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#31
07-11-2007, 05:16 PM
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Re: BRAG: Just got approved for a home mortgage
Jeeeeeeesus Christ, man! Maybe you're just too close-minded to truly see what the hell you're talking about.
[ QUOTE ] Good lord. An asset is something you own. [/ QUOTE ] IT'S REALLY PRETTY OBVIOUS THAT HE DOES NOT OWN THIS HOME. His name might be on title, but, until every single penny is paid to the bank, they are the real home owners. Did they not teach you that in your little accounting class? [ QUOTE ] A liability is a debt. [/ QUOTE ] Uhm.... Soo..... what exactly is a mortgage again? It's kinda like a bill right? I forget. [ QUOTE ] If your asset has a higher value than your liability, you have net worth. That's a good thing, in case you didn't realize. [/ QUOTE ] It's definitely good, he just doesn't have any. He will consistently pay to live there and when he sells it he will have not made up the difference. [ QUOTE ] He has to live somewhere! Your logic makes no sense whatsoever. Based on your numbers, the monthly cost on this house over 5 years is $1362.78. If he lives there 10 years this number drops significantly more. Do you think he could rent a house like this for that amount? Of course not. [/ QUOTE ] Is buying this house more cost effective than renting a house of equal size and style? Over a period of time, sure. Is it still costing him money? Yes. Which makes it a.... a what? A liability. 
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#32
07-11-2007, 05:20 PM
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Re: BRAG: Just got approved for a home mortgage
[ QUOTE ]
Well, being that the down payment was his money already, when he sells and gets it back, we can't really count that as profit now can we? [/ QUOTE ] No, the downpayment is an asset used to purchase another asset. And, it lowers the monthly cost of the home. Tell you what, you learn the difference between an asset and a liability, and then maybe we can continue this discussion. The only way that buying a home is -EV is when you turn it around quickly and lose money (usually in real estate fees and other sales related costs). Occasionally you can lose money in the short run because of decreased market values, but this rarely occurs in the 7-10+ year long run.
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#33
07-11-2007, 05:21 PM
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Re: BRAG: Just got approved for a home mortgage
[ QUOTE ]
There were a few recent discussions about the rent/buy decision in the Business/Finance/Investing forum. The fact that the OP is (seemingly) buying at a price that allows his roommates to pay off a significant part of the mortgage, then his decision seems to be a good one. If he's deciding between paying $600 in rent (increasing over the years) and $600 in mortgage payments, the decision is clear. For many people, buying a house is one of the best investments they will make. (This is not to say there are not better investment vehicles.) [/ QUOTE ] I completely agree that it's a great idea to have multiple people go in on a mortgage. You'll have more space for close to the same amount of payment. There's really no reason not to do it other than the immediately loss of whatever money you'll be using as a down payment.
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#34
07-11-2007, 05:25 PM
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Re: BRAG: Just got approved for a home mortgage
[ QUOTE ]
Is it still costing him money? Yes. Which makes it a.... a what? A liability. [/ QUOTE ] Christ. You have no idea how the terms "asset", "liability", and "expense" are used, do you? Are you really a real estate agent? They need to add a little finance and accounting to your training.
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#36
07-11-2007, 05:45 PM
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Re: BRAG: Just got approved for a home mortgage
[ QUOTE ]
[ QUOTE ] Well, being that the down payment was his money already, when he sells and gets it back, we can't really count that as profit now can we? [/ QUOTE ] No, the downpayment is an asset used to purchase another asset. And, it lowers the monthly cost of the home. Tell you what, you learn the difference between an asset and a liability, and then maybe we can continue this discussion. [/ QUOTE ] I never wanted to have this discussion in the first place. If I wanted to argue with children I'd have kids. All I wanted to do was show you, and anybody else that wanted to know, that you consistently lose money "owning" a home and when you sell 99% of the time you do not recoup those losses. Arguing about the definition of a word really takes the focus off of the true discussion. Your accounting teacher told you an asset is something you own. Fine. A multimillionaire told me that an asset is something that benefits you financially. You want to define a home as an asset because you own it. That's fine as long as you bought it out-right. If you had to get a loan to buy it then technically you don't own it until the loan is paid off. You're allowed to live there in the meantime. Even though the "sale" has gone through, you're still buying it. Just like buying a car. You have a monthly payment. The only thing you "own" is a debt. You defined the meaning of "liability" as a debt. So, now, according to your definition of the word "asset" I've shown you why a home that you have a mortgage on is not an asset. You still have not proven to me, or anybody else reading, why a mortgaged home is NOT a liability.
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#38
07-11-2007, 05:57 PM
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Re: BRAG: Just got approved for a home mortgage
[ QUOTE ]
Arguing about the definition of a word really takes the focus off of the true discussion. [/ QUOTE ] Common definitions of words are the only thing that make rational discussion possible. Which is why this discussion is not rational. It's impossible to play a game when one side doesn't understand the rules. [ QUOTE ] Your accounting teacher told you an asset is something you own. Fine. A multimillionaire told me that an asset is something that benefits you financially. [/ QUOTE ] It is both. A home is both. You just don't understand why. [ QUOTE ] The only thing you "own" is a debt. You defined the meaning of "liability" as a debt. So, now, according to your definition of the word "asset" I've shown you why a home that you have a mortgage on is not an asset. [/ QUOTE ] No, you've only shown that the asset I own has a liability (of lesser amount) attached to it. [ QUOTE ] You still have not proven to me, or anybody else reading, why a mortgaged home is NOT a liability. [/ QUOTE ] The home is the asset, the mortgage is the liability. The liability decreases monthly, while the asset value increases over the long term. You do know what an investment is, right? Is putting money into your 401K every month a liability, or an asset? Is the monthly cost of purchasing a home an expense, or a liability? Is a monthly rent payment on an apartment an expense, or a liability? I'm afraid to see your answers to these questions.
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#39
07-11-2007, 06:09 PM
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Re: BRAG: Just got approved for a home mortgage
[ QUOTE ]
Occasionally you can lose money in the short run because of decreased market values, but this rarely occurs in the 7-10+ year long run. [/ QUOTE ] Past performance has no bearing on future performance. You could easily take a bath in that time frame right now.
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#40
07-11-2007, 06:27 PM
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Re: BRAG: Just got approved for a home mortgage
[ QUOTE ]
[ QUOTE ] Your accounting teacher told you an asset is something you own. Fine. A multimillionaire told me that an asset is something that benefits you financially. [/ QUOTE ] It is both. A home is both. You just don't understand why. [/ QUOTE ] Please to explain how buying a home benefits you financially. All I can see is consistent loss of money. [ QUOTE ] The home is the asset, the mortgage is the liability. [/ QUOTE ] This is really all you had to say instead of "this is misleading...." You could have saved everybody a lot of time arguing. [ QUOTE ] You do know what an investment is, right? Is putting money into your 401K every month a liability, or an asset? [/ QUOTE ] Please tell me you're not trying to compare something with a guaranteed ROI to buying a home. [ QUOTE ] Is the monthly cost of purchasing a home an expense, or a liability? Is a monthly rent payment on an apartment an expense, or a liability? [/ QUOTE ] Any liability associated with owning a home or renting an apartment would be considered a cost of living expense.
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