patrick.net

tatupu70 says

Poor gentle Terri. No, again you are correct. You didn’t imply anything in that post. You were just making an observation about renters in the middle of a thread about someone BUYING a house. How could anyone have mistakenly thought you were making a point about renting vs. owning? Again–our mistake.

Because I was specifically addressing suboink's earlier post where he/she repeatedly compared and contrasted renting and owning...

SubOink says

As if that has anything to do with buying vs renting.

SubOink says

When you pay 2300 in rent that you throw out the window every month then buying a house where you’re mortgage+ prop tax - tax deduction is around 2500ish for a much better house then why not?

SubOink says

When rents start adjusting with inflation and will go up, then my advice for those who are renting is “Make sure you have enough cash stashed away, Don’t loose your job”[emphasis added]

See?

terriDeaner says

Because I was specifically addressing suboink’s post where he/she repeatedly compared and contrasted renting and owning

Exactly. So why did you say this then?

terriDeaner says

C’mon now kids, take another look at my post and verify, for yourselves that I did not say anything (for or against) about the possibility of owners also renting to roomates to make ends meet

You commented on a post that compared renting vs. owning with an advantage that renters have. So, I felt it appropriate to remind you that owners have the exact same option.

tatupu70 says

It’s been about 2 years since I rented. Not sure why that’s relevant, but if you ask twice, then I’d better answer….

Thanks, just curious. Have you rented often?

tatupu70 says

No, renters who can’t pay the rent generally get evicted by their landlords. That’s the most common situation.

There are many different types of rental agreement (leases, month-to-month, etc.) with varied degrees of flexibility. There are also many different kinds of landlord out there with different degrees of flexibillity.

Consider these possibilities (no dilemma- many more exist): A long-term, responsible renter loses their job and can't pay rent to an understanding landlord who owns the rental property free-and-clear. The two may come to an agreement for reduced or deferred rent for a specified period of time. Or, if the landlord is a stiff and the renter is month-to-month, the renter may decide to move out and co-habitate with friends or family until they find a job.

And even if the renter irresponsibly breaks their lease and stops paying rent owed, the total of the renter's liability would most likely be FAR less than that of an over-leveraged owner who defaults on a hefty mortgage due to job loss.

terriDeaner says

Thanks, just curious. Have you rented often?

Pretty often. I always rent for at least 6 months after moving to a new place to get to know the area. And I've moved around quite a bit, so there's been a good share of renting. Also I rented all through the bubble years because it was so much cheaper.

terriDeaner says

SubOink says

It’s totally against the law. You didn’t know? You can only rent out a room when you rent. Landlords love that.

BTW when was the last time you two rented? You may be surprised, but there is more than one kind of rental agreement out there these days… as well as (shock) flexible landlords.

I have rented my whole life until a couple of months ago when we found a great house and bought it. I know all about renting my friend. One of the houses that we rented was an awesome house and just when we lived there for 1.5 years, totally settled, bought furniture etc - landlord needed to sell. We lived out our 2 year lease and had to get outta there. Broke our hearts. It sucked! (and the landlords were actually good, repaired things etc..) - was good while it lasted...

Another house we rented had a landlord that was so cheap, he just did the bare minimum of whats legally required. The list goes on...

I sure hope that I will never have to rent again.

terriDeaner says

SubOink says

When rents start adjusting with inflation and will go up, then my advice for those who are renting is “Make sure you have enough cash stashed away, Don’t loose your job”[emphasis added]

See?

See what? I was repeating what somebody else had posted...
terriDeaner says

Now I want you to listen closely: WHATEVER you do, No matter what else happens, make sure that you OR your partner DON’T LOSE YOUR JOBS. THAT would be financially irresponsible.

SEE?

SubOink says

I have rented my whole life until a couple of months ago when we found a great house and bought it. I know all about renting my friend.

