Mortgage vs Rent

[Mr. Clean]

So I applied for a home loan and was "pre-approved".....but ran into some "problems" since I obtained my job through a staffing agency and the lender didn't like how I recieved income so now my pre-approval doesn't mean squat.

So anyways, something is seriously wrong when my rent is the same price as 2 mortgages.

Seriously, if I had bought a house....my monthly house payment would have been $500ish but rent for my apartment is $938.

Anyone else think this is screwed up? :duh:

[bassman]

Yeah, I remember being completely shocked when I found out how much cheaper it was to mortgage a home rather than rent. The monthly payments may be cheaper, but you also have the responsibility of maintenance and repair, which can be a bummer to some people, but I actually enjoy it.

I hope everything works out for you!

[AcesandEights]

I live in a horribly expensive market for home ownership, however eventually I do hope to own (probably 5 to 7 years away & not in the county I currently reside in). I explain it to my wife as a means to simply have money leftover from our housing expenses when we retire, as opposed to throwing it away with no return as one does with renting.

That said, be aware of the prevailing property taxes and what laws (if any) are on the books in your state to impede their growth. Property costs & taxes are simply monstrous in my area.

Estimated median house or condo value in 2009: $544,700 (it was $285,800 in 2000)
Westchester County: $544,700
New York State: $306,000
Lower value quartile - upper value quartile: $357,200 - $750,100

Mean price in 2009:

Detached houses: $776,277
Here: $776,277
State: $343,827

Townhouses or other attached units: $513,731
Here: $513,731
State: $484,742

Median real estate property taxes paid for housing units with mortgages in 2009: $9,414 (1.7%)
Median real estate property taxes paid for housing units with no mortgage in 2009: $8,111 (1.6%)

Good luck, but do your homework.

[Mr. Clean]

lol Remind me not to look for real estate in New York. :stunned:

We were looking at 1200ish sq ft homes(3 bed 2 bath) for around $80,000ish in Tulsa, OK.

I've heard that's why alot of people from California and New York save up their money and buy up properties in cheaper areas but I didn't know it was that bad expensive.

[Eyebiter]

If your playing 900+ a month rent, sounds like you should move.

[Mike70]

i have many times decided against buying a house and probably never will. renting has one big advantage over owning: if things like the hot water heater go out, the roof leaks, etc. the landlord has to fix that stuff. i really have no desire to deal with such things. i'll end up inheriting a rather nice house one day - that i plan on selling as fast as i can.

[bassman]

i have many times decided against buying a house and probably never will. renting has one big advantage over owning: if things like the hot water heater go out, the roof leaks, etc. the landlord has to fix that stuff. i really have no desire to deal with such things. i'll end up inheriting a rather nice house one day - that i plan on selling as fast as i can.

I certainly understand where you're coming from, but I really enjoy working on my house. Replacing hot water heaters, air units, etc is a pain in the ass because there's nothing to it but expense, but the actual repairing of things is fun and rewarding imo. It's a good feeling to build a wall, repair the roof, add on to the porch, etc and sit back with a beer and enjoy the fruits of my labor. To each his own of course, but I love it. Beat my chest and say "me fix home" kinda thing. :lol:

[Tricky]

i have many times decided against buying a house and probably never will. renting has one big advantage over owning: if things like the hot water heater go out, the roof leaks, etc. the landlord has to fix that stuff. i really have no desire to deal with such things. i'll end up inheriting a rather nice house one day - that i plan on selling as fast as i can.

Thats my take on it, for me I see a mortgage as just posh rent, too many people see it as some kind of money making scheme in the UK and there is a national obsession with owning your own house. Which you never actually own because the bank owns it until you make the last payment, which with prices as they are and most people being on fairly low incomes is probably when you've passed retirement, at which stage your life is nearing its end and you've wasted all your best years scrimping and saving and doing without just so you can be smug and say you own it (which you dont as already stated). The property obsessives look at me as if I'm mad when I say I'm not really interested in buying though and do their best to convince me that you aint shit unless your mortgaged up to the hilt :rolleyes: Maybe one day if I get myself into a really good job & I can comfortably afford to pay a mortgage, but not in my current situation where I can barely afford to get by on a months wages as it is...

