Quote:
Originally Posted by xxweekxx
its not that expensive.. my sister has a house in TN, cost her around $135k, her taxes are like $1k/yr, insurance a few hundred a yr.. maintenance $0 so far in a year.. its not like people make it out to be..
Heres my question: if say you work 9-5, and you can afford $1,500 on living.. are you better off getting a house and using that 1.5k for mortgage, or are you better off spending that $1.5k on rent..
This is a good scenario because thats where majority of americans fit in..
in my scenario, you'll see its a much much better idea to buy given those circumstances
at least from your $1.5k mortgage, a good chunk goes towards your house, so lets say $500 is interest, then the other $1000 is "your" money... while in the rental scenario, the $1.5k is going towards nothing, same thing as going into a club and buying 5 bottles and pissing it away.. you dont get anything in the long term
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Your sister is lucky, those are very very low taxes.
From the $1500 mortgage, "a good chunk" does not go towards your house. You'll be paying $50 on the principle for many many years. It takes awhile for that to stack up.
If the choice was $1500 on mortgage (and that includes taxes, insurance, maintenance, and long-term maintenance) versus $1500 in rent, sure, go for the $1500 homeownership if that's something you wish to spend time on. But that's pretty lopsided. In many many markets (including the one you are living in right now) renting is going to be quite a bit cheaper than owning.
When I was living in San Diego my rent was $1800 a month, add in the other basic utilities and we are talking around $2100. Now, that house was valued at the time around $400-450k. A mortgage on that would have been around $3000 a month. Property tax was 1.5% I believe, so that's another $200-250 a month. Add utilities and we're already up to $3500 a month and we still haven't figured in homeowners insurance, regular maintenance, and long-term maintenance. Granted the market has changed since I left, you can drop a few of the prices but you will still see it pretty large disparity.
That's an extra $1400 a month that you are spending on basic cost of living. That's $1400 a month you can invest in yourself (school to make more money, vacation, enjoy life, etc.), $1400 a month you can put in your 401(k) or IRA, or $1400 a month you can use to start your own business. Options are limitless.
I think you're ignoring a lot of important numbers, most people do. Like I said, if you are ready and want to buy a house... by all means, go for it. Just don't say it's a great "investment."