I knew mortgage rates made a huge difference in payments.....but.....

[dclpluto]

Be careful. I remember the crash in 08 and 09.

you get a fixed rate mortgage. If people can’t pay for their house that’s on them.

 

[tvguy]

they ended up ahead on the short sale or while they were renters?

They lost $150,000 on the short sale, but saved $240,000 in rent in the 10 years they were in the house. So they were $90,000 ahead of the game when it was all said and done.

 

[afan]

you get a fixed rate mortgage. If people can’t pay for their house that’s on them.

Yes. A bit part of the issue back then was the interest only loans and the adjustable rate. Both causing people to buy more house than they could actually afford when things changed. There were those that the market falling for sure got caught up in even when buying fixed rate and within their means but they also weren't the problem.

 

[pigletto]

you get a fixed rate mortgage. If people can’t pay for their house that’s on them.

The entire 08/09 mortgage crash was based on variable rate predatory lending mortgages was it not ?

 

[Lilsia]

Yes. A bit part of the issue back then was the interest only loans and the adjustable rate. Both causing people to buy more house than they could actually afford when things changed. There were those that the market falling for sure got caught up in even when buying fixed rate and within their means but they also weren't the problem.

I have also had friends that had their real estate agents try to push them into buying homes that the knew that they could not afford. They have you get pre-approved, which is usually more then you can realistically afford, and the agents see ka-ching since they make a percentage. That needs to change too. Agents should be paid a flat fee and not a percentage.

 

[winterwhite]

They lost $150,000 on the short sale, but saved $240,000 in rent in the 10 years they were in the house. So they were $90,000 ahead of the game when it was all said and done.

Did they “lose” that money or are they forgetting the money they paid in interest, property taxes, and insurance which are sunk funds you pay whether you rent or you own? And the costs of repairs, upgrades, etc over 13 years.

 

[afan]

The entire 08/09 mortgage crash was based on variable rate predatory lending mortgages was it not ?

Not fully. You could get a no docs loan, so they ran your credit. You didn't have to show proof of employment, income or savings. Which is what I did when I moved to NC in 2006. Was cheaper to buy than rent but I was moving without a job or a huge savings account. But I also bought within my means and not what I could have qualified for.

There were a lot of things that led to the crash.

 

[tvguy]

Did they “lose” that money or are they forgetting the money they paid in interest, property taxes, and insurance which are sunk funds you pay whether you rent or you own? And the costs of repairs, upgrades, etc over 13 years.

I looked up the property taxes on Zillow. $20,000 over 10 years. Interest was probably $50,000. Insurance you have to have when you rent so a wash there. So still $20,000 ahead of the game

 

[winterwhite]

I looked up the property taxes on Zillow. $20,000 over 10 years. Interest was probably $50,000. Insurance you have to have when you rent so a wash there. So still $20,000 ahead of the game

No, I mean the homeowners insurance which the owner also carries separate from your renters. Not really a wash. Homeowners is generally significantly more expensive because it covers a structure not just belongings and liability.

adjusted for inflation $20,000 over 13 years is significantly less than that.

Just saying that doing funny math when you say you “lose” rent money isn’t quite accurate.

 

[tvguy]

No, I mean the homeowners insurance which the owner also carries separate from your renters. Not really a wash. Homeowners is generally significantly more expensive because it covers a structure not just belongings and liability.

adjusted for inflation $20,000 over 13 years is significantly less than that.

Just saying that doing funny math when you say you “lose” rent money isn’t quite accurate.

Rent money is always lost money, Always.

 

[DLgal]

No, I mean the homeowners insurance which the owner also carries separate from your renters. Not really a wash. Homeowners is generally significantly more expensive because it covers a structure not just belongings and liability.

adjusted for inflation $20,000 over 13 years is significantly less than that.

Just saying that doing funny math when you say you “lose” rent money isn’t quite accurate.

Exactly. I rent. My renters insurance is $250 per YEAR. The typical homeowners insurance on this house is $3000/year. Plus, I haven't had to shell out the almost $2000 on repairs over the last 6 years. Not to mention the landscaper she pays to come trim every couple months.

Renting comes with less stress and more convenience, and you have to account for that somehow.

 

[DLgal]

Rent money is always lost money, Always.

No it isn't. This is a really outdated way of thinking. You know what my rent payment allows us to do? Put $4000/month into investments that make us, so far, around 18% annual growth. If we wanted to buy, we wouldn't have as much extra money every month to save and grow. Instead, we would be paying interest on a jumbo mortgage, and over 30 years, pay $1million more than we will as renters.

The comparison isn't just strictly monthly mortgage payment vs rent. That is a far too simplified way to look at it. You can't ignore the opportunity cost of money, nor the flexibility of renting.

