Rent is a ripoff

Post #56,184 by tuberculosis 10/11/02 10:32:02 AM Reply	Rent is a ripoff That was my motivation for buying when I first did. Figure out if your house payment will be about what your rent is, (maybe a little more) . If so, then buy something - because rent payments evaporate but mortgage payments are equity. The other key thing is to buy something that's not going to drop in value by the time you want to sell it. Property value is primarily determined by the 3 factors location, location, and location. Thats it. If you can swing it, buy a shitty house in a nice neighborhood. You can always fix it up (within reason). Other little rules - when markets go soft, multi-family units (condos) go soft first. My condo is a trendy loft at the corner of 15th and Blake streets in Lower Downtown Denver (yes the Blake Street Bombers - that Blake street - 5 blocks away). Its doubled in price since I bought it 5 years ago and that location is so hot that it may soften a little but its never going down. Next to go are the very outlying or half built new developments. Example was a lovely rural development near the Martin Marietta factory in west Denver (Roxborough). Absolutely gorgeous neighborhood - great views, built around a beautiful golf course with soaring red stones rising out of the rough. Defense cuts hit, Martin scaled back, and its just a little too far out for non-Martin employees to consider as a sane commute. Established neighborhoods not on the decline are a great bet. Stuff close to the city is a great bet. Stuff I don't trust is stuff like Marin County CA - with real estate prices that continue to rocket upwards despite a trashed local economy and the highest forclosure rate in the US. I guess you can't lose if you can make the payments but it still sort of defies logic to me. I am out of the country for the duration of the Bush administration. Please leave a message and I'll get back to you when democracy returns.
Post #56,313 by a6l6e6x 10/11/02 11:34:42 PM Reply	Re: "mortgage payments are equity" Think again. Look at what portion of the first mortgage payment of a 30 year mortgage is equity. It is mostly all interest! But, as mentioned earlier, interest is a deduction. Alex "In America, anybody can be president. That's one of the risks you take." -- Adlai Stevenson (1900-1965)
Post #57,149 by tuberculosis 10/16/02 11:08:25 AM Reply	Thought about it Make on extra mortgage payment a year and pay off in 17 years. How do you do that? I round up a little. So your mortgage payment is $1020. Pay $1100. Like you're going to notice the missing money. But if you take a look - it totally adds up. Faster than you would think. Anyhow, I have a 15 year and I'm still rounding up to the nearest 100 plus a hundred. It pays off. Which is another thing - given the economy, try for a 15 year and put at least 20% down to avoid the dreaded "mortgage insurance" which is also a ripoff. I am out of the country for the duration of the Bush administration. Please leave a message and I'll get back to you when democracy returns.
Post #57,171 by Another Scott 10/16/02 12:34:56 PM Reply	No need for 20% down to avoid PMI. PMI = Private Mortgage Insurance. Many places offer "80/10/10" or even "80/15/5" loans. First mortgage is 80% of the principal, 2nd mortgage (at a higher rate) for 10% or 15% of the principal, and you make a 10% or 5% down payment. You won't have to pay PMI and the interest on the 2nd mortgage is deductable. (And I think there are even places that offer 0% down mortgages, or used to. I'd be scared of that unless I really understood the costs.) 80/10/10 or 80/15/5 is a great system for those who can't or don't want to put 20% down. I agree with the desire to pay things off early (I'm paying off my 30 year mortgage in 20 years), though there are good arguments (like those given by Ben long ago) that it's a mistake to have too much money tied up in your home (e.g. it's hard/expensive to get it out). Cheers, Scott.
Post #56,730 by wharris2 10/14/02 5:28:49 PM Reply	Don't forget to factor in: Maintenance (even stupid little things like mowing the lawn) not to mention bigger things like occasionally replacing water heaters, furnaces, reshingling roofs, carpet. Taxes (though usually themselves deductable.) Insurance. Slow initial buildup of equity - are you going to stay there long enough to make it worthwhile? Low interest rates - good thing to consider. The lawyers would mostly rather be what they are than get out of the way even if the cost was Hammerfall. - Jerry Pournelle

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