And you know practically nothing about owning.

tatupu70 says

If you lose your job as a buyer or renter, you should have savings to cover you for some period of time. If you are unemployed for a long time, you are going to be in trouble whether you rent or own. Right now, you are probably better off as an owner actually–banks are taking 1+ year to foreclose. You have quite a while to find a new job and get back on your feet. You’d be evicted more quickly then you’d be foreclosed on…

You can’t go through life making decisions based on the chance you might lose your job. Have a rainy day fund, keep your skills up to date, and live your life.

You are missing the point. If someone has 50k saved up and they lose their jobs as a renter, they can cover their rental payments. If they put that into a house, then they have no buffer. Even if they are only putting 20k down, their buffer is only 60% of what it was when they were renting, and they lose it all when they stop paying their mortgage. Probability and risk. Don't pretend that it's the same renting versus owning. It's not.

SubOink says

Another house we rented had a landlord that was so cheap, he just did the bare minimum of whats legally required. The list goes on…

I sure hope that I will never have to rent again.

I'm sure that when your AC breaks, your roof needs replacing, and when your hot water tank bursts you'll be just as thankful that you are in the imaginarily inflated social echelon of "owner".

But you've owned for two months, so you must know all about that.

klarek says

You are missing the point. If someone has 50k saved up and they lose their jobs as a renter, they can cover their rental payments. If they put that into a house, then they have no buffer. Even if they are only putting 20k down, their buffer is only 60% of what it was when they were renting, and they lose it all when they stop paying their mortgage. Probability and risk. Don’t pretend that it’s the same renting versus owning. It’s not.

Like I said. You shouldn't buy until you have the down payment AND a buffer.

Yes, renting isn't the same as owning. Thanks for that pearl of wisdom...

klarek says

SubOink says

Another house we rented had a landlord that was so cheap, he just did the bare minimum of whats legally required. The list goes on…
I sure hope that I will never have to rent again.

I’m sure that when your AC breaks, your roof needs replacing, and when your hot water tank bursts you’ll be just as thankful that you are in the imaginarily inflated social echelon of “owner”.
But you’ve owned for two months, so you must know all about that.

Here you go. It may help you(SubO) understand what is coming. :)

http://patrick.net/?p=658038

bubblesitter says

Here you go. It may help you(SubO) understand what is coming.
http://patrick.net/?p=658038

lol--if you'll notice, soon he'll also own the house outright. Yes there is no MID, but there's also no mortgage. I think most people would make that trade.

bubblesitter says

Here you go. It may help you(SubO) understand what is coming.

http://patrick.net/?p=658038

By the time that my interest write off won't save me a lot of money, rents will be so much higher every month than my mortgage that I will still be better off. By the way, I am paying the same as I used to pay rent WITHOUT figuring in the deduction :)

So, I guess I won't find out what is coming because I look at the tax write off as a bonus. I did not count on it to make my payment. Currently, that "bonus" is around $650/month and I am putting it towards "principal only".

SubOink says

“principal only”.

Negative principle only!

bubblesitter says

SubOink says

“principal only”.

Negative principle only!

The house will be paid off in a few years. Nothing negative about that. The only thing that is negative is you and your gloom and doomer crowd :)

We probably won't be discussing this in 5 years from now because this forum will be gone along with the haters.

SubOink says

bubblesitter says

SubOink says

“principal only”.

Negative principle only!

The house will be paid off in a few years. Nothing negative about that. The only thing that is negative is you and your gloom and doomer crowd
We probably won’t be discussing this in 5 years from now because this forum will be gone along with the haters.

You still did not answer my question. What are you doing on this forum?

tatupu70 says

Like I said. You shouldn’t buy until you have the down payment AND a buffer.

Yes, renting isn’t the same as owning. Thanks for that pearl of wisdom…

Ok, define down payment and a buffer, please.

5%, 10%, 20%, 50% or even higher down payment?
And for the buffer, how much do you think is good amount? What percentage of home price, or money enough for how many months w/o income?

bubblesitter says

SubOink says

bubblesitter says

SubOink says

“principal only”.

Negative principle only!

The house will be paid off in a few years. Nothing negative about that. The only thing that is negative is you and your gloom and doomer crowd

We probably won’t be discussing this in 5 years from now because this forum will be gone along with the haters.

