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Posted on 2/2/09 at 11:34 am to LSU1018
Yeah, flexibility. What happens if you need to move in five years, the average home value has declined by 50%, and you're stuck with this huge debt?
Posted on 2/2/09 at 11:39 am to LSUtoOmaha
Look at history on house values on a 10 year basis. Find me one example where a house has depreciated 50%. The history shows that over a 10 year period, your house will not lose value. As bad as people think the economy is right now, 10 years from now, I would bet my life savings that your house is worth at least what it is worth now.
Posted on 2/2/09 at 11:41 am to LSU1018
quote:
A 30 year mortgage on a 130,000 loan in todays market will run your note about 800 or so a month. You can buy a 3 bedroom 2 bath house for that price.
Does that $800 include taxes, insurance and maintenance?
Posted on 2/2/09 at 11:42 am to LSU1018
quote:
10 years from now, I would bet my life savings that your house is worth at least what it is worth now.
I'll hold you to that
Posted on 2/2/09 at 11:48 am to LSU1018
quote:
Find me one example where a house has depreciated 50%.
Areas of California, Nevada and Florida are almost there over the last 2 years. You'll see several areas with 50% price declines by this time next year.
This post was edited on 2/2/09 at 11:49 am
Posted on 2/2/09 at 12:09 pm to Martavius
That's why I said look at 10 years. Also, I'm pretty sure this guy that started this post was not referring to one of the 3 areas that you referred to. Over 50% of the foreclosures are made up of just those 3 states.
Posted on 2/2/09 at 12:18 pm to LSU1018
quote:
Look at history on house values on a 10 year basis. Find me one example where a house has depreciated 50%. The history shows that over a 10 year period, your house will not lose value. As bad as people think the economy is right now, 10 years from now, I would bet my life savings that your house is worth at least what it is worth now.
Property value in 10 years equal to what it is now = RENTING.
Property value in 10 years greater than what it is now = INVESTING.
Property value in 10 years less than what it is now = LOSING.
I know how far to press the issue with them - I will not alienate family members just to prove a point.
Posted on 2/2/09 at 12:28 pm to tigerdup07
quote:
this is what is wrong with some people. why in the HELL would you worry about what your sister-n-law and brother-n-law do with their money? are you financing them or something?
That's right - why the HELL would anybody want to see their family members, who they care about, make sound financial decisions ? Especially when they go out of their way to ask you for advice ?
Posted on 2/2/09 at 12:29 pm to LSU1018
quote:
Actually I have done plenty. A 30 year mortgage on a 130,000 loan in todays market will run your note about 800 or so a month.
I know this is actually helping to make your case, but that comes to an interest rate of 6.25%. Isn't that a bit high?
quote:
Are you gaining any equity by renting?
Are you gaining any equity by buying?
quote:
Also, you are able to deduct your interest on your tax return.
It's unlikely that you are able to deduct this interest either, since it's well below the standard deduction.
quote:
What exactly are you gaining by renting a place?
You're shifting the goalposts now. Your original statement was you would NEVER advise somebody to rent, yet now you are acting like you've done all kinds of cost/benefit analyses.
Posted on 2/2/09 at 12:31 pm to LSU1018
quote:
Look at history on house values on a 10 year basis.
Right. Let's all look at history as a guide during an unprecedented deleveraging bubble.
quote:
As bad as people think the economy is right now, 10 years from now, I would bet my life savings that your house is worth at least what it is worth now.
Done.
Posted on 2/2/09 at 12:42 pm to Tiger JJ
quote:
Property value in 10 years equal to what it is now = RENTING.
No not renting b/c if you paid off 10 years of a house in that amount of time, then you own that much . If you pay 10 years worth of rent, you get nothing back.
I was including Escrow in the 800 note to be fair because that is really what the cost is. You could very possibly be deducting the interest also your first few years. Do you not have any medical expenses or any other expenses? Just because the interest alone does not exceed the standard deduction rate does not mean you won't be deducting it.
Next yall will start saying it's a good thing to lease a car too.
Posted on 2/2/09 at 12:44 pm to LSU1018
quote:
You're shifting the goalposts now. Your original statement was you would NEVER advise somebody to rent, yet now you are acting like you've done all kinds of cost/benefit analyses.
Cost/benefit analysis(which is how you spell this) is what will bring you to the conclusion that you should not rent.
Posted on 2/2/09 at 12:45 pm to LSU1018
quote:
Cost/benefit analysis(which is how you spell this)
Posted on 2/2/09 at 12:48 pm to Tiger JJ
frick, can I get in on this bet too? Are we betting your life savings now or in 10 years? I'd prefer to nail your net worth down now, as it will probably be far lower in 10 years.
Posted on 2/2/09 at 12:50 pm to LSU1018
quote:
Cost/benefit analysis(which is how you spell this)
BOOM
Posted on 2/2/09 at 12:52 pm to Cold Cous Cous
wow. 
Posted on 2/2/09 at 12:52 pm to Colonel Hapablap
My net worth will be more in 10 years b/c I will have paid off my HOUSE!
Posted on 2/2/09 at 1:00 pm to LSU1018
quote:
No not renting b/c if you paid off 10 years of a house in that amount of time, then you own that much . If you pay 10 years worth of rent, you get nothing back.
Again, it depends on the price and cost. If you pay 10 years of rent at a rate of .5X the costs of ownership, then I would argue you have come out way ahead in the scenario of prices staying flat. Plus, you've clearly been killed by inflation in that scenario.
quote:
You could very possibly be deducting the interest also your first few years. Do you not have any medical expenses or any other expenses? Just because the interest alone does not exceed the standard deduction rate does not mean you won't be deducting it.
At 5%, you have $6500 in interest the first year. I believe the standard deduction for married people is now up to $11,000. Sure you could have investment gains or thousands of dollars of eligible medical expenses. Or you might not. It would be better described as an option on a potential tax benefit. My guess is that the vast majority of people with mortgages that size do not get to itemize.
Posted on 2/2/09 at 1:02 pm to LSU1018
quote:
Cost/benefit analysis(which is how you spell this) is what will bring you to the conclusion that you should not rent.
Your original statement was made as a complete blanket statement applying to all. Perhaps the cocoon you live in locally prevents you from understanding that the situation you are describing is by far the exception to the rule and not vice versa.
The true answer is that there is no blanket statement answer - it varies greatly on a case by case basis. And in MANY cases these days, renting is the clearly superior option.
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