Author Topic: The Benefits of Home Ownership?  (Read 14277 times)

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Online Chino

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Re: The Benefits of Home Ownership?
« Reply #175 on: January 29, 2018, 09:22:41 AM »
Yea, that does sound miserable (cleaning up the leafs that is).

And damn Jingle, must be nice to free yourself from the mortgage. 

According to zillow, my house is worth 20% more than what I paid for it over the course of 4.5 years living there.  I only have a few investments, but my house is definitely one of them that really works well for me and my lifestyle.

My house was re-appraised by the city and is worth 15%more than it was this time last year. I'm kind of pissed about it because that's going to raise my taxes. I would challenge it, but then they're going to have to come into my house and do a more formal inspection. There are things in my house that can not be seen by any government employee.

Online cramx3

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Re: The Benefits of Home Ownership?
« Reply #176 on: January 29, 2018, 09:27:58 AM »
I was re-appraised at 10% more about 2 years ago (when I refinanced to get my ex off the deed) which did raise my taxes, but not a whole lot.  I have that same mentality though, I don't want them snooping around because I made my basement livable since then which would apparently raise my taxes, also other things...

Offline Stadler

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Re: The Benefits of Home Ownership?
« Reply #177 on: January 29, 2018, 09:34:19 AM »
Yea, that does sound miserable (cleaning up the leafs that is).

And damn Jingle, must be nice to free yourself from the mortgage. 

According to zillow, my house is worth 20% more than what I paid for it over the course of 4.5 years living there.  I only have a few investments, but my house is definitely one of them that really works well for me and my lifestyle.

My house was re-appraised by the city and is worth 15%more than it was this time last year. I'm kind of pissed about it because that's going to raise my taxes. I would challenge it, but then they're going to have to come into my house and do a more formal inspection. There are things in my house that can not be seen by any government employee.

"Lettuce".  Yes.  :)

Offline jingle.boy

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Re: The Benefits of Home Ownership?
« Reply #178 on: January 29, 2018, 09:35:30 AM »
Yea, that does sound miserable (cleaning up the leafs that is).

And damn Jingle, must be nice to free yourself from the mortgage. 

According to zillow, my house is worth 20% more than what I paid for it over the course of 4.5 years living there.  I only have a few investments, but my house is definitely one of them that really works well for me and my lifestyle.

My house was re-appraised by the city and is worth 15%more than it was this time last year. I'm kind of pissed about it because that's going to raise my taxes. I would challenge it, but then they're going to have to come into my house and do a more formal inspection. There are things in my house that can not be seen by any government employee.

Ruffage?

Edit... Ninja'd.
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Online lordxizor

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Re: The Benefits of Home Ownership?
« Reply #179 on: January 29, 2018, 09:58:36 AM »
Really surprised to hear this - especially the financial thing.  Given the real estate market, owning vs renting is a no-brainer to me... especially since I now own my home.  No monthly payment, and I have a 6 figure asset after 20 years of paying.  If I had been renting, I'd have no asset and still be making monthly payments.  Considering my house has gone up in value by about 2.5x, it's a no-brainer.  As a long-term investment, there isn't much more of a sure thing than property (by-and-large)
Historically, real estate values pretty much match inflation, so while things are good now, they won't be forever. I'm paying 3.375% interest on a home that I can expect to gain about 3% a year on average in value over the next 30 years. Add in the maintenance costs, taxes, insurance, upgrades, etc, and it's easy to see why homes are not as great an investment as people want you to think they are.

On my ~$250k home, I will pay about $600k in mortgage, taxes, insurance, etc (not including annual increases in taxes and insurance which of course will happen). I will also put in about 1% of the value of the home annually for maintenance, repairs, upgrades, etc. every year on average, so I will spend another $120,000 on that over 30 years (which I think is probably low given the cost of a new roof or siding). So now I've paid at least $720k for a house that I can expect to be worth about $600k in 30 years if I get average property value increases. By any other investment standards, I've lost money on my investment. But I need a place to live, and ending up with $600k in value in my home isn't too shabby either.

