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Is buying a house worth it?

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fizzymk

Bluelighter
Joined
Dec 18, 2013
Messages
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I was going thru some old papers from when I was married, I had a large folder with mortgage paperwork from when we bought a house back in 2001. I got to looking at the interest rate, length of the note, and what the house was listed for initially and dont understand a few things, this concerns everyone that has ever bought house and had a mortgage.

The house we bought was listed for $ 94,000. we took out a 30 yr loan on it, our interest rate back then was around 6%. I remember our monthly payments were about $750...the strange thing happened, when I thought if we had stayed together and paid every month of that house for the entire 30 yrs, we would have paid $270,000...???!!!

I know banks dont make that kind of profit from financing houses, so Im curious how it got to this large of an amount?

Plus, my brother and his wife just bought a nice house, he said their monthly payments are about $1200. a month, I looked online to see what the selling price of the house was that they bought, it was $280,000, but again, when I added up their payments, they will end up paying a little over $432,000.

This doesnt make sense...if this is accurate, then people that pay off their houses are loosing their asses in the deal!! I know houses dont appreciate this much, even over 30 yrs!!

Can anyone explain this? I know I cant be the first person to recognize this difference.
 
that is correct, they make that much profit. But they take a big risk with big money. That total amount paid at year 30 is what you will pay if you paid for 30 years. Its simple interest. And most of that interest gets paid before the principle.
It has always been like that. Home loans are normally better than any other type of credit, you should see the end balance on a credit card that compounds the interest, its ridiculous.

They are not losing their asses, that what it costs for a financial institution to risk giving you several hundred thousand dollars AND the house and then trust you to pay them back for 30 YEARS. If you had to give someone 100K of your money that wouldnt get paid back for 30 years, whats that worth to you to give up 100k for 30 yrs?

Most people do not stay in the same house for that long so they never get to that. And thats what I tell people that freak when they see those huge numbers on their loan. Unless you stay for 30 years, forget that number because you will never pay it all.


94K at 6% should be like a 400-500 monthly payment A 150K loan at 6.5 is $850 a month so something doesnt jive with your old loan.

Its a little more complex but the simple math is $94000 X .06 (6 % = $5640 divided by 12 (Months) = $470 a month

That large ending balance is on your Loan docs, on the TIL (truth in Lending) So since you're just no learning about this means you signed all your loan docs unaware that you has a 270K payoff. Thats not good when you miss the largest number on the whole thing lol
 
Im curious why our monthly payment was so high now..?? I know for a fact the payment was about $750, know for a fact we bought the house at 94K, as well as the 6% rate...Im not sure how they got to this number! It was my first house, we went thru first time buyers program, I think but not sure anymore, we put about $1500. down.

Could it be PMI causing such a high payment?
 
that monthly payment may have included property taxes and homeowners insurance.

if you bought a house for $94,000 and it appreciated at 4 percent annually -- which google portrays as a reasonable number -- that's $304,879.36 after 30 years.
 
fizzymk said:
Im curious why our monthly payment was so high now..?? I know for a fact the payment was about $750, know for a fact we bought the house at 94K, as well as the 6% rate...Im not sure how they got to this number! It was my first house, we went thru first time buyers program, I think but not sure anymore, we put about $1500. down.

Could it be PMI causing such a high payment?
Click to expand...

You got your house for 94,000. That seems to have been quite a great deal. I imagine the market, how could you have made made by selling it. I think it´s worth buying your house you need to, but the interests on a long term loan are high. But again, it´s a life investment depending on how you look at it and how this is now serving you, so to speak.
 
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The banks don't loan you anything. They risk bugger all in handing over the money for your loan because that money never existd until you signed your name!

It's a scam, straight and simple. You give YOUR signature so they can create money, then they make you PAY the money to them as well, PLUS interest and penalties and all the rest. If you want to push it you can stop paying any loan and after trying to scare you into paying they will give it up, because nobody has been harmed by you not paying.

Download the book by Mary Elizabeth Croft and have a read - and there are plenty more sites full of information about the con game being run on the people of almost all countries.

And yes, I've used it to get my wife out of a debt in the States.
 
Yes, I know Journyman.
The thing is .. when you really need to have a house due to marriage, children, etc, you have to acquire your 'nest' through banking channels, or loans basically. Right?
Is it the same system in Australia? If you don´t mind me asking..
 
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fizzymk said:
This doesnt make sense...if this is accurate, then people that pay off their houses are loosing their asses in the deal!! I know houses dont appreciate this much, even over 30 yrs!!
Click to expand...

Have you actually looked at average house prices in 1985? Even allowing for inflation, unless you live in a war torn economy, you will still find yourself coming up in front with your investment over 30 years. Obviously it depends where you buy, and how much you spend maintaining the property. Also in many countries, residential homes are exempt from capital gains tax, meaning you will not pay tax when you eventually sell it. This is not the case for any other investment such as shares.

Plus you have to remember that you will still be paying rent throughout your live time, even if you don't own your house. The interest you save by not having a mortgage is usually spent covering this, so it's not like you actually save this money.
 
Yes. That´s why I think it´s worth buying a house/apartment as long as you know and study the best way to make your investment returns. Not necessarily financially speaking.
 
You really don't see it.

the bank gives you 10 dollars. You have to pay 10 dollars plus .60 back. That's if it is paid in one payment. You agree to make 10 payments of 1.00
Every payment contains .60, and the balance to equal 1.00 or .40. Sooo you only paid .40 on the loan.
Next payment is .58 plus .42. ect
The way a loan is structured the principle stays high so the interest is the majority of every payment.The banks then average it out to make it APPEAR as an equal monthly payment in an Amortization table.
Then you add all the extras like insc. ect... Those payments further reduce the principle you pay to just a few dollars per month

It's the second oldest trick in their book. Everyone simply bows their head, and lives with it
 
fizzymk said:
I was going thru some old papers from when I was married, I had a large folder with mortgage paperwork from when we bought a house back in 2001. I got to looking at the interest rate, length of the note, and what the house was listed for initially and dont understand a few things, this concerns everyone that has ever bought house and had a mortgage.