 

[barkley]

The entire 08/09 mortgage crash was based on variable rate predatory lending mortgages was it not ?

Not fully. You could get a no docs loan, so they ran your credit. You didn't have to show proof of employment, income or savings. Which is what I did when I moved to NC in 2006. Was cheaper to buy than rent but I was moving without a job or a huge savings account. But I also bought within my means and not what I could have qualified for.

There were a lot of things that led to the crash.

i couldn't believe how much LESS i was asked for in the way of income verifications when we bought in 2007 than when we previously bought in 1999-it was almost nothing. i came to the table with verfications of our income b/c it was an odd source for someone our ages and i remembered how previously i had to provide verfications going back a couple of years on earnings and such-nope, pretty much just wanted to see our driver's licenses to i.d. us.

 

[tvguy]

No it isn't. This is a really outdated way of thinking. You know what my rent payment allows us to do? Put $4000/month into investments that make us, so far, around 18% annual growth. If we wanted to buy, we wouldn't have as much extra money every month to save and grow. Instead, we would be paying interest on a jumbo mortgage, and over 30 years, pay $1million more than we will as renters.

The comparison isn't just strictly monthly mortgage payment vs rent. That is a far too simplified way to look at it. You can't ignore the opportunity cost of money, nor the flexibility of renting.

Remember, I am an area where rents are about double what a house payment is for the same property. If you bought here, you'd have 50% more to invest than renting.

 

[Starport Seven-Five]

Be careful. I remember the crash in 08 and 09.

08/09 was an anomaly as it was a recession caused by housing. Housing has been pretty much immune to every recession prior (gray shaded areas indicate recessions).

https://fred.stlouisfed.org/series/USSTHPI

No it isn't. This is a really outdated way of thinking. You know what my rent payment allows us to do? Put $4000/month into investments that make us, so far, around 18% annual growth. If we wanted to buy, we wouldn't have as much extra money every month to save and grow. Instead, we would be paying interest on a jumbo mortgage, and over 30 years, pay $1million more than we will as renters.

The comparison isn't just strictly monthly mortgage payment vs rent. That is a far too simplified way to look at it. You can't ignore the opportunity cost of money, nor the flexibility of renting.

It very much depends on your location. In most locations, renting is more expensive than owning but it's always good to check that assumption.

The other intangible with owning is opportunity costs from career progression. I bought a home a year after I graduated college and it definitely prevented me from looking at jobs in certain areas. If I was renting, it would just be a battle of finding a new apartment and ending a lease early.

 

[JAMIESMITH]

We are in one of the lowest cost of living areas in the country. Our mortgage on a 1600 square foot home with 2 acres and a two car carport is $545 per month including taxes and homeowners insurance. That's a 4% interest. The downside is that good paying jobs are also scarce. My job is close, but my husband has a little over an hour commute. The cheapest comparable rentals are $800+.

 

[DLgal]

Remember, I am an area where rents are about double what a house payment is for the same property. If you bought here, you'd have 50% more to invest than renting.

Based on what house price? Don't you live near Sacramento? Houses up there aren't much cheaper than here (I'm looking at 4br, 2+ bath, at least 2000 sq ft). Im seeing $650k and up. Plus, if we lived up there, our housing allowance would be $1000/month less than it is here, so we would have less money overall.

 

[tvguy]

Based on what house price? Don't you live near Sacramento? Houses up there aren't much cheaper than here (I'm looking at 4br, 2+ bath, at least 2000 sq ft). Im seeing $650k and up. Plus, if we lived up there, our housing allowance would be $1000/month less than it is here, so we would have less money overall.

My daughter paid $250,000 for her house and her payment is $900. It is half a duplex in an area of duplexes. That same floor plan rents for $2,000. My house is 2,000 square feet , 4 bedroom 2 1/2 bath and Zillow lists it as worth $505,000 and renting for $3,000.

 

[DLgal]

My daughter paid $250,000 for her house and her payment is $900. It is half a duplex in an area of duplexes. That same floor plan rents for $2,000. My house is 2,000 square feet , 4 bedroom 2 1/2 bath and Zillow lists it as worth $505,000 and renting for $3,000.

The mortgage we could get on a $505,000 house with a similar size up in Sacramento would have a monthly cost of $2825 (VA mortgage). This includes principal, interest, insurance, and taxes.

Hardly a savings over renting.

 

[tvguy]

The mortgage we could get on a $505,000 house with a similar size up in Sacramento would have a monthly cost of $2825 (VA mortgage). This includes principal, interest, insurance, and taxes.

Hardly a savings over renting.

Ah, with 20% down and the current VA rate of 2.353$ for 30 years I get $1,848.92 a month. $417 a month property taxes. $100 a month insurance. Not sure whee $2825 comes from but your math doesn't agree with the mortgage calculators. So a huge savings over renting