Dear folks who wish you owned your own home

[vraiblonde]

One point to offer to the rent payment vs. mortgage payment point you make is the mortgage payment is not all there is to home ownership. This is sometimes presented to the prospective buyers as a principal and interest payment only. The property tax and homeowners insurance numbers are left out of the equation.

Typically you get a number, PITI. THAT is the number you work with, not merely the principle and interest. Both times I have purchased a home, that is the number the mortgage people gave me, then pre-approved me for a certain amount based on the monthly PITI.

It's pretty simple to run the numbers and compare it to your income, what you're currently paying for rent, what you can afford to pay, etc. If you currently pay $1000/mo for rent and are strapped, you cannot afford a $1500/mo mortgage. Simple.

Again, if you read the sob stories about people losing their homes, you'll find a lot of A) investors; and B) people who felt the need to buy new cars, furniture, trips, etc, in addition to their new home. They could have afforded their mortgage just fine until they racked up $20k in credit card debt.

Like this one family, and I think the link is actually in this thread somewhere. They're whining about foreclosure while their children are going to some fancy private school, they drive around in luxury automobiles, and are doing all their grocery shopping at the Whole Foods. This is not a family who over-bought their home - they are overspending on other things.

 

[Two-er]

If Two-er thinks anyone is going to believe he made 61% in the market, he's more delusional than I already had him pegged as being. He's also in fantasy land thinking rents are much cheaper than mortgages. Then again he was unable to answer my earlier questions when he was posting from his ass so I see what we're dealing with here, a delusional schizo living in la la land.

Who let Bajama Boy out of his bubble? Put your Bajamas on and get back in your bubble.

 

[Baja28]

The property tax and homeowners insurance numbers are left out of the equation.

You're not a stupid man. Do you for one second believe that the landlords property taxes and insurance are not built into your monthly rent??

In addition if the furnace breaks in a rental it is a phone call to a landlord. If a furance breaks in your owned home it is on the owner.

I just replaced my entire heating and cooling system with a top of the line Rheem 16 seer system for $5,200.00. Since my home was paid for that equated to 4 months of my prior mortgage. Guess what I did with the other $10,400.00??

Again, we are not that far apart on this. I just listed the criteria that I know will work.

I have actually managed my finances based on much of the advice you've posted and it works very well. Just be sure to include all the facts.

 

[Baja28]

Who let Bajama Boy out of his bubble? Put your Bajamas on and get back in your bubble.

Case in point.

 

[vraiblonde]

You're not a stupid man. Do you for one second believe that the landlords property taxes and insurance are not built into your monthly rent??

I think he was talking about your mortgage number, as in the financial people give you a number that is PI only, then you get a nasty surprise when they add in the TI. I have not found this to be the case in my home buying situations. I was always given the PITI number as a monthly payment.

Also, I don't know where people are coming up with these crazy lenders and RE agents. Both times I've bought a house, the lender and the agent were very realistic and honest with me on what I could afford, and didn't try to talk me into going higher. In fact, the first time my ex and I bought, when we were in our mid-20s, our agent was Lorrie Garner from O'Brien, and she actually tried to talk us down, even though we were pre-approved for more. Then she found us a perfect little house that we could easily afford, and still have some left over for playing around with.

So I don't know where people are finding all these predators....

 

[Baja28]

I think he was talking about your mortgage number, as in the financial people give you a number that is PI only, then you get a nasty surprise when they add in the TI. I have not found this to be the case in my home buying situations. I was always given the PITI number as a monthly payment.

Also, I don't know where people are coming up with these crazy lenders and RE agents. Both times I've bought a house, the lender and the agent were very realistic and honest with me on what I could afford, and didn't try to talk me into going higher. In fact, the first time my ex and I bought, when we were in our mid-20s, our agent was Lorrie Garner from O'Brien, and she actually tried to talk us down, even though we were pre-approved for more. Then she found us a perfect little house that we could easily afford, and still have some left over for playing around with.

