Owning a house - good investment? My views.

[nbowa]

Owning a house is always been a push that the USA has done for decades. Part of it was to expand the market. In 2008, it was apparent that the banking industry was way over-leveraged; giving people loans for up to 105% of the value of their house. When the values came crashing down, so did people's net worth's, many of which were way underwater

Comments

[tigertoy]

If you get a 30 year mortgage you really should make extra payments against the principle early in the life of the loan. A small increase in the monthly payment for the first few years means you finish paying the loan off a lot sooner and pay a lot less interest.

It is easy to look at how much lower the mortgage payment is than rent and think that it's a lot cheaper to own, but you need to understand that houses are money sinks, they cost a heck of a lot more than just the mortgage payment.

If you're only looking at your house as an investment, it's a pretty risky one. But there are intangible benefits too -- if you own (really own, not a condo or a place with a homeowner's association) you can do what you want with your place without having to worry about what a landlord will tolerate. Finding a place you can rent with pets can be very hard for instance. Or let you host wild parties :-)

[nbowa]

OH yeah, I totally agree. I have a 15 year. It's easy to get in the mode of paying the bare minimum and making very little headway.

Houses always have costs. I'm surprised that an insurance underwriter hasn't had an "all inclusive" insurance for say 0.25% of your house value a month but guarantees things if they break. People like paying small amounts, not huge sums in one go.

[p_pardus]

Good write-up. I’m in Canada, so the same rules don’t apply in some cases like our mortgage interest aren’t tax deductible, or having 30-year fixed rate terms (I think our max is 5 years, then you’re up for renewal), so we actually have some more risk then you in that respect

[nbowa]

Thanks for the link! What a good read! :)

I feel like Australia is in the same boat, HOWEVER, the Chinese are dumping $$$$ into it, so it might be, as long as there are investors. Many people have no hopes or dreams of ever owning in Australia, so they spend on enjoyment, and assume rent is the way to go always.

[mortonfox]

Well, I must be one of the not many with $200K lying around. I saw the housing bubble crash in 2008/2009 and saw the opportunity to purchase a recently-renovated property with the cash I had on hand (since I had the foresight to sell stocks on the way up the boom), so that's how I did it. I've got to say though that home maintenance has been a huge learning opportunity. There were lots of simple fixes around the house that I had to research online and make a trip to Home Depot or Lowes to get the tools and supplies for. The maintenance cost eats into the savings of not paying rent, so I guess the real plus is if something goes wrong, I can deal with it myself right away instead of waiting for the landlord to do it.

[nbowa]

Wow, that sounds like you were on the ball and hopefully bought at a great time! :) Around here, we never had a crash, actually, due to the 2008 flood it kept property flat-lined.

100K?

[sabercat]

Wow, I don't think that even touches a lot here. 200k maybe. And some of us have 200k or so in the back cave of pride rock...just for those large savannah parties. :)
I thought you still lived with your "parents"!

Re: 100K?

[nbowa]

Oh I'm sure not. I can't imagine you get much with $200k, maybe a small room and a shower.

:P I could live with them. I mean, i'm old enough!