Rent Vs. Buy housing

Xarpolis · Jun 30, 2013

ZyyzYzzy_sl said:
Seriously mortgage insurance at this point, to me, is bullshit. Banks should not over lend or offer more than a person can afford (they still do it). The amount of principal paid or amount down to forgo PMI should be reduced, as it is becoming more unfeasible for families to actually put that amount down. Shit is an outright scam at this point it seems like.

That's because it absolutely is a scam. It's just a way for the banks to get even more money from you.

Unidin · Jun 30, 2013

ZyyzYzzy_sl said:
Seriously mortgage insurance at this point, to me, is bullshit. Banks should not over lend or offer more than a person can afford (they still do it). The amount of principal paid or amount down to forgo PMI should be reduced, as it is becoming more unfeasible for families to actually put that amount down. Shit is an outright scam at this point it seems like.

Then maybe they should just rent. There's nothing wrong with renting. If you can't save say even 10%, how will you have money to fix stuff when it breaks?

Cutlery · Jun 30, 2013

Unidin_sl said:
Then maybe they should just rent. There's nothing wrong with renting. If you can't save say even 10%, how will you have money to fix stuff when it breaks?

Probably because the shit that breaks isn't 10% of your house value, typically. There's a big difference between storing $25,000 away and replacing a toilet.

Gauss_sl · Jun 30, 2013

ZyyzYzzy_sl said:
Seriously mortgage insurance at this point, to me, is bullshit. Banks should not over lend or offer more than a person can afford (they still do it). The amount of principal paid or amount down to forgo PMI should be reduced, as it is becoming more unfeasible for families to actually put that amount down. Shit is an outright scam at this point it seems like.

Not a homeowner, but wouldn't reducing the amount required to trigger PMI payments cause a commensurate increase in home prices as some families find out they have more "buying power"? The price of the home is irrelevant without taking into account the sum of the interest, insurance, taxes, etc., which is what determines what people can actually afford. Decreasing any one of the parts such as interest rates (past 30 years) or taxes (California) and you get an increase in prices.

Unidin · Jun 30, 2013

Cutlery_sl said:
Probably because the shit that breaks isn't 10% of your house value, typically. There's a big difference between storing $25,000 away and replacing a toilet.

What happens when the roof needs replacing? 3.5% down on FHA (the minimum) is $8750 on a $250k home. A new roof or a new AC system can cost almost that much.

Unidin · Jun 30, 2013

Just to add. There is no private market for mortgages with people putting down 3.5%. That's why the government fills the gap. Also, I don't know how you can say that MI is a just there to help the banks make money. How do you think that the FHA pays for that program? They use the MI payments to help offset the people who barely put any money down when there are foreclosures. In 2012, the FHA had a $16.3 billion deficiency last year. Without MI, it would have been even worse. Much worse.

http://www.bloomberg.com/news/2012-1...2-deficit.html

ubiquitrips · Jun 30, 2013

Unidin_sl said:
Then maybe they should just rent. There's nothing wrong with renting. If you can't save say even 10%, how will you have money to fix stuff when it breaks?

10% isnt so bad, but 20% is about 40k on the home we are getting. We have about 45k total in savings but I am not comfortable with our "oops, someone lost a job" fund being depleted especially while being responsible for two mortgages.

The problem is my wife wants a specific type of house (mid century modern) and this is the only one to come on market under 300k and even those usually sell same day/week they go on market. So,naturally , we are snatched this one up quickly.

I may look at how going 20% would affect the monthly. Would lose initial spending power but would potentially gain a bit of flexibility month to month. That is a tough call.

Vinen · Jun 30, 2013

Cutlery_sl said:
Probably because the shit that breaks isn't 10% of your house value, typically. There's a big difference between storing $25,000 away and replacing a toilet.

I wish 25K was anywhere near a down payment in the Northeast.

ZyyzYzzy · Jun 30, 2013

Gauss_sl said:
Not a homeowner, but wouldn't reducing the amount required to trigger PMI payments cause a commensurate increase in home prices as some families find out they have more "buying power"? The price of the home is irrelevant without taking into account the sum of the interest, insurance, taxes, etc., which is what determines what people can actually afford. Decreasing any one of the parts such as interest rates (past 30 years) or taxes (California) and you get an increase in prices.

In my opinion housing prices are still out of hand at this point in time if you look at how rapidly prices have been increasing for decades versus wages and general cost of living. Also, I was more suggesting it because when you have banks that have gotten billions in tax payer's money to save them refusing to allow people to refinance, straight up foreclosing illegally, and still not properly handling mortgage backed securities, PMI as it stand now seems ridiculous.

Vinen_sl said:
I wish 25K was anywhere near a down payment in the Northeast.

This. 25k is like 4%-7% down on a single family home outside of most cities in the Northeast and Mid-Atlantic.

Xarpolis · Jun 30, 2013

Unidin_sl said:
What happens when the roof needs replacing? 3.5% down on FHA (the minimum) is $8750 on a $250k home. A new roof or a new AC system can cost almost that much.

I live in a town house. We have a heat pump. When I purchased the house (we paid $199k when the house initially went on the market for $250), our heat pump was pretty shot. 25 years old and in dire need of being replaced. I took another loan for $7800 to get a new system put in. We were quite happy with that decision.

Last September we decided to replace our roof. $3000 exactly for this little town house. I shopped around a LOT before finally finding this guy. Everyone else wanted upwards of 5-6k... pathetic.

Owning a house is awesome, but it's definitely costly.

