Rent Or Not Rent that is the Question

[OneToEnvy]

So iv lived in apartments for the last 5 years and im sick of throwing my money away, and i dont know shit about buying a house.

 

I just dont know what to do. I can afford about 1k for a morgage, but would like to keep it close to 800 or 900 if possible and 3 bdrm would be nice. Any ideas?? Should i just keep renting? or should i start taking the steps? and i have ok Credit but i have 3 cards that are pretty maxed out.

[Akula]

depends on if you want wealth or not. Some people like to rent, but if you are paying 70 or 80 % of what a decent mortgage would be, you are wasting an opportunity to build wealth.

[Duff1647545513]

I bought a house and I think it is well worth it. I hated just throwing money away on an apartment. It's nice putting money into a place that you're basically not just fixing up for someone else to have a year or two later.

 

Just go get pre-approved to see what price range you can look for and go from there.

[thorne]

I found a calculator online that I put in my rent and the cost of what my host is booked at and it told me I had to live where i was over 7+years for it to be benficial to buy it.

[copperhead]

Just find a realtor thats been around for a while. They can answer all of your questions. And keep in mind, they are being paid to work for YOU, not the seller, so they tend to be pretty honest about stuff.

 

And if you can pull off the $$$ to make payments, DO IT. Smartest thing I ever did. I went from a reasonably priced apartment with two roommates to split the bills, to a good sized monthly payment with one roommate that pays the same amount each month, so I have a whole lot less in my wallet each month, but fuck it. I'll have something to show for it in a few years, even if it means not having quite as nice of a car or being able to go out and do shit every night I'm off work.

[Smokey]

depends on if you want wealth or not. Some people like to rent, but if you are paying 70 or 80 % of what a decent mortgage would be, you are wasting an opportunity to build wealth.

 

I would like to respectfully disagree with this point. A house should never be considered an asset/investment unless you're not living in it and it makes you money. That type of thinking has led many people into the current turmoil in the market.

 

That stated, you are entirely correct that IF it's within your budget then purchasing a home is an entirely better way to spend your rent money.

 

Stating you currently have maxed out credit cards on a budget of less than you say you can afford for a mortgage would throw red flags for me. I mean no offense to the OP, but would hate to see him put himself in a bad situation.

[LJ]

I would like to respectfully disagree with this point. A house should never be considered an asset/investment unless you're not living in it and it makes you money. That type of thinking has led many people into the current turmoil in the market.

 

That stated, you are entirely correct that IF it's within your budget then purchasing a home is an entirely better way to spend your rent money.

 

Stating you currently have maxed out credit cards on a budget of less than you say you can afford for a mortgage would throw red flags for me. I mean no offense to the OP, but would hate to see him put himself in a bad situation.

 

A house is an asset, not an investment...

 

your mortgage is what kills it by creating a liability.

[TTQ B4U]

your best bet right now financially is to pay off your CC's. that will likely net you the best savings in the short term.

 

once you do that, IMO, buy a home. the tax savings alone will be huge. back when we bought our first home we were paying nearly $760mo in rent which turned out to be about equal to a $1,200 mortgage.

 

of course there are other associated expenses, but together my wife and I have bought and sold several properties both commercial and residential and have yet to lose. you have to do it right of course.

 

just like the stock market, buy low, sell high. I feel bad for my friends who bought over the past 4 years or so and are now into some very, very nice homes that aren't worth what they paid. dumb....IMO if you have a mortgage that's so high that losing one income will kill you then you've bought too much home. That's all part of the millennial generation instant gratification / entitlement thing....but that's another thread.

 

 

So iv lived in apartments for the last 5 years and im sick of throwing my money away, and i dont know shit about buying a house.

 

I just dont know what to do. I can afford about 1k for a morgage, but would like to keep it close to 800 or 900 if possible and 3 bdrm would be nice. Any ideas?? Should i just keep renting? or should i start taking the steps? and i have ok Credit but i have 3 cards that are pretty maxed out.

[Smokey]

A house is an asset, not an investment...

 

your mortgage is what kills it by creating a liability.

 

 

thanks for the correction. That's what I was getting at. I'm always scared when I hear people talk about buying houses as an investment, or saying that their house is their biggest asset....when it's neither.

[Akula]

thanks for the correction. That's what I was getting at. I'm always scared when I hear people talk about buying houses as an investment, or saying that their house is their biggest asset....when it's neither.

 

Actually, my house is an asset.

 

The liability on my house is by far less than its worth. And, over time, a house appreciates in value thus furthering the ratio in my favor.

 

I never said a house was to be an asset for the OP. I said that it is difficult to build wealth while renting.

[LJ]

Actually, my house is an asset.

 

The liability on my house is by far less than its worth. And, over time, a house appreciates in value thus furthering the ratio in my favor.

 

I never said a house was to be an asset for the OP. I said that it is difficult to build wealth while renting.

 

 

Same here, I have enough equity in my house (at the current devaluation) that it can be considered an asset and I could get a secured loan for 1 years salary off of it.

 

that isn't the case for most people though.

[Smokey]

that isn't the case for most people though.