Which isn't to say it's not the right decision for a lot of other reasons. You'll probably come out ahead buying over renting and investing the difference in the stock market (which hardly anyone would do anyway) unless rentals are really cheap in your area or you plan on moving a lot. But I'm hesitant to say a home is a good investment. It's necessary to have a place to live and buying can be the better option, but it's not for everyone.

My math or some of the assumptions may be off by a bit, but the point remains. You'll likely get less out of your house than you put in it over the long term.

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Re: The Benefits of Home Ownership?
« Reply #180 on: January 29, 2018, 10:04:22 AM »
unless rentals are really cheap in your area or you plan on moving a lot

This pretty much nails it for me.  Renting near me is not cheap at all, you will pay more and get less than my house.  I know some paying the same rent per month (~2k) which is the cost of my mortage (interest and insurance included) and they get a small room in a crappy area, where as I have a house (my house is small, so not much more room than an apartment) with a backyard driveway and privacy.  It's kind of a no brainer in my area if you plan on sticking around for at least 5 years.

Online Chino

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Re: The Benefits of Home Ownership?
« Reply #181 on: January 29, 2018, 10:18:02 AM »
Really surprised to hear this - especially the financial thing.  Given the real estate market, owning vs renting is a no-brainer to me... especially since I now own my home.  No monthly payment, and I have a 6 figure asset after 20 years of paying.  If I had been renting, I'd have no asset and still be making monthly payments.  Considering my house has gone up in value by about 2.5x, it's a no-brainer.  As a long-term investment, there isn't much more of a sure thing than property (by-and-large)
Historically, real estate values pretty much match inflation, so while things are good now, they won't be forever. I'm paying 3.375% interest on a home that I can expect to gain about 3% a year on average in value over the next 30 years. Add in the maintenance costs, taxes, insurance, upgrades, etc, and it's easy to see why homes are not as great an investment as people want you to think they are.

On my ~$250k home, I will pay about $600k in mortgage, taxes, insurance, etc (not including annual increases in taxes and insurance which of course will happen). I will also put in about 1% of the value of the home annually for maintenance, repairs, upgrades, etc. every year on average, so I will spend another $120,000 on that over 30 years (which I think is probably low given the cost of a new roof or siding). So now I've paid at least $720k for a house that I can expect to be worth about $600k in 30 years if I get average property value increases. By any other investment standards, I've lost money on my investment. But I need a place to live, and ending up with $600k in value in my home isn't too shabby either.

Which isn't to say it's not the right decision for a lot of other reasons. You'll probably come out ahead buying over renting and investing the difference in the stock market (which hardly anyone would do anyway) unless rentals are really cheap in your area or you plan on moving a lot. But I'm hesitant to say a home is a good investment. It's necessary to have a place to live and buying can be the better option, but it's not for everyone.

My math or some of the assumptions may be off by a bit, but the point remains. You'll likely get less out of your house than you put in it over the long term.

The biggest benefit to having your own home vs renting is your ability to take out a home equity line of credit. My father did that for mine and my sister's college education. We paid him monthly as we would a bank, but we were only paying 3.25% interest on his money vs whatever the rate on the student loans were (I think it was around 7%). 

Offline Stadler

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Re: The Benefits of Home Ownership?
« Reply #182 on: January 29, 2018, 10:30:54 AM »
Really surprised to hear this - especially the financial thing.  Given the real estate market, owning vs renting is a no-brainer to me... especially since I now own my home.  No monthly payment, and I have a 6 figure asset after 20 years of paying.  If I had been renting, I'd have no asset and still be making monthly payments.  Considering my house has gone up in value by about 2.5x, it's a no-brainer.  As a long-term investment, there isn't much more of a sure thing than property (by-and-large)
Historically, real estate values pretty much match inflation, so while things are good now, they won't be forever. I'm paying 3.375% interest on a home that I can expect to gain about 3% a year on average in value over the next 30 years. Add in the maintenance costs, taxes, insurance, upgrades, etc, and it's easy to see why homes are not as great an investment as people want you to think they are.