[Mike70]

I certainly understand where you're coming from, but I really enjoy working on my house. Replacing hot water heaters, air units, etc is a pain in the ass because there's nothing to it but expense, but the actual repairing of things is fun and rewarding imo. It's a good feeling to build a wall, repair the roof, add on to the porch, etc and sit back with a beer and enjoy the fruits of my labor. To each his own of course, but I love it. Beat my chest and say "me fix home" kinda thing. :lol:

also, please remember that i am a complete and total egghead. i would probably blow myself to smithereens trying to dick around with a hot water heater.

i can do some basic work on cars (oil, belts, etc) but usually mechanical things and i don't mix very well.

[MissJacksonCA]

Renting is long term cheaper than a home mortgage and really (just my half a cent here) you're lucky you're not buying a home right now. As a renter you may be paying a bit more but you're not paying off something that's priced above reasonable market value. A lot of people who own homes right now are paying more for the home than they're worth long-term. Housing prices have been inflated and inflated so fast a few years ago (sub prime era) that they stll havent lowered to their 'real' prices. Its a buyers market but really ... I'd wait...think of a house like buying a car... once you drive it off the lot (or move in) its not worth what you paid... and yet, you're going to be paying

[Mr. Clean]

Renting is long term cheaper than a home mortgage and really (just my half a cent here) you're lucky you're not buying a home right now. As a renter you may be paying a bit more but you're not paying off something that's priced above reasonable market value. A lot of people who own homes right now are paying more for the home than they're worth long-term. Housing prices have been inflated and inflated so fast a few years ago (sub prime era) that they stll havent lowered to their 'real' prices. Its a buyers market but really ... I'd wait...think of a house like buying a car... once you drive it off the lot (or move in) its not worth what you paid... and yet, you're going to be paying

I see your statement applying to new cars and new homes but I think a 40 year old home isn't gonna lose much value this way. Even if it does, if I replaced the roof or did some other major repair, the value climbs a little or at least stays the same. It just all depends on what buyers want. For me, I was wanting something to call my own and if I wanted redo the bathroom....I could very well do so. Later on, I would probably rent it out but that's speaking 15 to 20 years later. :lol:

[AcesandEights]

I see your statement applying to new cars and new homes but I think a 40 year old home isn't gonna lose much value this way. Even if it does, if I replaced the roof or did some other major repair, the value climbs a little or at least stays the same. It just all depends on what buyers want. For me, I was wanting something to call my own and if I wanted redo the bathroom....I could very well do so. Later on, I would probably rent it out but that's speaking 15 to 20 years later. :lol:

I pretty much agree.

MissJackson, I know if you live in the tri-state area you've seen a lot of homes bought shortly prior to the housing crash lose value, however the overall value has skyrocketed over the long haul (I'm talking 20+ years) and the supposed depreciation in value has not effected other markets to the degree we've seen here in the metropolitan and greater metropolitan area (though it has happened). This is because we live in a hyper-inflated market.

Long story-short: I still believe real estate in general and homes in particular (as long as they are quality built, well located and maintained) are easily profitable over the long haul in a majority of markets.

[MissJacksonCA]

I'll give ya that... plus you're in OK and my experience in homes is TX, CA, FL, and NY based. The home I grew up in cost my parents 225k, they sold it for 550k today it recently sold for 1.5... the home was 30 years old but the home isn't worth 1.5 its worth maybe 550... but the market in California is so inflated especially in Corona Del Mar its riddick... my parents could buy into the housing market... I however... well unless I start gold digging probably will never see that in my future... kinda sad because wanting to own a home part of that whole American dream... hell even if I shared the professions of my family I still couldn't afford to... there's something wrong in the world when that's the case... or at least wrong in 92625

I relate... I'd love to tear apart some things in my apartment and do whatever I want to the place... its part of who we are... leaving our mark on where we are is inherent in us all at the base of it all...

