Question for those that own a home.

[Toad82]

I have been thinking a lot about buying a house. I was wondering if over all, is it is worth it. It seems that it would be a pain in the ass, but a great investment. I am only 25 and I don't know if I could handle owning a house. Any thoughts to think about would be appreciated. Thanks




RJ

[Herbwoman39]

Hubby and I have owned homes for 17 years. The worst part is the maintanence. But the great part is you have a place that is YOURS. No more throwing money down the toilet. With every payment you oWN something that, if you choose well, will continue to go up in value.

IMHO, it is worth it.

[chuck1124]

If you are planning to stay in one location for at least 5 years, a house is a great investment. Rent is an expense, but a house is an investment. Yes, maintenance on a home is a pain, but, your "neighbors" aren't just over your head, and, eventually, your can reclaim the money you have spent on maintenance as a house in a reasonable area will increase in value over time, while apartments decrease in value.

[Michael623]

I am a real estate appraiser. There are so many factors involved in buying a house. Regardless of what many tell you not everyone should purchase. On the other hand if your monthly payment is going to be less than what you pay in rent for a comparable place then you might consider it. Remember, you have additional cost in taxes and insurance and maintenance. Other factors are the economic stability of your area and that of your job. Make sure that you, as they say, give location lots of consideration. Also, functional utility of the house, i.e. bedrooms, etc. Condition of an older house is very important. Value is created by supply and demand and the availability of money. Watch interest rates and supply of houses and try and buy when it's a "buyers market" I hope this helps some!!!

Michael

[biwords]

IMHO, a lifetime of paying rent and not acquiring equity rarely makes sense -- unless your rent is so low that you can successfully invest the difference between what you pay in rent and what you'd be paying on your mortgage. Many of us don't have that degree of investment skill; I certainly don't.

[Michael623]

But, certainly at 25 one should be financially stable. Where is it written that single family residences always appreciate in value? It's a relatively safe investment, however, more than likely a lower return than most investments. Gawd, take a look at the amount of interest you pay over a 30 year period. Home ownership has always been and will continue to be an amenity purchase.

[elian]

It's a lot of responsibility - you are going to incur debt for most likely 30 years .. you can always pay it off sooner or probably sell it..but all of those things require a stable income. The first five years of the loan is practically all "interest upfront" payments so don't expect the amount of principal you actually owe on the house until your mortgage is paid off to go down quickly.

I fell into the same category - thought "Why should I throw money away renting?" - so I went back from "pretty much debt free" to "30 year mortgage and another car on credit"

I was a nervous wreck to start - even though the house was in pretty good shape - I was always concerned about even the smallest detail - I actually blamed myself for a lot things - it never really donned on me that the place was 60 years old - and that it wasn't my fault things were a little worn out.

You won't need that gym membership anymore, your new house comes with its own fitness program; be prepared to have to do things like get up on a ladder and caulk around the windows, trim tree branches too close to the roof, unclog gutters full of leaves - or be able to afford someone else who can do that sort of thing for you.

My one friend had a good piece of advice - he said "Well, you know sooner or later you're going to have to replace EVERYTHING"

The difference that finally calmed me down was a) I finally learned the difference between a leaking faucet and a leaking roof, b) I had finally saved up enough money so that if something REALLY BAD happened I could accomplish the repair and still not be strapped for cash and c) I hand dug a new drainage trench away from the house so that the crawl space wouldn't be damp anymore..and in the process I learned that you can a) whine about things and play victim or b) take control of your life and fix the problem.

The people who do mortgages for a living tell you that the industry "standard" is that you should pay 20% of the purchase price of the home as a down payment. Can you AFFORD that much? I didn't have 20% either and you can certainly pay less down payment but it's a good gauge to see if you are really fiscally ready to try such an undertaking.

So, if you REALLY want a piece of ground to steward and a home to call your own and you can afford the mortgage. maintenance, taxes and insurance then it might be right for you.

on the other hand

If you aren't sure about the future of your job, or you might want to relocate soon to another area, or you don't like to be tied down with a lot of responsibility and physical labor maybe an apartment is a better choice.

You could always try a mobile home - you get the worst of both worlds that way - get to pay rent on the land, live by a bunch of rules AND do the building maintenance. Did that for a while too, it was cheaper than an apartment and you got more space..it was a good primer - the difference there was that my trailer was a 1970 model worth $1500 total so if the whole thing fell to pieces it wasn't a very large concern in my mind.

The house mortgage is significantly more - the first time I accidentally damaged the drywall I was sick to my stomach (I've since learned that that "putting holes" is what walls are FOR in a house).

Sorry to ramble - to summarize - first three years = total hell because I just wasn't ready for the responsibility - but I'm getting used to it now - and it helps to have a house reasonably well constructed. I'm no expert by any means but I know that between 1940 and 1960 they actually used to build houses with REAL WOOD ..I actually burnt up a cordless screwdriver trying to mount a phone jack to the main beam of my house.