On my ~$250k home, I will pay about $600k in mortgage, taxes, insurance, etc (not including annual increases in taxes and insurance which of course will happen). I will also put in about 1% of the value of the home annually for maintenance, repairs, upgrades, etc. every year on average, so I will spend another $120,000 on that over 30 years (which I think is probably low given the cost of a new roof or siding). So now I've paid at least $720k for a house that I can expect to be worth about $600k in 30 years if I get average property value increases. By any other investment standards, I've lost money on my investment. But I need a place to live, and ending up with $600k in value in my home isn't too shabby either.

Which isn't to say it's not the right decision for a lot of other reasons. You'll probably come out ahead buying over renting and investing the difference in the stock market (which hardly anyone would do anyway) unless rentals are really cheap in your area or you plan on moving a lot. But I'm hesitant to say a home is a good investment. It's necessary to have a place to live and buying can be the better option, but it's not for everyone.

My math or some of the assumptions may be off by a bit, but the point remains. You'll likely get less out of your house than you put in it over the long term.

You've ignored several plusses, though.  You didn't mention the tax write-off for interest, taxes and insurance.  You didn't mention the value created by having the loan (in the form of a higher credit score - all things being equal) that generally gets you better interest rates elsewhere.   You are also playing a little fast and loose with the time value of money; I think you'd be surprised at how that evens out the investment over time.

I think these discussions also under sell the incremental "over-payment" that most leases have;  I own two houses, and the second was a rental for which I charged $2000 a month, for a house for which I paid about $1600 a month in mortgage.   Fine for me, but from the perspective of the renter, he/they were paying a 25% premium per square foot for their living space.   I can't look you in the eye and say I spent the same level of diligence procuring services that were passed on to the tenant as I did (or do) for services that I absorb (for example, at my own home).   I shovel my own snow, hell or high water, because I'm healthy and able and proud.   I pay a guy to plow the driveway at the rental, at the expense of the tenant.   

Online lordxizor

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Re: The Benefits of Home Ownership?
« Reply #183 on: January 29, 2018, 10:43:15 AM »
Yeah, I wasn't intending to catch every plus or minus or trying to be tremendously accurate with the math. And the time value of money is something that seems like an accounting trick to me, but I get it's valuable if you know the details of it. Just trying to point out that buying isn't the slam dunk investment we're frequently lead to believe it is.

And the tax write-off is frequently overblown since really it's only the interest we pay above the standard deduction that saves us any money, which for me is actually nothing since my interest is below the standard deduction. But it is a nice perk if you get above it.
« Last Edit: January 29, 2018, 10:48:25 AM by lordxizor »

Offline jingle.boy

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Re: The Benefits of Home Ownership?
« Reply #184 on: January 29, 2018, 10:57:48 AM »
I don't know anywhere or any situation where renting would be less expensive (monthly) than buying.  SOMEONE owns the house/property, and except in very rare circumstances, isn't in the renting game to lose money.  Monthly rent incorporates mortgage, insurance, property taxes, and variable expenses on the behalf of the landlord + income for the landlord.  Other than situations where the landlord has already paid off the mortgage, I can't see any situation where rent would be cheaper than owning.  Apartments aside, but it's not an apples-to-apples comparison.

The real rub in home ownership is coming up with the down-payment.  If banks were willing to lend 100% of the purchase price, why would anyone rent?
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Online lordxizor

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Re: The Benefits of Home Ownership?
« Reply #185 on: January 29, 2018, 11:09:45 AM »
The fees you pay up front when you buy and what you pay the realtor when you sell will quickly eat up any gains if you're living in the house for less than 5 years. So that's one reason. There are places in the country where it's difficult to sell a home, so that would be another reason if you don't want to be tied down.

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Re: The Benefits of Home Ownership?
« Reply #186 on: January 29, 2018, 11:11:09 AM »
The real rub in home ownership is coming up with the down-payment.  If banks were willing to lend 100% of the purchase price, why would anyone rent?

Yea, and that's what FHA loans are for if you haven't saved up the amount yet can show you have the income to make the monthly payments.  I had to do this route after I refinanced because I had to buy out my ex and therefore didn't have any cash to put into the refinance at the time (I practically emptied my bank account during this break up).  The FHA loan came at a cost of monthly mortgage insurance, but even that added it's still cheaper than a rental.

