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You aren't up until you sell. If you borrow against it you are putting the property at risk. What happens if the house goes underwater and you have to sell? You are up now and good for you. I would get out and move to Sacramento or the wine country and buy a house with cash or mostly cash.
True about the paper value. I have a HELOC, but it's only for a dire emergency. I pay for all upgrades when I need them in cash. The house would have to lose nearly 50% for me to be underwater, and that's not happening along the coast. I can't really leave as my kids are in school for another 8 years. Nor do we want to leave, even for a paid off house.
You were lucky. Nobody knew the rich would buy up the excess inventory of homes with bank credit. Truth is, getting the houses back in one fashion or another is what banks do. They got the houses back through extending lines of credit which they can call in at any time, and get the physical control of the houses.
Definitely. But then again, so did mostly everyone that bought in 2010-11.
My point isn't to gloat, but to come back after a period of time, and look back on how things turned out. Maybe it is time to revisit the adage about it being a good time to rent?
The risk is always greater if the loan is toxic. So, it is better to rent than get a toxic loan, most of the time. But comparing to a conventional loan, than renting seems inflated in the bay area which is constrained as to supply.
I'm in LA. Not sure that toxic loan applies here as my loan is conventional. Most loans these days with the FANNIE MAE guidelines aren't toxic, right?
I have been a visitor to patrick.net for a long time (since 2010), but took a good 12 month hiatus until now.
I bought my first place in 1999 for $330K, sold it for $610K in 2008 (after renting it out for one year), and rented 2007-11. Bought again in 2011 for $799K and here I am today, with my house worth $1.1M according to the Redfin estimate. I spent about $164K over the past 4.5 years on PITI. Had I rented a comparable place out at $3800/month, I would be out $205K.
Im basically up $342K, albeit on paper. Had I rented, I would be down $205K. That's a $547K swing...nothing small.
Had I listened to the advice on Patrick.net, I would definitely be kicking myself right now.
http://news.mortgagecalculator.org/interview-with-patrick-killelea-of-patrick-net-its-a-fantastic-time-to-be-a-renter/
Rents are rising going in to next year:
http://money.cnn.com/2015/12/15/real_estate/rent-rising-2016/index.html
This isn't genius on my part. I got lucky for the second time. My original down payment was $70K. After poring money into to a mortgage, I'm now at $1.1M. While it depends on where you live, buying over the last 15+ years has been a much better deal for me than renting.