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Started By
Message
“You’re just throwing your money away on rent”
Posted on 8/20/19 at 10:44 am
Posted on 8/20/19 at 10:44 am
This as a pro-homeownership argument we’ve all heard for decades.
However, my housekeeper and her beau are in the market to buy a house and I have encouraged them not to.
1. The housing market is super inflated in our area (Nashville).
2. They don’t have much of a down payment.
3. Their crediks are good enough to qualify, but they’d probably be looking at a 6% rate or more.
Let’s say they miraculously found a starter home for $200K.
They put $5K down.
They owe $195K and mortgage insurance.
Their 30-year payment would be about $1,350 after mortgage ins, escrow, and interest.
Their monthly principal payment would be about $200 for a few years, so they wouldn’t be building equity by paying it down...they would be fepending on the market to continue going higher, or performing upgrades which they wouldn’t have the money for.
On top of these things, they’d be SOL if their AC went out or there were other expensive repairs.
I suggested they rent and keep saving until there’s another dip in the market.
Plus buying a home as an unmarried couple isn’t a great idea.
Am I the only one who thinks homeownership isn’t the greatest goal which we can achieve?
However, my housekeeper and her beau are in the market to buy a house and I have encouraged them not to.
1. The housing market is super inflated in our area (Nashville).
2. They don’t have much of a down payment.
3. Their crediks are good enough to qualify, but they’d probably be looking at a 6% rate or more.
Let’s say they miraculously found a starter home for $200K.
They put $5K down.
They owe $195K and mortgage insurance.
Their 30-year payment would be about $1,350 after mortgage ins, escrow, and interest.
Their monthly principal payment would be about $200 for a few years, so they wouldn’t be building equity by paying it down...they would be fepending on the market to continue going higher, or performing upgrades which they wouldn’t have the money for.
On top of these things, they’d be SOL if their AC went out or there were other expensive repairs.
I suggested they rent and keep saving until there’s another dip in the market.
Plus buying a home as an unmarried couple isn’t a great idea.
Am I the only one who thinks homeownership isn’t the greatest goal which we can achieve?
80
Posted on 8/20/19 at 10:45 am to Eli Goldfinger
Posted on 8/20/19 at 10:45 am to Eli Goldfinger
Not-so-subtle "I have a housekeeper" brag
Posted on 8/20/19 at 10:45 am to Eli Goldfinger
quote:
m I the only one who thinks homeownership isn’t the greatest goal which we can achieve?
Usually, it's a good thing. But it's not as black and white as people tend to think it is.
We've certainly been conditioned to believe that home ownership is the ultimate goal.
Posted on 8/20/19 at 10:45 am to Eli Goldfinger
quote:
my housekeeper
do you have any imágenes?
Posted on 8/20/19 at 10:45 am to Eli Goldfinger
you think they can find something to rent for less than $1350/mo if the housing market is that inflated?
Posted on 8/20/19 at 10:46 am to Eli Goldfinger
I'm wondering when housing bubble 2.0 is going to pop.
Posted on 8/20/19 at 10:46 am to Eli Goldfinger
Buying isn’t for everyone. It’s a myth perpetuated by lenders and stock market folks.
Posted on 8/20/19 at 10:46 am to Eli Goldfinger
If you can only afford 5% of a down payment, you can't afford the house. Period.
That's a foreclosure waiting to happen.
It's a tough situation because they are throwing away money on rent and there's no telling when prices will fall.
I think they need to save the 20% and avoid PMI.
Ok let me modify this. Obviously if you have the 20 percent but choose to invest it because you’re interested rate is low that’s one thing. That’s obviously not the case for these people.
That's a foreclosure waiting to happen.
It's a tough situation because they are throwing away money on rent and there's no telling when prices will fall.
I think they need to save the 20% and avoid PMI.
Ok let me modify this. Obviously if you have the 20 percent but choose to invest it because you’re interested rate is low that’s one thing. That’s obviously not the case for these people.
This post was edited on 8/20/19 at 12:05 pm
Posted on 8/20/19 at 10:46 am to Eli Goldfinger
A lot of people make the mistake of thinking since they have the down payment they can afford the house, however they then become cash poor and if something happens, like an AC compressor breaks and needs replacing and it’s $1500+ they are not prepared for the downsides of ownership
Posted on 8/20/19 at 10:46 am to Eli Goldfinger
Home ownership is still the best option if and when you have the means... it just does not seem like they do right now
Posted on 8/20/19 at 10:47 am to Eli Goldfinger
quote:
Am I the only one who thinks homeownership isn’t the greatest goal which we can achieve?
I agree, but as a landlord. The past week of showing to tenants, I've confirmed that some people are not capable of owning a pet rock, much less a house.
Posted on 8/20/19 at 10:48 am to Eli Goldfinger
quote:
Am I the only one who thinks homeownership isn’t the greatest goal which we can achieve?
No. It's great for many, but not so great for others.
Posted on 8/20/19 at 10:48 am to Eli Goldfinger
You speak to your housekeeper?
Posted on 8/20/19 at 10:49 am to Eli Goldfinger
"Why make the landlord richer? Put us to the test! Get out of the rent race call HMS!!!"
Bless your heart!
Posted on 8/20/19 at 10:49 am to Eli Goldfinger
quote:
Am I the only one who thinks homeownership isn’t the greatest goal which we can achieve?
Your point about individual markets is spot on but you then try to use that outlier as a foundation for your belief.
Most of the US isn't large, urban sprawl with over-inflated property values so your stance is only situational at best.
Posted on 8/20/19 at 10:49 am to The Spleen
As others have said, owning a house ain't cheap. shite breaks and if you already blew your meager savings on a down payment, you're screwed.
That's when you go into credit card debt to fix the a/c, plumbing, etc. Being poor sucks.
That's when you go into credit card debt to fix the a/c, plumbing, etc. Being poor sucks.
Posted on 8/20/19 at 10:50 am to Eli Goldfinger
Dont know, I used my VA Homeloan.
Posted on 8/20/19 at 10:50 am to lowhound
yea...but I think his point here is that with renting for about $1,350 that's all they would be paying. Paying a mortgage that is $1,350 comes after a down payment and any other costs with closing etc....plus it would likely leave them unable to make any repairs that come up...A/C or water heater goes out...they fricked.
Home owning is a much better option as long as it does not leave you broke and vulnerable to unexpected expenses
Home owning is a much better option as long as it does not leave you broke and vulnerable to unexpected expenses
Posted on 8/20/19 at 10:50 am to Eli Goldfinger
I pay $350 a month in rent (not making the 350 up) That's $4200 a year. I don't even have to cut my own grass. I can leave for 10 days and have nothing to worry about. Bills are all included in that. I don't feel as if I'm throwing my money away, freedom is valuable to me.
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