You still did not answer my question. What are you doing on this forum?

Just read the topic - Somebody bought a house. So did I.

I have been reading this forum for a long time, all thru my renting misery. But things have changed (in my area, my personal situation etc etc) and I am sharing it to provide "the other" side, that is lacking in this forum. Just click on my name and read some posts from 2009 or so, you'll see...I was just as annoyed as y'all. But prices have kept crashing and crashing and once they hit a level where rent = mortgage, I jumped in. In other words...I have come around as I am not a perma bull or bear. Things change.

You are a classic perma negative poster. You will never change. You don't even want to hear the other side, which is why you are asking me what I am doing here?? What are YOU doing here?? If you are happy renting, just rent. Why post? Such a moot point asking somebody why they are here. It's a crash forum, you can't post if you are an owner?
I still think that there is a good reason to rent in certain situations. There are some valid points. But there are also many points for buying, especially when its as affordable as now.

Does that answer your question?

Now, let me ask you - why are you so bitter and angry? and since this was not a crash post...what are you doing in here?

@Suboink,

Sorry, I am still on the other side. I need to be here to create some balance. I hope you get enough crowd on your side very soon.

SubOink says

I have rented my whole life until a couple of months ago when we found a great house and bought it. I know all about renting my friend. One of the houses that we rented was an awesome house and just when we lived there for 1.5 years, totally settled, bought furniture etc - landlord needed to sell. We lived out our 2 year lease and had to get outta there. Broke our hearts. It sucked! (and the landlords were actually good, repaired things etc..) - was good while it lasted…

Another house we rented had a landlord that was so cheap, he just did the bare minimum of whats legally required. The list goes on…

I sure hope that I will never have to rent again.

I can certainly sympathize. I've rented many different properties from many different landlords with many different kinds of rental agreements. Some good and some bad and some very bad. And I am not against purchasing, but I'd choose to continue renting rather than buying a house I could barely afford by taking on too much debt. Hence my hardline stance against what I consider to be a foolish financial decision by the OP.

That the OP is complacent in, and even proud about, HOW they got their downpayment is beyond me. Not to say that selling a house at a profit is universally bad, mind you. It would just be nice to see that some of those who made a profit from the housing bubble understand EXACTLY where that money came from (other families' financial ruin, in some cases), and what part the profiting sellers played in the whole process.

That said, I dearly hope they ponzied a flipper when they sold at the peak.

tatupu70 says

terriDeaner says

Because I was specifically addressing suboink’s post where he/she repeatedly compared and contrasted renting and owning

Exactly. So why did you say this then?
terriDeaner says

C’mon now kids, take another look at my post and verify, for yourselves that I did not say anything (for or against) about the possibility of owners also renting to roomates to make ends meet

You commented on a post that compared renting vs. owning with an advantage that renters have. So, I felt it appropriate to remind you that owners have the exact same option.

?

You lost me here...

SubOink says

terriDeaner says

SubOink says
When rents start adjusting with inflation and will go up, then my advice for those who are renting is “Make sure you have enough cash stashed away, Don’t loose your job”[emphasis added]
See?

See what? I was repeating what somebody else had posted…

terriDeaner says

Now I want you to listen closely: WHATEVER you do, No matter what else happens, make sure that you OR your partner DON’T LOSE YOUR JOBS. THAT would be financially irresponsible.

SEE?

You too... usually when something is repeated it the same message both times.

Okay, you jealous bunch...enjoy the week.

tatupu70 says

lol–if you’ll notice, soon he’ll also own the house outright. Yes there is no MID, but there’s also no mortgage. I think most people would make that trade.

You'd actually be surprised at how people will justify taking out an unnecessary mortgage on their property, or continue to refinance it for decades. One major incentive (besides equity extraction) is the reset amortization schedule.

