Home ownership
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For me, the benefit of owning a house lies in paying my own mortgage as opposed to someone else's. When you pay rent, you will basically NEVER see a return on that investment.
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I just sold my condo, and it is closing in November. I bought it about 2 years ago and I'm losing about $25k on it. If you take in to account the extra money I've spent every month versus what rent would have cost me it is at least another $11,000.... I did get some tax savings along the way, but not nearly enough to cover the $36k I lost.
I'm moving to Austin Texas at the end of the year, and I'm just going to rent a cheap apartment for the first year that I'm down there at least. I want to know that things have really hit bottom before I even consider buying again. The times of making tons and tons of money on a house are over, and I don't know that it will ever be the way it was 8-10 years ago again.
When you pay a mortgage you're still basically paying rent to your bank! The first couple years 90% of your payment goes to interest anyway, so what is the difference? I don't think I'll buy again until I can afford a 15 year or less loan.
I'm moving to Austin Texas at the end of the year, and I'm just going to rent a cheap apartment for the first year that I'm down there at least. I want to know that things have really hit bottom before I even consider buying again. The times of making tons and tons of money on a house are over, and I don't know that it will ever be the way it was 8-10 years ago again.
When you pay a mortgage you're still basically paying rent to your bank! The first couple years 90% of your payment goes to interest anyway, so what is the difference? I don't think I'll buy again until I can afford a 15 year or less loan.
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Rent vs Buy Calculator, Should I Rent or Buy? - Yahoo! Real Estate
Typically (not always of course) rent will be more per month for the same house. ie. 1200 sq 3 bedroom rent 1500 a month vs a mortgage for the same house for like 1200. Every situation and location is different but just keep that in mind.
Personally if I'm going to live there for more than 5 years its worth buying, we bought our first house in VA when my wife was in Med School, and still own it as a rental. We have rented the past 3 years though because we have lived in 2 different states and will be moving again next year or the year after..
Rental benefit, when shit breaks you don't have to fix it (unless you broke it) and you can move without a huge loss, even if under lease you still have an option to get out of it for 1-2 months of rent typically.
Owning benefit, not paying someone elses mortgage, building equity (hopefully), can paint and redecorate any way you want, tax deduction for interest paid, and some upgrades to the home.
HOA's are the devil though, at least in my eyes..
Typically (not always of course) rent will be more per month for the same house. ie. 1200 sq 3 bedroom rent 1500 a month vs a mortgage for the same house for like 1200. Every situation and location is different but just keep that in mind.
Personally if I'm going to live there for more than 5 years its worth buying, we bought our first house in VA when my wife was in Med School, and still own it as a rental. We have rented the past 3 years though because we have lived in 2 different states and will be moving again next year or the year after..
Rental benefit, when shit breaks you don't have to fix it (unless you broke it) and you can move without a huge loss, even if under lease you still have an option to get out of it for 1-2 months of rent typically.
Owning benefit, not paying someone elses mortgage, building equity (hopefully), can paint and redecorate any way you want, tax deduction for interest paid, and some upgrades to the home.
HOA's are the devil though, at least in my eyes..
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412 Posts
1. You can deduct the interest payments on your federal income tax. So in a scenario where you are renting an apartment for $1,000/ month vs. paying $1,000 monthly in mortgage payments, your net payments are lower in a house.
2. If you are a first time buyer, then you get $8,000 cash from the feds. It's non-repayable, meaning free money. This program is ending soon.
3. I admit that it was nice to just call someone when something broke. Now... I can still call someone but I have to hand over the plastic. But it's nothing comparable to the satisfying feeling of coming home after a hard day at work, and knowing that it's your OWN place (and that you owe your life and your firstborn to the bank).
2. If you are a first time buyer, then you get $8,000 cash from the feds. It's non-repayable, meaning free money. This program is ending soon.
3. I admit that it was nice to just call someone when something broke. Now... I can still call someone but I have to hand over the plastic. But it's nothing comparable to the satisfying feeling of coming home after a hard day at work, and knowing that it's your OWN place (and that you owe your life and your firstborn to the bank).
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267 Posts
Also if it's paid off you OWN it. You will never own your apartment. So when things get bad you still have your house.
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Yea, that's the way it is where I live. People pay $1500 a month to rent the townhouses like the one I own, my mortgage payment is $1625. True, most of that for the foreseeable future is interest, but I do get 1/3 of that back in taxes by being able to write it off against my income.
It's benefits highly depend on your plans and income.
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I thought buying a home now was a good idea,,,I think I was wrong 
I bought mine in march for 130(below appraisal at the the time) and it was just reappraised for 90k 7 months later. I don't think I will be able to sell it without taking a loss for a long long time.
I do love having a garage but paying almost 700 extra a month is making me a sad panda!
And now that it's way overpriced with what is selling in my area, I'm stuck with it and stuck in it.
I think being single and never EVER having been locked into anything, I wonder if I was mature enough for this,,,too late now I guess. But I'll still make my extra payments and enjoy that garage.
