Rent Vs. Buy housing

ZyyzYzzy_sl said:

Seriously mortgage insurance at this point, to me, is bullshit. Banks should not over lend or offer more than a person can afford (they still do it). The amount of principal paid or amount down to forgo PMI should be reduced, as it is becoming more unfeasible for families to actually put that amount down. Shit is an outright scam at this point it seems like.

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That's because it absolutely is a scam. It's just a way for the banks to get even more money from you.

ZyyzYzzy_sl said:

Seriously mortgage insurance at this point, to me, is bullshit. Banks should not over lend or offer more than a person can afford (they still do it). The amount of principal paid or amount down to forgo PMI should be reduced, as it is becoming more unfeasible for families to actually put that amount down. Shit is an outright scam at this point it seems like.

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Then maybe they should just rent. There's nothing wrong with renting. If you can't save say even 10%, how will you have money to fix stuff when it breaks?

ZyyzYzzy_sl said:

Seriously mortgage insurance at this point, to me, is bullshit. Banks should not over lend or offer more than a person can afford (they still do it). The amount of principal paid or amount down to forgo PMI should be reduced, as it is becoming more unfeasible for families to actually put that amount down. Shit is an outright scam at this point it seems like.

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Not a homeowner, but wouldn't reducing the amount required to trigger PMI payments cause a commensurate increase in home prices as some families find out they have more "buying power"? The price of the home is irrelevant without taking into account the sum of the interest, insurance, taxes, etc., which is what determines what people can actually afford. Decreasing any one of the parts such as interest rates (past 30 years) or taxes (California) and you get an increase in prices.

Cutlery_sl said:

Probably because the shit that breaks isn't 10% of your house value, typically. There's a big difference between storing $25,000 away and replacing a toilet.

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What happens when the roof needs replacing? 3.5% down on FHA (the minimum) is $8750 on a $250k home. A new roof or a new AC system can cost almost that much.

Just to add. There is no private market for mortgages with people putting down 3.5%. That's why the government fills the gap. Also, I don't know how you can say that MI is a just there to help the banks make money. How do you think that the FHA pays for that program? They use the MI payments to help offset the people who barely put any money down when there are foreclosures. In 2012, the FHA had a $16.3 billion deficiency last year. Without MI, it would have been even worse. Much worse.

http://www.bloomberg.com/news/2012-1...2-deficit.html

Unidin_sl said:

Then maybe they should just rent. There's nothing wrong with renting. If you can't save say even 10%, how will you have money to fix stuff when it breaks?

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10% isnt so bad, but 20% is about 40k on the home we are getting. We have about 45k total in savings but I am not comfortable with our "oops, someone lost a job" fund being depleted especially while being responsible for two mortgages.

The problem is my wife wants a specific type of house (mid century modern) and this is the only one to come on market under 300k and even those usually sell same day/week they go on market. So,naturally , we are snatched this one up quickly.

I may look at how going 20% would affect the monthly. Would lose initial spending power but would potentially gain a bit of flexibility month to month. That is a tough call.

Cutlery_sl said:

Probably because the shit that breaks isn't 10% of your house value, typically. There's a big difference between storing $25,000 away and replacing a toilet.

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I wish 25K was anywhere near a down payment in the Northeast.

Unidin_sl said:

What happens when the roof needs replacing? 3.5% down on FHA (the minimum) is $8750 on a $250k home. A new roof or a new AC system can cost almost that much.

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I live in a town house. We have a heat pump. When I purchased the house (we paid $199k when the house initially went on the market for $250), our heat pump was pretty shot. 25 years old and in dire need of being replaced. I took another loan for $7800 to get a new system put in. We were quite happy with that decision.

Last September we decided to replace our roof. $3000 exactly for this little town house. I shopped around a LOT before finally finding this guy. Everyone else wanted upwards of 5-6k... pathetic.

Owning a house is awesome, but it's definitely costly.

Like I said earlier in the thread, you don't own the house. The house owns you.

ZyyzYzzy_sl said:

In my opinion housing prices are still out of hand at this point in time if you look at how rapidly prices have been increasing for decades versus wages and general cost of living. Also, I was more suggesting it because when you have banks that have gotten billions in tax payer's money to save them refusing to allow people to refinance, straight up foreclosing illegally, and still not properly handling mortgage backed securities, PMI as it stand now seems ridiculous.

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If you want to get really mad, read (TARP inspector general) Neil Barofsky's bookBailout

The greed isn't really isolated to bankers. In my mind, if they built houses now like they did in the 60's, they would be much more affordable. I grew up in a 1950's ranch house, 1050 square feet, 2 bedrooms and 1.5 bathrooms. The townhome I live in now is 1500 square feet, 2 bedrooms, and 2.5 bathrooms. Haven't noticed it so much in California, but in Oregon, where I lived last summer, they've been putting up shitty, densely-spaced, large houses everywhere. This is pretty typical of what I saw:https://www.google.com/maps?ll=45.52...,,0,-3.25&z=19these cheaply-built monstrosities are about 2.5k square feet and are going for about 50% more than what the modest ranch homes are half a mile away are, despite being on half the lot size or less.

Edit: changed the street view link

Cad_sl said:

What are you, 75?

Or are you a country bumpkin pissed off about having to live in the city?

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Some of us like a little breathing room. Which we have in the house we just bought. More work? Of course. But I just had a BBQ here last weekend and it was pretty awesome. Our garden is pretty awesome. I'm already clearing the space where we're going to build a fort for my son. When he gets older he'll have an actual backyard (and side yard, and small orchard, and large gravel driveway) to play around with. I loved that as a kid, he may very well too. I don't really get homes like you linked which have such a large front yard. I'd rather stick the house closer to the street and have a sweet ass back yard (which is what we have, large drivethrough driveway notwithstanding).

Mentioning the property tax thing is misleading. Get an expensive 3k sq ft house on a tiny lot and you'll be paying more than I will in my 1.4k house on a lot 4x your size. At least in California.