Online Chino

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Re: The Benefits of Home Ownership?
« Reply #187 on: January 29, 2018, 11:12:42 AM »
The real rub in home ownership is coming up with the down-payment.  If banks were willing to lend 100% of the purchase price, why would anyone rent?

Yea, and that's what FHA loans are for if you haven't saved up the amount yet can show you have the income to make the monthly payments.  I had to do this route after I refinanced because I had to buy out my ex and therefore didn't have any cash to put into the refinance at the time (I practically emptied my bank account during this break up).  The FHA loan came at a cost of monthly mortgage insurance, but even that added it's still cheaper than a rental.

I have to pay $157 a month in mortgage insurance (I only put 3.5% down on the house). Sucks.

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Re: The Benefits of Home Ownership?
« Reply #188 on: January 29, 2018, 11:15:38 AM »
We pay PMI too and it does suck. We made a calculated decision to buy 3 years ago rather than wait until we had 20 percent saved. Given that interest rates have gone up and home values have gone up a lot in that time it looks right now like we made the right decision. But I still hate paying that PMI.

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Re: The Benefits of Home Ownership?
« Reply #189 on: January 29, 2018, 11:25:50 AM »
We bought our PMI out for $4800 when we first financed. Not a good idea if you're planning to move within 5-7 years but we knew we'd be here for some time so it was worth it. We had some extra savings and took a calculated risk. 'Saved' us $140 a month on our mortgage bill.
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Re: The Benefits of Home Ownership?
« Reply #190 on: January 29, 2018, 11:27:17 AM »
We bought our PMI out for $4800 when we first financed. Not a good idea if you're planning to move within 5-7 years but we knew we'd be here for some time so it was worth it. We had some extra savings and took a calculated risk. 'Saved' us $140 a month on our mortgage bill.
They never mentioned that as an option when we bought. I would have considered it.

Online Chino

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Re: The Benefits of Home Ownership?
« Reply #191 on: January 29, 2018, 11:36:02 AM »
We bought our PMI out for $4800 when we first financed. Not a good idea if you're planning to move within 5-7 years but we knew we'd be here for some time so it was worth it. We had some extra savings and took a calculated risk. 'Saved' us $140 a month on our mortgage bill.

Why would it have been a bad idea if you were to move within 5-7 years ?

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Re: The Benefits of Home Ownership?
« Reply #192 on: January 29, 2018, 11:42:56 AM »
Closing costs and PMI costs add up to eat any value you might have earned I guess, maybe even eats into it.  I was told not to do an FHA loan if you plan on moving in 5 years.  I live closer to the house I grew up in than anyone else in my family, staying here for the long term is an easy decision for me.  I absolutely hate the moving process too, I could honestly see myself living in my small house till I die.

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Re: The Benefits of Home Ownership?
« Reply #193 on: January 29, 2018, 11:50:59 AM »
Ok guys... help this Canuck(lehead).  What is PMI and FHA?
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Online Chino

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Re: The Benefits of Home Ownership?
« Reply #194 on: January 29, 2018, 11:53:27 AM »
Closing costs and PMI costs add up to eat any value you might have earned I guess, maybe even eats into it.  I was told not to do an FHA loan if you plan on moving in 5 years.  I live closer to the house I grew up in than anyone else in my family, staying here for the long term is an easy decision for me.  I absolutely hate the moving process too, I could honestly see myself living in my small house till I die.

I have no problem with a small house, at all. That might change when kids enter the mix. The things I do care about though are the size of my yard (It's been a dream of mine to have a private RC track) and a basement with enough open space to have a nice woodshop. Minus the lot I'm on, I think my house is a perfect size. 1800 square feet with 2 full baths, a walk in attic, and a basement that's divided up into 4 different rooms (1 rec, 1 laundry, 2 storage). It's got a screened/glassed in porch and a kitchen that's full of high end appliances with gas and a range that vents outside (came with the house). I can't ask for much else. If I could pick up my house and dump it on another plot of land, I'd do it in a heartbeat.