I bought mine in march for 130(below appraisal at the the time) and it was just reappraised for 90k 7 months later. I don't think I will be able to sell it without taking a loss for a long long time.I do love having a garage but paying almost 700 extra a month is making me a sad panda!
And now that it's way overpriced with what is selling in my area, I'm stuck with it and stuck in it.
I think being single and never EVER having been locked into anything, I wonder if I was mature enough for this,,,too late now I guess. But I'll still make my extra payments and enjoy that garage.
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Varies state to state. I've seen it where if you fall under a certain threshold you can write off your rent, and I've seen them tell you to take a leap. Writing off 6.5% mortgage interest wouldn't make up for the $7,000ish in state and township porperty taxes on a $200,000 (low around here) house.
In fact my RENT is less then that year over year.
Here is a fun fact. The state of New Jersey hits you with an ADDITIONAL 1% tax if you sell a home without already being in escrow for another house in the state.
I. WILL. NEVER. BUY. HERE
Its not worth owning a home if all I can do is sit in it because I have to tag over 700 a month onto my mortgage in taxes and insurance, and I make OVER the national average for income.
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As long as nothing bad happens (or a divorce) for the first 20 odd years of ownership.
I'd rather get a 6 year note and live in a trailer.
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My brother is in the process of buying a decent trailer in a nice (as in not typical trailer trash) park, and he's only paying $22.5K for it. I like my place and have no regrets, but I definitely have some envy that he won't have a mortgage.
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264 Posts
This is the biggest benefit that I can see, I don't see many people mentioning this one. Let me say that it is a very good feeling when you have only 3 years left to pay on your house. Buying young and dumping all the extra money you can on your mortgage really helps. When you're renting, you'll never be "done".
First you never actually own your house, You make lease payments to your local government in the form of Taxes, get that nonsense out of your head.
If you buy a house and finance for the usual dumb ass 30 years you have just pissed your money away.
On a 15 year mortgage you can still come out ahead usually but should always put extra money on extra payments, it really does not take long to whittle down a mortgage if you do so.
Benefits to renting, you can move at will, nothing unless you break it is your responsibility and that is a big thing, Older houses are generally the most affordable to built but just like a bike, they more than likely will need some TLC, If you cannot afford to do the work on your own you will again, start losing out quickly, think of it like this, new roof will run you 6k on up to pay someone, do you have that kind of money in your bank account? now that is if you do not need new board underneath, woo wee that gets into a mess and costs a shitload more in a hurry, also depends on how long it was leaking if tha tis the case and if you have water damage to your ceiling as well, happens more than you think. Next if you live in a colder climate a furnace can go out, bam, another 6-10k pretty easily, do you have that kind of money?
It is not so easy to simply go get another loan for a home repair as it was a couple of years ago, so many people are now trying to figure out how in the hell they are going to pay for repairs. And even if you are able to get a loan, that is extra money on interest you have to pay out yet again. repairs are far more frequent than you think, there is always something to piss your money away on.
Owning a home to me is an Investment, nothing more, none of my houses are financed over 15 years and I am working hard to get that paid off even quicker for the sole purpose of renting out as a retirement or supplemental income at some point
If you buy a house and finance for the usual dumb ass 30 years you have just pissed your money away.
On a 15 year mortgage you can still come out ahead usually but should always put extra money on extra payments, it really does not take long to whittle down a mortgage if you do so.
Benefits to renting, you can move at will, nothing unless you break it is your responsibility and that is a big thing, Older houses are generally the most affordable to built but just like a bike, they more than likely will need some TLC, If you cannot afford to do the work on your own you will again, start losing out quickly, think of it like this, new roof will run you 6k on up to pay someone, do you have that kind of money in your bank account? now that is if you do not need new board underneath, woo wee that gets into a mess and costs a shitload more in a hurry, also depends on how long it was leaking if tha tis the case and if you have water damage to your ceiling as well, happens more than you think. Next if you live in a colder climate a furnace can go out, bam, another 6-10k pretty easily, do you have that kind of money?
It is not so easy to simply go get another loan for a home repair as it was a couple of years ago, so many people are now trying to figure out how in the hell they are going to pay for repairs. And even if you are able to get a loan, that is extra money on interest you have to pay out yet again. repairs are far more frequent than you think, there is always something to piss your money away on.
Owning a home to me is an Investment, nothing more, none of my houses are financed over 15 years and I am working hard to get that paid off even quicker for the sole purpose of renting out as a retirement or supplemental income at some point
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3,170 Posts
You have to run the numbers to see if it works out money wise. Lots of moving parts in the calculation. Tax write off, sure. But it will be less and less as you pay less interest later in the loan, while the property taxes will only get higher.
Rent will always increase as well, but you don't pay for repairs or property taxes.
Its funny people mention rent being higher net in their areas because its the opposite everywhere I've lived, sometimes to the extreme.
