Owning a house.

[Roan]

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I'm watching TLC about couples buying houses and living together. It seems to me the thought of buying a house is worthless for the fact that the bank owns it and you're going to end up paying 3x the price if you dont just pay up front. Your thoughts?

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This post kinda makes my head hurt, not trying to be a dick, but i'm also not really sure to begin....

My guess is that anyone who is having their story put onto TLC probably has some get rich quick/flip plan for their house and stands a decent chance of getting in over their head.

But for the millions of Mom/Dad/2.4 Kids/Dog families out there buying a house and living in it for 20-40 years is probably the best investment that any of them will ever make.

Long term, what is the alternative to a mortgage?

[Ken_AA]

My wife and I bought a 89K town house ( no kids, small dog and I loooooove not having to mow the lawn myself) less then 2 miles from the apartment we were living in. Our interest rate is 6.5%. We have only paid off about 1.4K of the principal so far, but our monthly payment is only $756 a month ( not paying more on it each month as we have some other debt at higher interest rates that we are paying off).

When we left our apartment the rent was going up to 800 a month, and is now at 850. The house is also much nicer.

The house was an excellent investment.

Ken

[TheMetetron]

Ken,

How much are property taxes, maintenance costs, and homeowners' fees?

[Pokeraddict]

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Ken,

How much are property taxes, maintenance costs, and homeowners' fees?

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Also the "You can deduct your mortgage" is overrated. You already get a standard deduction of $10,300. Unless you are carrying a large note or donate lots of money to charity then it is not the steal you think it is. The appreciation should be the real reason. If you think you will be moving in the next 2 years don't waste your time.

There is a great feeling in having your oen home but you have to be ready to settle down or it is not going to work out as well as you hoped.

[maxtower]

Ken,
Your situation seems good. However in many parts of the country is not possible to buy a place anywhere near that cheap. Condos near where I live in Tempe are going for $250k+.
ugh...
I don't think I'll ever own a place around here.

[jaydub]

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Ken,

How much are property taxes, maintenance costs, and homeowners' fees?

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Also the "You can deduct your mortgage" is overrated. You already get a standard deduction of $10,300. Unless you are carrying a large note or donate lots of money to charity then it is not the steal you think it is. The appreciation should be the real reason. If you think you will be moving in the next 2 years don't waste your time.

There is a great feeling in having your oen home but you have to be ready to settle down or it is not going to work out as well as you hoped.

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PA,

The standard deduction issue you raise is rarely an issue with families. Also, the MI deduction is one of the few which can still be taken under AMT. This is critical for high income families.

I agree with the rest of what you said. Buying a house recently was made too easy, taken too lightly by purchasers, used as an ATM by suckers who live beyond their means, and used as a get rich scheme by fliptards.

J

[elus2]

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Also the "You can deduct your mortgage" is overrated.

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You pay about 60k in interest in the first 5 years on a 250k 25 yr loan at 6%. That seems like a substantial chunk to me to be able to deduct.

[TheMetetron]

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Also the "You can deduct your mortgage" is overrated.

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You pay about 60k in interest in the first 5 years on a 250k 25 yr loan at 6%. That seems like a substantial chunk to me to be able to deduct.

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It seems like a substantial amount to pay as well. So you pay $60k in interest and pay $18k less in taxes in that time... hmm, where's the deal? But it is really the other costs that really make buying a house not much a deal or a wash, or even a bad idea.


You guys realize, adjusted for inflation, real estate doesn't appreciate over time, right?

[Reef]

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You guys realize, adjusted for inflation, real estate doesn't appreciate over time, right?

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[Pokeraddict]

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Also the "You can deduct your mortgage" is overrated.

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You pay about 60k in interest in the first 5 years on a 250k 25 yr loan at 6%. That seems like a substantial chunk to me to be able to deduct.

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Right, so 60k/5 is 12k. You already get to deduct $10,300 no matter what. Now you got to deduct $1700 by paying 12k in interest. You saved about $425 in taxes. After the first 5 years or so the interest will be less then your standard deduction and you will not be able to deduct anything. What you don't get I guess is that you and your wife already can deduct most of the mortgage advantage anyway. If you are single it has more of an advantage but it still is not as good as the mortgage industry would want you to think.