That's with V living with me though. If it was just me, I'd be cool with like 1000 square feet.
« Last Edit: January 29, 2018, 12:04:14 PM by Chino »

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Re: The Benefits of Home Ownership?
« Reply #195 on: January 29, 2018, 11:56:38 AM »
PMI is a penalty you pay for not having a % as a down payment when buying a house.  I put down $11,000 when I bought my house, I needed 20% to not get charged the PMI which was $20,000 so i had to pay this tax.  It's bullshit that they get to do this but they do.  My PMI is up in 6 months and I will have an extra $81.00 a month in out pockets.
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Re: The Benefits of Home Ownership?
« Reply #196 on: January 29, 2018, 12:03:44 PM »
Ok guys... help this Canuck(lehead).  What is PMI and FHA?

Like King said - it's an insurance policy that the bank takes out if you don't put down a high enough percentage when you buy a house.  Should you fail to repay the loan (foreclose), the bank is paid off.  The premium for the insurance is passed off onto the home buyer.  So you're paying a monthly premium for insurance that does not pay out to you at all.  It's total bullshit.

I paid PMI mine for five years, then refinanced once we paid down our principal enough and built up some equity.  We received a lower interest rate and the bank eliminated the $91 PMI premium.

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Re: The Benefits of Home Ownership?
« Reply #197 on: January 29, 2018, 12:05:00 PM »
PMI is a penalty you pay for not having a % as a down payment when buying a house.  I put down $11,000 when I bought my house, I needed 20% to not get charged the PMI which was $20,000 so i had to pay this tax.  It's bullshit that they get to do this but they do.  My PMI is up in 6 months and I will have an extra $81.00 a month in out pockets.

I'm not sure I agree with you on the bullshit part of this.  The PMI is not a tax, it's insurance from the lender that we pay so they feel comfortable giving a loan of money that we, at that point, showed we are not able to pay right then.  I think it's a fair way to get people to buy houses who otherwise would not have been able to.  LIke you said, it goes away once you get to 20%.  I'd be pissed if they kept it throughout the life of the loan.  I got another couple years before I reach that point, then $150 off my tab each month.

And Chino, I hear ya about the family part.   As a single guy (my brother lives with me) I have no issue with the small house that requires small maintenance.  I think I could only have one kid in this house before I'd want to move (its only 2 bedroom and 1.5 bath).  I just think it's more like I have zero kids than I have 2 kids hence why I can realistically see myself in the same spot for the remainder of my life.  I do have nice space in my basement though.  Honestly have put serious thought into building my laundry room into a studio for gaming and live streaming (aka going the full green screen and lighting route).  It's nice to have these options.

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Re: The Benefits of Home Ownership?
« Reply #198 on: January 29, 2018, 12:07:37 PM »
PMI is a penalty you pay for not having a % as a down payment when buying a house.  I put down $11,000 when I bought my house, I needed 20% to not get charged the PMI which was $20,000 so i had to pay this tax.  It's bullshit that they get to do this but they do.  My PMI is up in 6 months and I will have an extra $81.00 a month in out pockets.

I'm not sure I agree with you on the bullshit part of this.  The PMI is not a tax, it's insurance from the lender that we pay so they feel comfortable giving a loan of money that we, at that point, showed we are not able to pay right then.  I think it's a fair way to get people to buy houses who otherwise would not have been able to.  LIke you said, it goes away once you get to 20%.  I'd be pissed if they kept it throughout the life of the loan.  I got another couple years before I reach that point, then $150 off my tab each month.

And Chino, I hear ya about the family part.   As a single guy (my brother lives with me) I have no issue with the small house that requires small maintenance.  I think I could only have one kid in this house before I'd want to move (its only 2 bedroom and 1.5 bath).  I just think it's more like I have zero kids than I have 2 kids hence why I can realistically see myself in the same spot for the remainder of my life. I do have nice space in my basement though.  Honestly have put serious thought into building my laundry room into a studio for gaming and live streaming (aka going the full green screen and lighting route).  It's nice to have these options.

That to me is one of the main perks in buying a house vs renting. Want to build a custom studio in your house? Go for it. Want to grow a shitload of lettuce? Have at it. Want to put 100 holes in the walls? Knock yourself out.

Offline Stadler

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Re: The Benefits of Home Ownership?
« Reply #199 on: January 29, 2018, 12:12:18 PM »
We bought our PMI out for $4800 when we first financed. Not a good idea if you're planning to move within 5-7 years but we knew we'd be here for some time so it was worth it. We had some extra savings and took a calculated risk. 'Saved' us $140 a month on our mortgage bill.

