Buy now?

[carlislematthew]

Something I find interesting about 30 year loans is that they’re not just aimed at young people. To me it seems that a 30 year loan only makes sense if you’re 35 or much younger, otherwise you’ll never pay it off! (let’s not even discuss 40 year loans)

The shift in judgement is that houses are *not* just things to pay off, they are retirement savings and the bigger chunk you can get hold of NOW, the more lavish a lifestyle you will have when you retire. If you still owe money on your house when you retire, that doesn’t matter because it will be worth 40 million bucks!!!

There are too many people that think their house is their retirement. They looked at the last 4 years and extrapolated that out for another 20 years.

[picpoule]

PerryChase’s post brings home the fact how much housing prices have to come down for most people earning the average income to be able to afford to buy. The Fed can reduce interest rates all it wants, but until that $700K house comes down to $350-400K, the costs associated with buying, due to property taxes, is just too high.

[zk]

“My point is that I was never offered a 15-year mortgage when inquiring about loans, I had to ask to get the information.”

When I almost bought a house last year (it was a new Pardee home), I was asking the Pardee loan guy about their interest rates. He gave me some ARM rates and some 30-year rates. I wanted a 15-year loan, so I asked, “what’s your rate on a 15-year loan?” His response: “Nobody uses a 15-year loan anymore.” I said that’s what I’d be using, and asked him again what the rate was. He said, “I haven’t even seen a 15-year loan used in the last 5 or 6 years.” I said, “that’s fascinating. Now, what’s the rate.” He said, “I don’t know. I’m not even sure I can get you one. I’ll have to find out.”

I don’t know if they get more commission on a longer term loan, or if he actually wasn’t accustomed to people asking about 15-year loans, but he sure seemed to get a bit freaky when I started asking about 15-year loans. He seemed to think I was a bit eccentric. His reaction was similar to what I imagine it’d be if I offerred to pay for the house with some bolts of silk and some pigs and goats.

[Peace]

I can think of a couple reasons older folks might take out a 30 year loan (assuming they can afford the payments into retirement) if they could snag a choice property:

#1 Home equity has special protections, for example, if one spouse has to go into a nursing home, the other spouse can keep the home while qualifying for Medi-care to help pay the nursing home costs. This isn’t all rosy, there’s a man in my dad’s nursing home for alzheimer’s, his wife “gets” to keep the house, unfortunately, it’s two hours away, so this old lady has to drive 4 hours round trip to see her husband. The downside of this benefit is that she can not sell the house to move closer to the nursing home because once the equity is freed-up, her husband will be disqualified from medicare and they can’t afford the nursing home for long. He has violent outbursts (like most Alzheimer’s patients) and he could hurt her. This is a couple with very modest means.

#2 Heirs can inherit a house valued at the current market value for estate purposes – in other words, your heirs can inherit at the stepped up value which usually has great tax advantages. BUT the biggest windfall is that your heirs also inherit YOUR Prop 13 property tax rate – making it possible for your heirs to benefit from the long-ago purchase and quite possibly make it possible for one of your heirs to keep the house (if they can continue to pay the mortgage payments that are left behind due to the 30 year loan).

[mixxalot]

I make 200k should I rent or buy?

This is very interesting. I am saving for my first home purchase. Unlike flippers I dont look at it as pure investment but a place to live in a long time. My job is a 3 year contract with possible renewals. Work is plenty in technology in southern California. I plan to save up 100k as a down payment on a home. When should I buy? I rent a room currently for 550 per month which is dirt cheap and includes house privileges. My taxes are 10k per month since I am single and have no extra deductions. I could incorporate and use that but it would take some time and planning. Homes do not seem to depreciate much in coaster Los Angeles and Ventura that I am aware of.

Scott

[VCJIM]

I am so weird! When I bought my house, I was 24 years old and requested a 15 year fixed loan. In addition to that, I made advance payments in the first year that took the mortgage from 15 to 11 years, it would have been paid off at the end of 2005 if I hadn’t sold it at the beginning of 2005. I hate debt of any kind.

[Author]

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