Falstaff · Jun 30, 2013

Like I said earlier in the thread, you don't own the house. The house owns you.

Gauss_sl · Jun 30, 2013

ZyyzYzzy_sl said:
In my opinion housing prices are still out of hand at this point in time if you look at how rapidly prices have been increasing for decades versus wages and general cost of living. Also, I was more suggesting it because when you have banks that have gotten billions in tax payer's money to save them refusing to allow people to refinance, straight up foreclosing illegally, and still not properly handling mortgage backed securities, PMI as it stand now seems ridiculous.

If you want to get really mad, read (TARP inspector general) Neil Barofsky's bookBailout

The greed isn't really isolated to bankers. In my mind, if they built houses now like they did in the 60's, they would be much more affordable. I grew up in a 1950's ranch house, 1050 square feet, 2 bedrooms and 1.5 bathrooms. The townhome I live in now is 1500 square feet, 2 bedrooms, and 2.5 bathrooms. Haven't noticed it so much in California, but in Oregon, where I lived last summer, they've been putting up shitty, densely-spaced, large houses everywhere. This is pretty typical of what I saw:https://www.google.com/maps?ll=45.52...,,0,-3.25&z=19these cheaply-built monstrosities are about 2.5k square feet and are going for about 50% more than what the modest ranch homes are half a mile away are, despite being on half the lot size or less.

Edit: changed the street view link

Big Phoenix · Jun 30, 2013

Never understood why people go for chicken wire houses in sardine can neighborhoods.

ZyyzYzzy · Jun 30, 2013

I hear you, it is really hard to find a modest home in my area. Even townhomes are becoming ridiculous. We looked at a new development where the smallest plan they had was 3.4ksqft. Also, I never got building a 1+million dollar house where you're back yard is smaller than your kitchen.

It sort of sucks that if I want a newer home that is modest and well built, I essentially just need to buy a lot of land and have it built.

Cad · Jun 30, 2013

It turns out most people live inside the house and don't go outside as much as they used to (which is probably a function of the houses getting bigger so its a chicken and egg problem) but what does a big lot get you? More upkeep and property tax. Granted in Texas its usually too fucking hot to go outside but I hardly ever mess around outside my house here. If we go outside its to a park, a biking trail, soccer field, etc... all of which are really close to us. Big lots don't mean shit.

Here's a street right near my house (not my street, fucking stalkers, but I live within 6 streets of here, come say hi)

https://www.google.com/maps?ll=32.83...g=opt&t=m&z=12

The houses back right up to the alley, the backyards are non-existant.

ZyyzYzzy · Jun 30, 2013

Cad_sl said:
It turns out most people live inside the house and don't go outside as much as they used to (which is probably a function of the houses getting bigger so its a chicken and egg problem) but what does a big lot get you? More upkeep and property tax. Granted in Texas its usually too fucking hot to go outside but I hardly ever mess around outside my house here. If we go outside its to a park, a biking trail, soccer field, etc... all of which are really close to us. Big lots don't mean shit.

Here's a street right near my house (not my street, fucking stalkers, but I live within 6 streets of here, come say hi)

https://www.google.com/maps?ll=32.83...g=opt&t=m&z=12

The houses back right up to the alley, the backyards are non-existant.

Privacy. Also, I enjoy gardening and landscaping. It's nice to sit on a back porch in the morning in a Saturday before you start your day and drink a cup of coffee while looking at a nice view.

I'll never get that like I had in CT, unless I want a 3 hour commute to work here in DC.

Cad · Jun 30, 2013

ZyyzYzzy_sl said:
Privacy. Also, I enjoy gardening and landscaping. It's nice to sit on a back porch in the morning in a Saturday before you start your day and drink a cup of coffee while looking at a nice view.

I'll never get that like I had in CT, unless I want a 3 hour commute to work here in DC.

What are you, 75?

Or are you a country bumpkin pissed off about having to live in the city?

Big Phoenix · Jun 30, 2013

Dunno maybe im backwards but id much prefer a large lot with modest size house than large house on small lot. I mean unless youre raising kids a 2500sqft 4 bedreoom 3 bath house is pretty pointless(talk about upkeep?) if youre single or just married.

OneofOne · Jun 30, 2013

Cad_sl said:
What are you, 75?

Or are you a country bumpkin pissed off about having to live in the city?

Some of us like a little breathing room. Which we have in the house we just bought. More work? Of course. But I just had a BBQ here last weekend and it was pretty awesome. Our garden is pretty awesome. I'm already clearing the space where we're going to build a fort for my son. When he gets older he'll have an actual backyard (and side yard, and small orchard, and large gravel driveway) to play around with. I loved that as a kid, he may very well too. I don't really get homes like you linked which have such a large front yard. I'd rather stick the house closer to the street and have a sweet ass back yard (which is what we have, large drivethrough driveway notwithstanding).

Mentioning the property tax thing is misleading. Get an expensive 3k sq ft house on a tiny lot and you'll be paying more than I will in my 1.4k house on a lot 4x your size. At least in California.

ZyyzYzzy · Jun 30, 2013

Cad_sl said:
What are you, 75?

Or are you a country bumpkin pissed off about having to live in the city?

Sorry I like doing maintaining a yard myself and gardening. It is one of my hobbies. I don't want to live in a city or in a house where I can almost touch my neighbor's house with my hand by sticking it out of my window.

Edit - yes mentioning property tax is stupid. One, property taxes are higher in a city and a large house on a small lot will easily have higher taxes on a modest house on an acre or more.

Rent Vs. Buy housing

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