Why would it have been a bad idea if you were to move within 5-7 years ?

That cash - that $4800 - operates essentially as an additional deposit at that point, whereas the PMI is for all intents and purposes "amortized" across the life of the loan (with FHA, it does NOT drop off automatically when the loan to value ration exceeds 80%, like with other loans).   

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Re: The Benefits of Home Ownership?
« Reply #200 on: January 29, 2018, 12:14:59 PM »
PMI is a penalty you pay for not having a % as a down payment when buying a house.  I put down $11,000 when I bought my house, I needed 20% to not get charged the PMI which was $20,000 so i had to pay this tax.  It's bullshit that they get to do this but they do.  My PMI is up in 6 months and I will have an extra $81.00 a month in out pockets.

I'm not sure I agree with you on the bullshit part of this.  The PMI is not a tax, it's insurance from the lender that we pay so they feel comfortable giving a loan of money that we, at that point, showed we are not able to pay right then.  I think it's a fair way to get people to buy houses who otherwise would not have been able to.  LIke you said, it goes away once you get to 20%.  I'd be pissed if they kept it throughout the life of the loan.  I got another couple years before I reach that point, then $150 off my tab each month.

And Chino, I hear ya about the family part.   As a single guy (my brother lives with me) I have no issue with the small house that requires small maintenance.  I think I could only have one kid in this house before I'd want to move (its only 2 bedroom and 1.5 bath).  I just think it's more like I have zero kids than I have 2 kids hence why I can realistically see myself in the same spot for the remainder of my life. I do have nice space in my basement though.  Honestly have put serious thought into building my laundry room into a studio for gaming and live streaming (aka going the full green screen and lighting route).  It's nice to have these options.

That to me is one of the main perks in buying a house vs renting. Want to build a custom studio in your house? Go for it. Want to grow a shitload of lettuce? Have at it. Want to put 100 holes in the walls? Knock yourself out.

I've lived in rentals where I couldn't even paint the walls if I wanted to.   Fuck that.  I run wires (surround sound), I paint, I've done all kinds of shit in all the houses I've lived in.   

Offline Stadler

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Re: The Benefits of Home Ownership?
« Reply #201 on: January 29, 2018, 12:18:57 PM »
Ok guys... help this Canuck(lehead).  What is PMI and FHA?

PMI is "private mortgage insurance" and like Cram said, it's not a penalty (though it has the perception of penalizing those that can't put down more than 20% in a deposit), but an insurance policy to protect the lender from foreclosure when the loan value is closer to the home value than 20%.   

FHA is the Federal Housing Authority, technically, but in the context of a "FHA loan" it's a loan that is backed, in part, by the FHA, so the lender assumes less risk and therefore can (presumably) give a better deal to the borrower.   It's basically a vehicle to get more people into homes they own.  I have an FHA loan, actually, and do pay PMI.   I will at some point refinance, but the numbers don't quite work for me at this point.   

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Re: The Benefits of Home Ownership?
« Reply #202 on: January 29, 2018, 12:24:45 PM »
I figured that's what PMI was, but just wanted to be sure.  We have the same up here, from the gov't run CMHC (Canada Mortgage and Housing Corp).  I'm sure they do other shit, but no one seems to really know or care what.  Basically the same rules.  It's been so long since I had to pay for that, I forget if it was embedded in to the mortgage payment or not.

FHA.. pretty sure we have no such equivalent as it relates to loans/mortgages.
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Re: The Benefits of Home Ownership?
« Reply #203 on: January 29, 2018, 12:26:03 PM »
I'm getting pretty close to 20% equity and would love to refinance to get rid of the PMI, but unfortunately interest rates have gone up enough that I'm not sure it will ever be worth it to refinance since the increased interest will offset the PMI savings. I'll look into it more in a year or so when I for sure have 20% equity. Interest rates were so damn low a few years ago that I may be stuck with PMI for quite a while.