Though it doesn't make any sense in the long run, the govt is effectively incentivizing them to do this: "Pay more in interest and we (other taxpayers) will subsidize it." Read finance articles involving refinance or the MID and you'll inevitably find testimonials of people that do this. I've had coworkers do it - even recommended by their financial adviser - with no realization as to how dumb it is. The bottom line is that they have more money in their spending accounts, and they maximized their deductions. It's hard to believe that the mortgage interest deduction hasn't been removed from our tax code. This is as bad as the credit card and car loan b.s. from the 1980's.

seaside says

Ok, define down payment and a buffer, please

http://dictionary.reference.com/browse/downpayment

http://dictionary.reference.com/browse/buffer

seaside says

5%, 10%, 20%, 50% or even higher down payment?
And for the buffer, how much do you think is good amount? What percentage of home price, or money enough for how many months w/o income?

I think those are personal choices. There is no "right" answer. How much to put down depends on a lot of factors.

On the buffer--personally I like to have at least 6 months income in liquid accounts.

What do you think?

klarek says

Though it doesn’t make any sense in the long run, the govt is effectively incentivizing them to do this: “Pay more in interest and we (other taxpayers) will subsidize it.” Read finance articles involving refinance or the MID and you’ll inevitably find testimonials of people that do this. I’ve had coworkers do it - even recommended by their financial adviser - with no realization as to how dumb it is. The bottom line is that they have more money in their spending accounts, and they maximized their deductions. It’s hard to believe that the mortgage interest deduction hasn’t been removed from our tax code. This is as bad as the credit card and car loan b.s. from the 1980’s.

I agree that the MID may not be good policy.

But, I think those people that refinance to take advantage of it aren't dumb. If you can get a refi at 5% and then get one third of that back through the MID, you are effectively paying 3.33% on the loan. If you can invest that money and make more than 3.33%/year, then you are coming out ahead.

tatupu70 says

But, I think those people that refinance to take advantage of it aren’t dumb. If you can get a refi at 5% and then get one third of that back through the MID, you are effectively paying 3.33% on the loan. If you can invest that money and make more than 3.33%/year, then you are coming out ahead.

If you're ten years into your amortization schedule, restarting the clock to maximize a govt bribe based on the amount of interest you pay is just plain dumb. I'm not saying that it's irrational or that the people doing it are stupid, but that an economic/tax policy which incentivizes some taxpayers to do this at a net cost to other taxpayers (those who do not pay less in taxes due to paying less interest) is so fundamentally stupid that nobody could justify it in an honest fashion.

klarek says

If you’re ten years into your amortization schedule, restarting the clock to maximize a govt bribe based on the amount of interest you pay is just plain dumb. I’m not saying that it’s irrational or that the people doing it are stupid, but that an economic/tax policy which incentivizes some taxpayers to do this at a net cost to other taxpayers (those who do not pay less in taxes due to paying less interest) is so fundamentally stupid that nobody could justify it in an honest fashion.

klarek says

tatupu70 says

But, I think those people that refinance to take advantage of it aren’t dumb. If you can get a refi at 5% and then get one third of that back through the MID, you are effectively paying 3.33% on the loan. If you can invest that money and make more than 3.33%/year, then you are coming out ahead.

If you’re ten years into your amortization schedule, restarting the clock to maximize a govt bribe based on the amount of interest you pay is just plain dumb. I’m not saying that it’s irrational or that the people doing it are stupid, but that an economic/tax policy which incentivizes some taxpayers to do this at a net cost to other taxpayers (those who do not pay less in taxes due to paying less interest) is so fundamentally stupid that nobody could justify it in an honest fashion.

Yep. The tax code is full of dumb write-offs...

Is it too late to get an abortion?

Nomograph says

bubblesitter says

jealousy just affects me

At least you now admit your comments are born of jealousy. Most folks are jealous of other people to some degree or another, but very few lash out like you. If you behave in real life the way you do on this forum, you’ll never get anywhere.
Let other pens dwell on guilt and misery — Jane Austen

LOL. You can never read my mind correctly. I was never jealous but you are out there giving your stupid buy now advise, clearly.

It's insane how different most of California is from the rest of the country. Here in Ohio, 675k would buy you a mega mansion...you'd have the nicest house in the county! I just can't fathom spending that much money on a house, and as an engineer I make decent money.

