23109VC –
Wow, I was laughing when I first read your post, not because of your purchase, but because, we all had figured that you had finally became decisive, and decided to stay put renting your home, for a relatively low price, if I’m not mistaken. My wife was watching me, and noticed me laughing, I was so surprised that you pulled the trigger, but I guess I shouldn’t be. I will congrat you on your purchase, but I do think your logic is seriously flawed…
you claim….
i ran all the numbers of renting vs buying. and candidly – i’m going to be paying about the same to buy this house compared to renting something similar.
I would love to hear/see the details of this rational… I personally don’t see it anywhere near breaking even, even after the overhyped tax and interest tax breaks.
If I’m not mistaken, you rent for somewhere between 1400-1600 a month right? I remember congratulating you on your exceptional (rental)deal. And you were going to go %100 on the purchase right? Explain to me, how you think you can finance a $350k home, pay about $7k in taxes per year, pay a $120 HOA, home ins, and P&I, and come remotely close to $1400-$1800 in rent you pay? Especially with out the use of an extremely toxic I.O. loan or some other silly type of “rental” loan, in which you don’t really pay your debt down in a any reasonable fashion.
I come up with $2700-2800 TOTAL payment of P&I, taxes, ins, hoa with 350k financed, and 6% fixed 30 year loan. So you are paying at least $1100 more per month, the way I see it, before your tax write offs…. Do you really think that you will be able to realize that $1100 per month in decreased income tax payments? I don’t see you saving $1100 per months in taxes, to make your break even point, but even if it did, and the property continues to depreciate… you could be in some real trouble.. I thought you agreed to take advantage of your cheap rent, save, and then buy at a lower price in the future(with a down payment), IMHO, this is a great way to go for you, anyways, I would love to hear your side on this issue, and if my math is way off, let me know.
And then….
no_such_reality….
You are looking at the picture completely wrong… you think that if homes drop in price, but rates go up, the monthly payment will be the same, so everything is fine, and you should go buy a house anyways, cause it won’t matter.
You are wrong it does matter, to a cash buyer, or a buyer that has a sizable down payment, rates DO NOT MATTER nearly as much as to the “all I can afford is a 100% financing interest only loan” crowd, who shouldn’t be buying in the first place. This is the reason prices went up so high to begin with, easy credit, and I don’t know about you, but my goal, is to own a home free and clear, not just finance the hell out of things for life. There is much more to things than monthly payment… It will matter when you go to sell that house, and you owe more than it is worth, and the smart ones, will have equity. BTW, even if rates go up, and we buy a cheaper home at a higher rate, and the payment is still a bit high, we can still refi at the next lowpoint for rates.
The ability to build equity can justify a slightly higher payment, but since most here agree, that owning a home now isn’t building you any equity, or is actually sapping your equity, and for many more, they have negative equity, is yelling at me to avoid buying a home for a while.
Anyways, congrats to those who are buying a home responsibly, and for the long haul, the houses are very nice.