The clapboard and plastic things they build now aren't worth the "$250,000 to start" price tag IMHO..

[12voltman59]

You really cannot say in this market that real estate has turned out the be the "good investment" that is is generally touted as being--there are lots of people right now who are as they say in the car business, "upside down" with no equity and lots of money owed on the house and then we have this situation with so many folks who got "great mortgage deals" five years or so back who are down up against the wall because they have variable rate mortgages and their payment went from say $950 a month to $2,500 or more thanks to their rates now bumping up--there are also many of those who went for mortgages where they are paying nothing but interest for years before they even begin to touch the principle---

Before buying a house right now--I would find out what sort of clases they have in your area for first time home buyers and such----take one and if they offer investment type counseling in terms of looking at some of the financial factors others have listed and such---they can offer you good advice on the best way to proceed----just don't jump into buying a home without looking at all of the factors involved----there is much to consider and owning a home is not always the best path--especially at your age--you may want to wait a bit since at this point in your career---you are probably not quite settled and you are bound to do some relocating at least several times in the coming years----

[Toad82]

[QUOTE=elian]
The people who do mortgages for a living tell you that the industry "standard" is that you should pay 20% of the purchase price of the home as a down payment. Can you AFFORD that much? I didn't have 20% either and you can certainly pay less down payment but it's a good gauge to see if you are really fiscally ready to try such an undertaking.
QUOTE]

As of right now I am actually unemployed. With that said, at 25 I could, if I wanted buy a house out right. However I would like to help out my credit score and only pay part (about half or a third) of the cost of the house. I am planning, no matter what, to do a lot of research. I don't understand anything about anything when it comes to buying a house. I need to figure out about how taxes work and I would have to teach myself how to do maintenance.

I guess my problem is I am trying to figure out everything that happens after I sign the papers. Just because I can afford the house doesn't mean I can afford the other things that come with it that I don't know about yet. Since I have lived on my own I have always lived in apartments. I know that there are things that I have never had to pay for, but I don't know what hidden costs ther are. My only experience with loan officers or real estate agents have left me very untrusting. I have been warned about the extra bills that come with a house and the closing costs. If anyone could help me understand that and fill me in on the extra bills it would be appreciated. Thanks.

RJ

[DiamondDog]

personally I NEVER want to own a home and do all of the matinence and everything to it.

I do not consider a home to be a wise investment, especially in today's market/economy.

[darkeyes]

Buy a pad?? jeez no fear...2 stressful... will jus stay wer me am wiv me nice friendly landlord who dus wotever me asks of im an don mess about wiv excuses (not that ya mucky sods)...

[GalacticiaActual]

If you don't have a particular reason to rent, i.e. frequent relocation for work, etc., then why pay for someone elses property?
Buynig a house is an investment, and although it can be a 30 year commitment, it is considered "good" debt, and the interest is tax deductable. Just make sure that it is something that you can afford, with the best fixed interest rate available.

[meteast chick]

I honestly think renting is a waste of your money. Yes it's true you would no longer have water, etc that might be included with your rent now, and there is the maintenance, so as long as you can afford that then you're golden. I know you said you don't know if you could handle buying a house. Talk to a lender about current rates and if you qualify, what programs are out there for 1st time buyers (and there are many), etc. I know in my area HUD (Housing and Urban Development) will give you a prorated forgivable loan of $3000-$5000 for a home, for 5 years, prorated for every year. It's how we afforded our down payment for our first house. I now own my own home without the aid of someone else at the age of 29 and I don't regret it. Have you ever heard of CFD (Contract For Deed)? That might be something you'd want to look into. Basically the home would remain in the previous owners name, renting it to you for a year or two with the option to buy and if you bought then all of your previous payments would be deducted.

Okay, well good luck!
luv and kisses,
xoxoxoxoxoxo
meteast

[the mage]

To sum up.....

Owning a home is a financial gamble, which, well played, will make you money.

Renting is a 100% loss venture.......

[Michael623]

You buy a house for $100,000, in 30 years pay $300,00 for it and after that period it's worth $200,000, maybe. A good investment? Oh, but you get a tax deduction.

[darkeyes]

Don reckon its a loss venture...it puts roof ova me head wer me lives an thats fine wiv me.... don get me money back sure.. but wud pay 2 or 3 times wot me dus now 2 buy spesh if me don share... an that jus aint on.

Average price of house in this country almost 200,000 quid (400,000 dollars), average wages bout 400 quid a week. Buyin a hovel in this town can setya back 100 grand an me refuses 2 live in hovel. An me refuses 2 struggle payin out a bomb on a decent place wen me don havta..So me pays out a relative pittance for sumwer that is comfy an me luffs than go inta huge debt for a hovel jus 2 get started on the ladder??? No ta...

Its all wotya want..me happy, has a triff wee pad, rent is fair an even cheap, hav a triff landlord in a part of the city me likes...