The thought of putting myself in a situation where I could have almost half a million dollars of debt makes me woozy. You all should just leave CA and live like kings elsewhere if you have so much money to throw away on, as Patrick said, a big box that rots in the rain.

StoutFiles says

It’s insane how different most of California is from the rest of the country. Here in Ohio, 675k would buy you a mega mansion…you’d have the nicest house in the county! I just can’t fathom spending that much money on a house, and as an engineer I make decent money.
The thought of putting myself in a situation where I could have almost half a million dollars of debt makes me woozy. You all should just leave CA and live like kings elsewhere if you have so much money to throw away on, as Patrick said, a big box that rots in the rain.

There's a reason why most californians choose to stay in california despite that moving to Ohio would be a financially prudent move. If the reason isn't obvious, don't worry about it. No need on trying to understand it or accepting it. Just let those who are under it's trance live it.

I will be joining you and Wagamama soon! Waiting for my short sale to go through. I have rented for 14 years because I missed the 1990's then in the early 2000's, it did not make sense bying> Now with the price back to 1990's range, and shortsale and foreclosure offeing a buffer of 20-30% to cover further price decline, it is wise jumping the ship. It is mor true for people who have skills that provide job security and are not buying as an investment, are buying what they can afford.

Congratulations Wagamama!

StoutFiles says

It’s insane how different most of California is from the rest of the country. Here in Ohio, 675k would buy you a mega mansion…you’d have the nicest house in the county! I just can’t fathom spending that much money on a house, and as an engineer I make decent money.
The thought of putting myself in a situation where I could have almost half a million dollars of debt makes me woozy. You all should just leave CA and live like kings elsewhere if you have so much money to throw away on, as Patrick said, a big box that rots in the rain.

It is insane. And we all talk about it often. But then when you look around, hit the beach in May and have 300 sunshine days...we often remind ourselves...well, this is why we all pay so much more for our houses here than elsewhere. I have done a cross country trip and I have to say...well, Ohio is...just Ohio. Very plain and very simple. You can't compare it. If CA was as cheap as Ohio, why would anybody live in Ohio?

You don't even have to go that far - you can buy a mansion for $675 here in CA. Just go outside of SF and LA...or go to Palmdale...lol.

There is a reason why a Porsche costs more than a Kia.

burritos says

There’s a reason why most californians choose to stay in california despite that moving to Ohio would be a financially prudent move. If the reason isn’t obvious, don’t worry about it. No need on trying to understand it or accepting it. Just let those who are under it’s trance live it.

These CAans you are talking about didn't pay 600+k for their homes, thats for sure.

My personal belief is that housing will still fall some (not just because of this double dip people talk about, but because of the QRM requirements that will soon be in place), but not enough to wipe out the bubble equity that you carried from your previous sale. You are one of the winners of the previous bubble. That win gives you the cushion to not worry about buying at the absolute bottom (which would be hard to time), and allows you to start living your life in the way you want. The time is right for you. Enjoy!

wagamama, I'm coming your way as well. I just entered contract to purchase an REO. Was able to get a year 2000 price with a cash offer. Sold for 340k in 1999, sold for $540k in 2001. Outstanding loan balance of $800kish at foreclosure.

Congrats!

bubblesitter says

@Suboink,
Sorry, I am still on the other side. I need to be here to create some balance. I hope you get enough crowd on your side very soon.

Looks like more people are joining the crowd after all...:)

I think OP was looking, So this message is for him :

To all my friends who are sitting on the Fence and are looking in Cambrian.

( Insider info)
This is one heck of a home,

http://www.redfin.com/CA/San-Jose/15111-Stratford-Dr-95124/home/1333989

This guy has spent money on the home like anything

SubOink says

Looks like more people are joining the crowd after all…:)

There's a difference between buying a home in this market and buying a home with the delusional expectation that prices have bottomed. One crowd capitulates knowing the risk, the others stick fingers in their ears and hum really loudly.