So I don't know where people are finding all these predators....

Gotcha and agree. I've never known anything but PITI and they were always automatically deducted and paid by my lender. In fact, I'm pretty sure they are shown on the Truth in Lending statement you're given showing you what your closing and mortgage costs will be.

 

[Bann]

February 11th was my 1 year anniversary of being a homeowner.



(2nd time, but first time on my own)

 

[DallasRed]

I think that if you folks want to have someone else control your living environment, tell you what pets you can and can't have, tell you what repairs will and will not be made, what plants will and will not be put in your yard, what color your walls must be, how many people you can have over to your house, etc...

...keep renting. :shrug:

PMW is hyper-conservative when it comes to finances, but people buy houses all the time without the strict criteria he lays down, and it's just fine. More people kept their homes than lost them over the last few years. And most of the people who lost their home were on some crap mortgage that they couldn't afford, and should have known better, or they were investors.

Typically you're going to pay almost as much for rent as you would for a house payment, so why keep paying a landlord??

I'm not in a typical situation...I am a home owner and I rent. My rent is 1K more than my house note each month...Go figure. But at the same time my renter pays more on rent than I pay the bank : )

 

[Baja28]

February 11th was my 1 year anniversary of being a homeowner.



(2nd time, but first time on my own)

Good for you!! When it's paid off and the renters are still writing that rent check, you can have the last laugh!

 

[Baja28]

I'm not in a typical situation...I am a home owner and I rent. My rent is 1K more than my house note each month...Go figure. But at the same time my renter pays more on rent than I pay the bank : )

And when your mortgage is paid off, you'll OWN that home and that rent check goes into your slush fund!

 

[vraiblonde]

I'm not in a typical situation...I am a home owner and I rent. My rent is 1K more than my house note each month...Go figure. But at the same time my renter pays more on rent than I pay the bank : )

Why do you not live in your house?

 

[DallasRed]

Why do you not live in your house?

Because the military moved us here : )

 

[vraiblonde]

Because the military moved us here : )

OIC. I thought your house was here with you.

 

[vraiblonde]

You make this much, pay out this much- pretty simple.

Pretty simple. :shrug:

 

[kom526]

Pretty simple. :shrug:

Yeah, but you can't fix stupid.

 

[somdrenter]

Typically you're going to pay almost as much for rent as you would for a house payment, so why keep paying a landlord??

And that just ain’t so. During the bubble years, rentals were roughly ½ the cost of owning. Rents must be directly tied to local incomes. There were no toxic mortgages, loose lending or liar loans to prop up the rental market.

 

[somdrenter]

Be able to afford a 15 year fixed mortgage where the total monthly payment (PITI + HOA) does not exceed more than 25% of your household take home income.

So you’re saying 3.9x income is a little too much? That was the "norm" just a few years ago…

 

[Baja28]

And that just ain’t so. During the bubble years, rentals were roughly ½ the cost of owning. Rents must be directly tied to local incomes. There were no toxic mortgages, loose lending or liar loans to prop up the rental market.

You must be renting a 1 BR apt. Housing rentals were the same or higher than mortgages! I could easily rent my house for MORE than my mortgage payment.

 

[vraiblonde]

And that just ain’t so. During the bubble years, rentals were roughly ½ the cost of owning. Rents must be directly tied to local incomes. There were no toxic mortgages, loose lending or liar loans to prop up the rental market.

You're stuck on stupid.

If you do not want to buy a home and want to continue renting, go ahead. Nobody is stopping you. But this phobia you have about *others* buying a home is just too much. Even your user name points to your obsession.

 

[nomoney]

You must be renting a 1 BR apt. Housing rentals were the same or higher than mortgages! I could easily rent my house for MORE than my mortgage payment.

I'd hate to differ - but because of life circumstances I have rented for the last two years. Both places I have rented for well under what a mortgage for owning the same home would've cost me.

On that note I just became a home owner again in November so I'm not "all for" renting - I just wanted to put that out there.