But I think in either case the most important thing to consider are the intangibles. If you're a person (like some on this thread, or my parents) that is grounded, responsible and gets a feeling of satisfaction by owning your own place then it will likely work out well for you.
If you're more of a go with the flow, could move to another state or country next week type of person (like me) then it might be a bad decision. You're gonna feel trapped.
Remember that a home purchase is a major, life altering decision. Up there with marriage and kids. Consider everything carefully and make your choice.
Rent will always increase as well, but you don't pay for repairs or property taxes.
Its funny people mention rent being higher net in their areas because its the opposite everywhere I've lived, sometimes to the extreme.
But I think in either case the most important thing to consider are the intangibles. If you're a person (like some on this thread, or my parents) that is grounded, responsible and gets a feeling of satisfaction by owning your own place then it will likely work out well for you.
If you're more of a go with the flow, could move to another state or country next week type of person (like me) then it might be a bad decision. You're gonna feel trapped.
Remember that a home purchase is a major, life altering decision. Up there with marriage and kids. Consider everything carefully and make your choice.
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Who is going to "buy young" with a 195,000 average home price.
A 40+ year old 1200sq/ft 2 bed one bath home goes for $190,000 here. The mortgage plus property tax is going to be almost double what rent is.
If you graduate as a doctor or lawyer yeah maybe its possible. Otherwise you are putting yourself into debt for the rest of your life for what? I like being able to pack up and haul ass.
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You don't buy "average", you buy for your situation.
For instance when I was in my mid 20's I had 20k in the bank and the condo I was living in when up for sale at 92k. I was making 36k at the time (late 90's) It would be perfectly acceptable for me to put that 15k down and buy. Thats around $600 a month including taxes, lol! I still kick myself for not doing that one.
There are several 1200 sq ft places in my neighborhood in the 100-120k asking price range. Thats easy for a young guy/gal to make and certainly a young couple, even if they're only pulling 30k a year each.
With that said, you're tying up your finances for YEARS buying a home and that may not be the best thing at all for a young person.
For instance when I was in my mid 20's I had 20k in the bank and the condo I was living in when up for sale at 92k. I was making 36k at the time (late 90's) It would be perfectly acceptable for me to put that 15k down and buy. Thats around $600 a month including taxes, lol! I still kick myself for not doing that one.
There are several 1200 sq ft places in my neighborhood in the 100-120k asking price range. Thats easy for a young guy/gal to make and certainly a young couple, even if they're only pulling 30k a year each.
With that said, you're tying up your finances for YEARS buying a home and that may not be the best thing at all for a young person.
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I'm 23 and have a 2-3 bedroom (one's rather small, but works) 1500sq.ft. 2-floor condo; price was 235k. I put down about 12k of my own money and my folks contributed some more to make the initial down-payment. Now I live with 2 roommates and our "rent" pays my mortgage.
If you have the means, it makes FAR more sense than renting. Biggest benefit as far as I'm concerned is that at the end of the day you have something to show for the money you're spending, rather than handing it over to a landlord and getting nothing significant out of the deal. Also, we'll be selling (this is a very conservative estimate) the place in 2 years for a least 70k more than we paid for it. It's a 15 minute walk from the downtown core/bar scene and is less than 5 minutes from the University campus, so the market for the area is ALWAYS strong, and it will sell itself.
If you have the means, it makes FAR more sense than renting. Biggest benefit as far as I'm concerned is that at the end of the day you have something to show for the money you're spending, rather than handing it over to a landlord and getting nothing significant out of the deal. Also, we'll be selling (this is a very conservative estimate) the place in 2 years for a least 70k more than we paid for it. It's a 15 minute walk from the downtown core/bar scene and is less than 5 minutes from the University campus, so the market for the area is ALWAYS strong, and it will sell itself.
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When I moved to FL after Katrina, I straight couldn't afford to buy around here. Things were so inflated it was just outrageous.
I just built a condo this last year after the bubble burst, and I've got neighbors in my same neighborhood that paid $300k+ while I came away at $135k all said and done. Its a 1680sq-ft, 3 bedroom, 2.5 car garage, built in 2008 in the new/nice part of town. I'm 4mi from my office.
My mortgage + taxes is $735 a month (financed $99k). Prior to this, I was renting a 900sq-ft 1-bedroom in a crummy part of town for $900 (with no garage).
Just completely depends on your situation and your area. For me, buying was the obvious choice.
I just built a condo this last year after the bubble burst, and I've got neighbors in my same neighborhood that paid $300k+ while I came away at $135k all said and done. Its a 1680sq-ft, 3 bedroom, 2.5 car garage, built in 2008 in the new/nice part of town. I'm 4mi from my office.
My mortgage + taxes is $735 a month (financed $99k). Prior to this, I was renting a 900sq-ft 1-bedroom in a crummy part of town for $900 (with no garage).
Just completely depends on your situation and your area. For me, buying was the obvious choice.
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