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Re: The Benefits of Home Ownership?
« Reply #204 on: January 29, 2018, 12:28:20 PM »
I'm getting pretty close to 20% equity and would love to refinance to get rid of the PMI, but unfortunately interest rates have gone up enough that I'm not sure it will ever be worth it to refinance since the increased interest will offset the PMI savings. I'll look into it more in a year or so when I for sure have 20% equity. Interest rates were so damn low a few years ago that I may be stuck with PMI for quite a while.

This is my fear as well. I managed to get a 3.5% interest rate. Who knows when they'll be that low again.

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Re: The Benefits of Home Ownership?
« Reply #205 on: January 29, 2018, 12:35:11 PM »
This is my fear as well. I managed to get a 3.5% interest rate. Who knows when they'll be that low again.

After the next global financial meltdown?
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Re: The Benefits of Home Ownership?
« Reply #206 on: January 29, 2018, 12:37:39 PM »
We bought our PMI out for $4800 when we first financed. Not a good idea if you're planning to move within 5-7 years but we knew we'd be here for some time so it was worth it. We had some extra savings and took a calculated risk. 'Saved' us $140 a month on our mortgage bill.

Why would it have been a bad idea if you were to move within 5-7 years ?

Typically (depending on your payment) it takes 5-7 years to reach that 20% equity in your home when you can then cancel PMI. It's usually when you get to that 80% of the original appraised value when you don't need to pay PMI. 

We chose to pay that off up front banking on the fact we wouldn't move in that time frame you typically pay it down. If we do (we've been there 4 years now) we basically would have been out that money by moving/getting a new loan. It made sense for us because we weren't/aren't planning to move AND we were fortunate enough to have the $$ to pay it off.



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Re: The Benefits of Home Ownership?
« Reply #207 on: January 29, 2018, 12:38:53 PM »
I'm getting pretty close to 20% equity and would love to refinance to get rid of the PMI, but unfortunately interest rates have gone up enough that I'm not sure it will ever be worth it to refinance since the increased interest will offset the PMI savings. I'll look into it more in a year or so when I for sure have 20% equity. Interest rates were so damn low a few years ago that I may be stuck with PMI for quite a while.

This is my fear as well. I managed to get a 3.5% interest rate. Who knows when they'll be that low again.

And you can write off both interest and PMI, so there's no benefit to be had there.

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Re: The Benefits of Home Ownership?
« Reply #208 on: January 29, 2018, 12:47:51 PM »
PMI is a penalty you pay for not having a % as a down payment when buying a house.  I put down $11,000 when I bought my house, I needed 20% to not get charged the PMI which was $20,000 so i had to pay this tax.  It's bullshit that they get to do this but they do.  My PMI is up in 6 months and I will have an extra $81.00 a month in out pockets.

I'm not sure I agree with you on the bullshit part of this.  The PMI is not a tax, it's insurance from the lender that we pay so they feel comfortable giving a loan of money that we, at that point, showed we are not able to pay right then.  I think it's a fair way to get people to buy houses who otherwise would not have been able to.  LIke you said, it goes away once you get to 20%.  I'd be pissed if they kept it throughout the life of the loan.  I got another couple years before I reach that point, then $150 off my tab each month.

And Chino, I hear ya about the family part.   As a single guy (my brother lives with me) I have no issue with the small house that requires small maintenance.  I think I could only have one kid in this house before I'd want to move (its only 2 bedroom and 1.5 bath).  I just think it's more like I have zero kids than I have 2 kids hence why I can realistically see myself in the same spot for the remainder of my life.  I do have nice space in my basement though.  Honestly have put serious thought into building my laundry room into a studio for gaming and live streaming (aka going the full green screen and lighting route).  It's nice to have these options.

Tell me how many people have 20% to get a house for 1st time buyers?  It's another revenue stream for banks to make more money.
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Re: The Benefits of Home Ownership?
« Reply #209 on: January 29, 2018, 12:51:04 PM »
Tell me how many people have 20% to get a house for 1st time buyers?  It's another revenue stream for banks to make more money.

I agree. Seems a bit steep and it's just another way for big money to hammer us. I get they need 'some' protection.....that protection should be them not lending the $$ or just charge the higher risk loans a higher interest rate. Nailing us to the tune of $100-$180 a month extra just because they can is BS.
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