So rentin 100% loss???...sorry not if ya has the rite place..an me dus for me... matta of choice.. made mine an it works...

[darkeyes]

You buy a house for $100,000, in 30 years pay $300,00 for it and after that period it's worth $200,000, maybe. A good investment? Oh, but you get a tax deduction.
Don think ya do here ne more Jags.... wos stopped a long time ago

[12voltman59]

The thing is with home ownership--even the "experts" in this area--are now saying that for some people-owning a home is not always best---you do need to consider all of the factors of your particular situation and make a decision based on those factors----I would say--look up one of those programs for young, first time potential homeowners---go to your bank, savings and loan or credit union--they themselves may offer such a program or take part in one with a local governmental developmental agency or perhaps local the community college---there are such programs in nearly every community of any size---they are worth the time you spend --many times they are free and if not-they don't cost too much-it is time and money well spent----

Check it out---you will get the answers to your many questions and even if you have no, little or damaged credit-----these programs can help with dealing with that as well---

[hudson9]

As of right now I am actually unemployed. With that said, at 25 I could, if I wanted buy a house out right. However I would like to help out my credit score and only pay part (about half or a third) of the cost of the house. I am planning, no matter what, to do a lot of research. I don't understand anything about anything when it comes to buying a house. I need to figure out about how taxes work and I would have to teach myself how to do maintenance.

RJ

The tax codes are set up to favor home ownership. Mortgage interest is deductable (rent is not!), and in the early years of a mortgage most of your payment is dedicated to the interest. Local real estate taxes are also deductible from your Federal income tax. If you can afford to put down 1/3 to 1/2, that means you will get more house for your monthly mortgage payment than if you were putting down only 10%. You should also look at getting a shorter-term mortgage in that case -- 20, or even 15 years rather than 30. This will lower the total interest you pay over the life of the mortgage, and increase your profit if/when you sell. (Imagine having NO mortage to pay when you're 40 or 45!!) Remember that a home is a long-term investment. The local housing market may go up or down over the short term, but over the long term it's an investment that's hard to beat.

Two notes, however:

1. Before you buy something, make sure you get an INDEPENDENT home inspection -- somebody YOU find and hire, NOT the real estate agent or even the bank (don't even ask the agent for a recommendation -- they represent the seller's interests, not yours).

2. If you really have enough cash that you COULD buy something outright, you should be talking to a financial advisor. Find a reputable independent one (again, I would not go to someone at the bank). Heck, you could even start by calling one of those radio call-in shows just for some general advice. But that's an amount of money that you want to be making informed decisions about -- tax codes, average returns, your lifestyle and situation and expectations, all that goes into the mix.

Good Luck!!

[Da Doctor]

the best i could suggest would be to buy a apartment complex. You could live in one and use the others to pay the mortgage. agree to lower the rent of one of your tenents rent slighty if he/she is handy.

[elian]

I like Voltman's idea of finding a first time buyer class - it sounds like you have a lot of basic questions - my local credit union offers those - as I am sure other banks do. I actually took a Real Estate elective as part of my degree - I understood about half of the course material because my finance background was a bit shaky. Taking a single class or course will by no means make you an expert on real estate but one of these free courses should be able to fill you in on the basics so you can get an idea.

I can't tell you for sure because at the time I was very interested in knowing about it but now the details are a bit fuzzy. Sometimes you pay closing, sometimes the seller will help..it depends on the contract you draft up.

If you elect to have an escrow account set up your monthly payments will be more, because some of the money is held in escrow for the life of the mortgage to pay for taxes and insurance when those are due. If you pay less than 20% down, you will be required to pay PMI (Private Mortgage Insurance) until you reach the 80% of value threshold.

A mortgage can be written to allow "pre-payment" of the principal or not. If there is a "pre-payment penalty" then if you try to pay it off earlier than the terms allow you will be charged an extra fee. The prepayment terms can be negotiated (well - ANYTHING can be negotiated if you REALLY want to do it).

One POINT = $2K of money (US) - you can "pay points" on your mortgage up front to lower the interest rate of the loan.

I'm not financial expert but try to stay away from an ARM or Jumbo loan -

ARM = the interest rate is adjusted on a periodic (usually yearly) basis usually in accordance with a particular index .. lately it has been going up - which is why a lot of people are foreclosing. Sellers using the Real Estate market as some sort of investment vehicle in the hopes of getting rich quick - and now with the "war" and all people don't "just have" $500K to plunk down on a "starter home" in their back pocket.

Jumbo = pay interest only - no principal is paid at all during the term of the loan - at the END of the term you are expected to just fork over the entire amount of the principal at once.

And the suggestion to try HUD or FHA is a good one - I was able to get a little help with an FHA loan - the government kicks in some assistance for first time home buyers depending on the program you may be eligible for.

[biwords]

By the by, Americans are extremely lucky in being able to deduct mortgage interest from their taxes....from this Canadian's perspective, that makes home ownership a no-brainer.