't mind, because I'm working on MY house, and it really makes all the difference.

Mures · Jul 5, 2013

Nester_sl said:
1) if you dont have the down payment you straight up can not afford it. Rent for another year, save what you can for a down payment.
2) DO NOT BUY MORTGAGE INSURANCE. Buy life insurance instead. often life insurance is less expensive for more coverage.
- life insurance is underwritten up front, therefore less likely to get CLAIM DENIED
- Mortgage insurance is underwritten after you die, oh you smoked? sorry claim denied.
- life insurance pays your family (or whomever you want) the amount on your policy.
- Mortgage insurance pays the bank on the balance of your loan. You had $200k in coverage but you paid $150k off your mortgage. now your policy is only $50k but your premium stays the same.
- Mortgage insurance is one size fits all, young fit and healthy? too bad, pay the same amount as chain smoking, skydiving granny.

It makes sense when you with your lender to want to insure your mortgage but go talk to an insurance broker, its free until they convince you to buy =-D

Just came into this thread, read the next few pages and didn't see anyone mention so I thought I would.

You HAVE to buy mortgage insurance on an fha loan. Not have like, dude you have to have this; have like, they won't give you the loan without it.

Brando · Jul 5, 2013

mures_sl said:
Just came into this thread, read the next few pages and didn't see anyone mention so I thought I would.

You HAVE to buy mortgage insurance on an fha loan. Not have like, dude you have to have this; have like, they won't give you the loan without it.

FHA provides the MI themselves and charges you the payment monthly, there is no buying on your part.

Rent Vs. Buy housing

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