12-29-2012 06:41 PM
Here is my story:
My wife and I moved to western Maryland last year around this time. We pay $1300 a month for rent. My landloard paid over 240k for the townhouse we live in now. It's worth less than half of that now. I am sure he is loosing money every month even at our current rent. We found a new construction condo about 30 miles away from DC for 250k. Estimated mortgage payment will be 1040.00 a month, taxes are 360 a month, and HOA fees are 150 a month. So a little more than 300 what we pay now. Honestly, we won't even miss the extra the 300 as we blow that on crap per month. Since we've bought our condo, they have raised prices on the next building by 10,000.00. Everyone I have talked with in the area says the property value will double within the next 5 years. It's about a quarter mile from a very affluent community. We are buying in a brand new mixed use development which is the talk of the town right now. Although I am excited about the prospect of a 250K gain in 5 years. It just makes much more common sense to spend the extra 300 every month for something that I will own and do as I please.
12-30-2012 04:19 AM
I considered this before I (being perfectly sane) signed a contract for my new home. I wanted an RV. My dream was to fulltime in an RV. Love the idea of no property tax, no ties, freedom. Then I weighed in the costs of things like gasoline and RV dues, insurance, and nightly expenses (or long-term lots) and it wasn't as appealing anymore. Add in that I still have two teens at home and that sealed the deal for me. Even with my taxes, my payment in my brand new construction, upgraded home is less than what my rent was at a shabbier, less energy-efficient house. Buying a house in my area is not insane, it's a no-brainer right now. In 20 years, my kids will have a paid off home they can either live in or rent out as we are in an area abundant with vacation rental homes that will prove to be an income source for them.
12-31-2012 09:17 PM
As for myself, I live in a small community. Housing prices are really down. Way down. I don't believe any house has actually sold in the past 6 months (as per my appraisal) within a 5 mile radius of my purposed new (to me) home. There are very few rentals and the few that do exist are not in very good neighborhoods. Additionally, they are more expensive than buying a modest home. For me it will be about 100.00 per month cheaper than what I pay in rent. But its not just about the money in my case. I'm getting older now (56) and although I consider myself 18 with 35+ years of experience...moving isn't as easy as it once was. I like being able to decorate to suit my tastes. You can't find granite counter tops, stainless appliances, designer colors in rentals in my area. I like the idea of being able to plant flowers where I want. I like the idea of not having to renew a lease or if the landlord decides he wants his daughter and her new husband to live in his rental, me having to move. That actually happened to me a few years ago. He only gave me 30 days to find a new place and even though he gave me that months rent free and did return my deposit that didn't cover my moving expenses, not to mention the mental anguish I went through having to find some place. I have a 14 year old dog that I wont get rid of regardless and once he goes to heaven (all dogs do ya know ) I will eventually want another and I don't want to have to ask anyone's permission to have a pet. So even IF buying a home was going to cost me more than renting I believe I would still want to buy. If for no other reasons than to have a place I can call home FOREVER. Even though I am going with a USDA guaranteed loan which they only do at 30 year fixed rates, I believe I can double my payments and have it paid off in less than half that time and maybe, just maybe I will get to enjoy my retirement without the headaches and expense of renting. I can't imagine being 70 years old or older and told I have to move because someone's family member wants to live in my house.
01-02-2013 12:06 AM
I am a mortgage officer and real estate appraiser. I got hit hard in 2008, file for Chapter 13 and eventually lost my house. I've come to the conclusion that borrowing money to buy a house is not a good idea for me. When you look at how much you pay in interest over the life of the loan, you end up paying about 3x's the price of the house. That just makes terrible sense to me. I do intend to buy a house again, but I will save and pay cash for it. In the mean time, all I need is a large room to sleep, watch TV and work. I want my Debt to Income ratio at less than 25% per month. If you live in an RV, and rent free, how long would it take you to save $200,000? Could you do it in 5 years? Maybe you won't have equity through home ownership, but you will have equity through saving your money.