 

what I was getting at here fellas

[87GT]

It depends on what you want. If you buy a house you are going to have to pay for all the repairs. You need to have more money set aside in savings in case this happens. If you rent the landlord should take care of this.

 

Ask yourself this? Do you want to make money now or later? You can rent for now and dump a lot of money into stocks with a quick turn around on profit and repeat. Or you could buy a house and fix it up until it is worth more then you bought it then rent/sell then repeat. I personally am going for money later. I bought a house and without any updates to it the valve of my property went up. I am going to update more over the next 5 years then sell it at a higher price. Then I will buy a bigger house and repeat the process.

 

It is all up to you. If anything having a house will raise your overall happiness, even if you have a mortgage. How much is that worth to you??

[copperhead]

oh, and whatever you do, GET A FIXED RATE LOAN ! ! ! ! ! ! !

 

DON'T do interest only

DON'T do an ARM (adjustable rate mortgage)

[smokin5s]

mortgages have changed lately also... I'm in the process of selling my house and as of Sept 1 you can no longer do zero down mortgages, and alot of the mortgages that you could at one time do (80/20, etc...) can no longer be done making it harder to get approved...

 

with that being said, as long as you are planning on living in your house for an extended period of time, it is a great investment.

[LJ]

oh, and whatever you do, GET A FIXED RATE LOAN ! ! ! ! ! ! !

 

DON'T do interest only

DON'T do an ARM (adjustable rate mortgage)

 

for the average person I agree with this

[mmrmnhrm]

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?_r=1&oref=slogin

[Dave1647545494]

how much free time do you have right now?

 

owning a house also means you are responsible for repairs and doing shit like mowing landscaping etc.

 

all in all a house costs you more money, but its yours and you can do whatever you want with it and your a little more detached from neighbors etc.

[xlr8tn]

if you go the house route ( which I would) shoot me a PM and I'll give you a good mortgage guy to go see. Best buddy of mine for 20 years. He can pre-approve you and he'll spend the time to explain shit to you because trust me you'll feel lost your first time through. Even if you don't pre-approve through him you could still talk to him and he'll educate you on the process. Real good guy.

[Trouble Maker]

The liability on my house is by far less than its worth. And, over time, a house appreciates in value thus furthering the ratio in my favor.

 

That wasn't true until the 40's or 50's, and it's definitely not true in the short term now, and the market may never go back to that paradigm.

[Doug1647545489]

Well the hardest part will be saving up 20% so you get a prime rate. UNless you want a 2nd mortgage. I't's taken me about 6 months to save up half of the downpayment I'm going to need to make.

[Tractor]

Markets move up and down all the time look at the 100yr or even 150 yr chart for home prices. Though they have down times like the depression, the 1970's, the early 1900's when a very similar mortgage/bank shady business thing occured, prices have continued to move upward. The only thing that will really stop the historic upward trend is gonna be a major loss of population like a major disease or zombie attack.

 

A loan is likely going to be harder to get these days though and you'll likely be doing an 80/20 loan.

 

Just for some thought maybe you should consider building? Right now a newly built home and land is gonna be about as cheap as you'll likely see it.

 

Evan

[tripleGmax]

thought i would throw in two cents on the whole buying a house.

 

this comes from a financial advisor who has bought several houses and learned from mistakes.

 

 

1. Never use a mortgage broker. Always go directly to the lender for the loan. No matter what a real estate agent tells you about getting a great deal from a mortgage broker, be advised that the agent is probably getting an incentive from the broker, who also earns a commission off of you and may not act in your best interests. ( Read today's front page story about the mess this economy is in due to greed in the real estate market. )

 

2. Always get a home inspection when you have a contract on a home. Be wary of inspectors recommended by the real estate agent. That's like putting the fox in with the chickens. Make sure the contract has a clause that states you can negate the purchase if for any reason you are not satisfied with the inspection. ( You will have to add the clause in the contract) Always get a mold test.

 

3. Real Estate agents always work for the seller, even if an agent is working with you personally. Their job is to get you to buy a house. If you are Internet savvy, the info for buying homes is available to you. When making appointments with an agent to look at a home always ask for the listing agent to show the property. That way you can negotiate half the 6% commission off of the price if you are not using an agent and you can use a real estate attorney for a lot cheaper than the 3% commission the buyers agent will receive.

 

If all of the above sounds paranoid, be advised that the buyer is the one that ends up with an over priced home, a high priced loan and possibly a home with hidden problems. The real estate agent, mortgage broker and appraiser will be long gone with their respective commissions. This is a buyers market. Nobody takes take better care of you than you.

[Tractor]

Very good advice Gmax. Especially about the mortgage broker. My wife has people crying at her desk at 5/3 at least a few times per quarter due to a mortgage broker giving them a "great" deal.

 

Evan

[Wease]

Buy a house, for sure. Do a 15 or 20 year mortgage if you can, and pay on it every two weeks, when you normally get a paycheck. That extra payment helps knock down the principal and thus your total mortgage life even more. Sure, you'll have to be responsible for repairs and such, but more often than not, it's nothing crazy. Just don't get in over your head with what you can afford. I bought my first house at 25, my current one at 28, and I'll have it paid off before I'm 50... :nod: