Answer to Brad's Housing Question
Don Erickson
derick at shark.zeni.net
Fri Aug 2 02:28:15 CDT 2002
In article <086f01c239bf$8394f7b0$028210ac at ctspy> you write:
>The third problem is that we're led to believe from the time we're kids that
>our lives aren't complete unless we own a house. "You're throwing away
>money." they say. Well, my rent was $625 a month, my house payment is $759.
>So it's costing me more... "But you're building equity!"
>
>"Huh? All I see if $45 in equity a month for the first five years."
So, make double principle payments and you've got a fifteen year mortgage.
It's only $45 a month, slowly increasing.
>"But it's tax deductable."
>
>"But it's still out of pocket and It's only $900 more than the standard
>deduction I have now. And what about the $300,000 the house will actually
>cost me over the next 30 years?"
Your principle and interest won't go up (given a fixed mortgage). Want to
bet what your rent will do over the next thirty years?
>"But the house will appreciate over 30 years."
>
>"So you're telling me that in 30 years... IF by some mirriclemy house value
>has TRIPPLED... I MIGHT break even on this whole deal?"
After thirty years, you own a house. After thirty years of renting, you
own nothing. How is that breaking even? Take a look beyond your next
paycheck, you'll see that it is a no-brainer. Not necessarily this year,
but in five to ten you're way ahead.
>It's at this point the mortgage broker starts looking like a rat trapped in
>a cage... So why did I buy a house? One reason: A woman.
Well, I think that you should never finance anything that depreciates.
Pay cash or do without. That's why my cars are all ancient. But I do
generally agree with you about Johnson county real estate values.
Regards,
-Don, Missourian
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