The house we bought was listed for $ 94,000. we took out a 30 yr loan on it, our interest rate back then was around 6%. I remember our monthly payments were about $750...the strange thing happened, when I thought if we had stayed together and paid every month of that house for the entire 30 yrs, we would have paid $270,000...???!!!

I know banks dont make that kind of profit from financing houses, so Im curious how it got to this large of an amount?

Plus, my brother and his wife just bought a nice house, he said their monthly payments are about $1200. a month, I looked online to see what the selling price of the house was that they bought, it was $280,000, but again, when I added up their payments, they will end up paying a little over $432,000.

This doesnt make sense...if this is accurate, then people that pay off their houses are loosing their asses in the deal!! I know houses dont appreciate this much, even over 30 yrs!!

Can anyone explain this? I know I cant be the first person to recognize this difference.
Click to expand...

financial interest. its said that the first ten years of mortgage repayments are simply you paying a mass dividend of your overall interest rate of your mortgage investment (locked and or fluctuating).

is it worth it? yes. id rather be a homeowner than a renter.

...kytnism...:|
 
Short sales are worth looking into as well. Jump onto someones mortgage who can't take it anymore for whatever reason.. If you find the right one, well then they've already paid most of it and you're just stepping in to kill it off for the benefit of not ruining their credit, but the real benefit comes with the fact that you scooped up real estate for ridiculously cheap.
 
Is it worth it? Depends on your goals and plans.

I'm really into gardening and would like to own fruit trees, I would like to start raising chickens and other poultry. I also want to build my own wooden smokehouse and a brick/clay oven. My wife want fully customized bathrooms and I want a fully customized kitchen at some point. None of that is happening unless we buy a house.

If you don't care about heavily customizing your space etc, then maybe it's not worth it for you.
 
Erikmen said:
Yes, I know Journyman.
The thing is .. when you really need to have a house due to marriage, children, etc, you have to acquire your 'nest' through banking channels, or loans basically. Right?
Is it the same system in Australia? If you don´t mind me asking..
Click to expand...
So here's a thought. Go get the bank loan, buy the house, then walk through the steps of making the bank demonstrate harm in any sense and walk away with a new house. :D It may seem like a lot of hassle but if you dot the i's and cross the t's it can be done.

You'd probably also come out with a lousy credit reference but hey, you've got the big thing in your life, right?

Another thing to check out is exactly what it means that they use capital letters for your name on the contracts. That has VERY specific meaning and if you know it, you can use it to advantage.

The con game only works because we don't know the rules, but there are plenty of people working them out and putting the info online for others.
 
just keep in mind two things:

1) when you finally own your home, it's not worth any money until you sell it.
2) when you sell the home you've been living in, you still need a roof over your head.

lots of boomers got thinking of their homes as grand retirement nest eggs only to reach the end of the mortgage and realize that the house they've been tirelessly sinking money into for the past thirty years only generated enough profit to buy them two years worth of retirement at their desired standard of living.

these days the common thing is for people to buy a house looking to rent out the basement to help offset the mortgage cost but they're not really thinking long-term either and there's this little thing called opportunity cost that rarely seems to enter people's thinking.

it always ends up coming down to how much you want a house. the more you want it, the easier it becomes to justify actions that don't make sense from purely a financial perspective. when you have money burning a hole in your pocket, it's hard to slow down and listen to reason.
 
Rent own or squat

If you own pay off your mortgage as fast as possible and renegotiate every five years with a variable rate (until the fed starts raising then lock)
If you rent then find somewhere you want to live for the next twenty years and stay. The landlord can only charge you a nominal increase every year (2%)
If you squat save your cash and thank your lucky ass.
 
Is buying a house worth it?
Click to expand...

this is like asking "how long is a piece of string?"

it depends on so many factors. what is your credit like / what kind of financing can you get? where is the house you want to buy located? can you afford to pay a 15 year mortgage instead of a 30 year? (30 year mortgages are an enormous rip off)

residential real estate can be a fantastic investment or a really stupid one, depending on those factors. this is a question better put to a financial adviser who knows the details of your finances and credit history.
 
^ yep
Journyman16 said:
So here's a thought. Go get the bank loan, buy the house, then walk through the steps of making the bank demonstrate harm in any sense and walk away with a new house. :D It may seem like a lot of hassle but if you dot the i's and cross the t's it can be done.

You'd probably also come out with a lousy credit reference but hey, you've got the big thing in your life, right?

Another thing to check out is exactly what it means that they use capital letters for your name on the contracts. That has VERY specific meaning and if you know it, you can use it to advantage.

The con game only works because we don't know the rules, but there are plenty of people working them out and putting the info online for others.
Click to expand...
it's not a con at all. nobody is forcing you to engage in it.

if you don't like it, take some responsibility for yourself and come up with $300,000 some other way...

alasdair
 
alasdairm said:
^ yepit's not a con at all. nobody is forcing you to engage in it.

if you don't like it, take some responsibility for yourself and come up with $300,000 some other way...

alasdair
Click to expand...

Perhaps CON was the wrong word.

Extortion seems to fill the bill much better.

Yes saving, and paying at least 50% of the sale value is the best option. Eliminating pre payment penalties, and making regular principal only payments are also wise choices.

Extortion... yes I like the ring of that much better.
 
^ only if you don't know the meaning of the word "extortion".

don't like it? stick it to the man and don't do it.

alasdair
 
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