[LouCipherr]

Renting = throwing your money into the toilet just to live somewhere. You get nothing out of it than a roof over your head. Well, you do get one other advantage: your landlord will fix all your issues with the place if anything goes wrong. That's the only benefit I can think of - and that's only. if you have a decent landord!

Owning/Mortgage = you own the place - it's yours, you get tax writeoffs/refunds on the interest you pay into the mortgage each year, anytime you need money you can borrow against the equity of your home.

One thing my father always drilled into my head is that when you own a home, you are always able to borrow money if you fall on hard times (ie: equity loan). When you rent, you're just throwing your money away for a roof over your head - but you spend all that money with zero to show for it.

It may be "technically" cheaper to rent a place, but it would be "smarter" and a better investment to own a place. Now is the time to buy considering the market and the prices are at rock-bottom. Matter of fact, for that exact reason, my wife and I have been poking around for a vacation home in the mountains not too far away. We're looking for an "investment" property (ie: a foreclosure which needs minimal $ to fix up, keep it for 5-10 years, then sell for a nice profit as the housing market "should" even out by then - then we'll go out and buy the really expensive log home on the side of a mountain that we've always dreamed about. :D)

Of course, this is just my opinion, I could be wrong, but I doubt you'd find an investor that would ever tell you renting is better than owning. ;)

[Tricky]

Owning/Mortgage = you own the place - it's yours,

Like I said though, you dont actually own it until you've made that final payment on it, anytime up until then the bank can seize it and everything in it if you fall on hard times & cant keep up those payments, theres been a lot of reposessions & people living in negative equity in the UK in the past few years. But I'm sure the property market and peoples attitudes towards it are very different between Britain and the US

[SymphonicX]

yeah I own a 170k debt on my home...until it's paid off, it's kinda the banks. Lou's right though in that it opens up the doors to many financial things and you can quite happily tell any bank manager "give me what I want, I'm a fuckin' home owner!!"

love owning my flat- it's been a major stress but it'll be worth it in the end, I hope. It's a minefield and you shouldn't own a house until you're ready. The market in the UK is so amazingly different frmo the US though - just looking at places like NY which seems to be only a rental city! SO thankful I've worked hard enoughto afford what I have, as soon as the market grows back again I'll be laughing. Currently my mortgage rate is 1.5% - minimal payments on my home are £500 a month...I've been doubling it for 3 years now.

[Publius]

Like I said though, you dont actually own it until you've made that final payment on it, anytime up until then the bank can seize it and everything in it if you fall on hard times & cant keep up those payments, theres been a lot of reposessions & people living in negative equity in the UK in the past few years. But I'm sure the property market and peoples attitudes towards it are very different between Britain and the US

I don't know what mortgages in the UK are like, but in the US the bank does not normally acquire a security interest in personal property in the house ("everything in it") unless it was something they loaned you money to buy and is mentioned in the loan documents. Also, while you certainly owe something until you make "that final payment," it's not fair to say that they effectively own the house itself, as though they can just seize it and leave you with nothing. They are only entitled to as much of the house as necessary to cover the outstanding balance of the loan. That may be all or almost all of the value of the house during the first several years of home ownership (especially if you buy at the top of a bubble or don't make a proper down payment), but you will have a substantial amount of equity in the house long before you've "made that final payment."

[Tricky]

until you make "that final payment," it's not fair to say that they effectively own the house itself, as though they can just seize it and leave you with nothing.

As far as I know they can in the UK, obviously there will be a legal process to go through before they can send in the bailiffs but you hear of it happening, there are also companies in the UK who specialise in buying peoples houses from them & then renting it back to them if they cant meet the mortgage payments. In these uncertain times with a huge financial & jobs crash looming within the next year, it would be very unwise of somebody like me to go down the route of trying to buy a house. Plus house prices in the UK are way, way too high for what the properties are actually worth :eek:

[AcesandEights]

As far as I know they can in the UK...

Man, if Prima Nocta and quartering redcoats in your homes wasn't bad enough as it is ;)