patrick.net

terriDeaner says

Cause, as a renter, when your expenses increase you absolutely cannot do anything practical like … getting a roomate to share expenses or moving somewhere else that is less expensive. I think it might be against the law, even.

Excellent point. Because it's also against the law to rent out a room when you own a home, isn't it?

tatupu70 says

No, of course you are right. Just call the landlord and tell him that you lost your job and can’t make rent.

If buying a house didn't require a down payment and a dumping of one's savings, you would have a point. In fact, if it weren't for reality, you would always have a really good point.

it sounds like OP got a good deal. Nice job cashing out right at the peak. That alone gives you some buffer incase prices go down.

I actually expect prices to go up in Cambrian because it's one of the nicer areas in SV
There's a ton of demand for those houses because for a middle class average high tech worker it's one of the few places that's still affordable.

klarek says

It surprises me not in the least that you would believe something as stupid as that. I’ll bet you live month to month with no savings and an escalating credit card debt. Tell me that’s not completely true.

Oh Man! You got me!! Month to month? ...I live Day to Day, hour by hour, second by second.

Seriously, to be totally honest - nothing has changed in my life. My payment is exactly what my rent was for the last 7 years so why would anything be different??

tatupu70 says

terriDeaner says

Cause, as a renter, when your expenses increase you absolutely cannot do anything practical like … getting a roomate to share expenses or moving somewhere else that is less expensive. I think it might be against the law, even.

Excellent point. Because it’s also against the law to rent out a room when you own a home, isn’t it?

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

Nomograph says

Another member of this forum has a small child, another on the way, and just purchased a house and the only thing you can do is make tacit wishes that both parents lose their jobs?

I didn't do anything of the sort, jackass. I said they probably made the right purchase and that buying now is better than at any point in the past several years.

SubOink says

Seriously, to be totally honest - nothing has changed in my life. My payment is exactly what my rent was for the last 7 years so why would anything be different??

I've pointed out the merits and the flaws of owning versus renting. It's a bigger commitment to own than rent, and falling behind on one's mortgage payment could put them at risk of losing every dollar they put into the house.

I'm not at all suggesting that this is Wagamama's situation, just that you ridiculing people for talking about the increased need of job security when owning is a demonstration of your ignorance and blissful euphoric visions of home ownership.

Nomograph says

Bubblesitter, terriDeaner, and Klarek, you three have distinguished yourselves as three of the most jealous, bitter, and nasty posters on this site. Another member of this forum has a small child, another on the way, and just purchased a house and the only thing you can do is make tacit wishes that both parents lose their jobs? And you wonder why you all have such crappy stations in life?
What the hell is wrong with you people?
Let other pens dwell on guilt and misery — Jane Austen

Well, jealousy just affects me but your advise brings financial misery to the other person when you willfully ignore the fact that home prices are still going down. Just for own gratification of being a bull you affect the persons life negatively. So which one is better? Jealousy or your stupid advise? LOL.

Nomograph says

Another member of this forum has a small child, another on the way, and just purchased a house and the only thing you can do is make tacit wishes that both parents lose their jobs?

Great to have you back nomo! Without the benefit of your imagination, I was having a hard time focusing in on things that I didn't ACTUALLY write or imply. You'll simply must give me a lesson in mind-reading sometime. And I just thought I was contrasting the foolish financial decision of:

wagamama says

[...] had 250K to put down, leaving us with a max’ed out conventional mortgage.

with

terriDeaner says

[...] make sure that you OR your partner DON’T LOSE YOUR JOBS. THAT would be financially irresponsible.

Silly me, just words I actually wrote! I guess if you were someone with poor reading comprehension skills and an unwillingness to participate in reality, you might miss this. But hey, you don't need to read and understand my posts at all if you're just gonna pull things out of context and fixate on what they don't actually say, right?

Great advice here, by the way:

Nomograph says

It sounds as if you [wagamama] are doing everything right to take care of your kids, which is priority number one. Getting them in a stable home in an excellent school district is key, so once again congratulations and enjoy your new place!

Leveraging themselves to the absolute limit probably IS a good thing to do for their kids. After all, having no buffer for dealing with unforseen life crises has never resulted in personal financial crises. My bad!

Nomograph says

And you wonder why you all have such crappy stations in life?

Do I? Let me eat cake!

Nomograph says

What the hell is wrong with you people?

Hmm... probably nothing wrong with me that some poorly reasoned, self-delusional, and escapist philosophy can't fix. So keep trying! And thanks for asking.

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. I am simply addressing suboink's flippant position on inflation and its consequences for RENTERS. Try again.

tatupu70 says

terriDeaner says

Cause, as a renter, when your expenses increase you absolutely cannot do anything practical like … getting a roomate to share expenses or moving somewhere else that is less expensive. I think it might be against the law, even.

Excellent point. Because it’s also against the law to rent out a room when you own a home, isn’t it?

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.

tatupu70 says

No, of course you are right. Just call the landlord and tell him that you lost your job and can’t make rent. I’m sure he’ll tell you that it’s no problem. Just don’t pay until you have a job. Right?

Sigh... poor, gentle, easily confused tatupu. Is that the ONLY possible (or even probable) situation for a renter who loses his/her job and can no longer afford their rent?

Again, when was the last time you rented?

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. I am simply addressing suboink’s flippant position on inflation and its consequences for RENTERS. Try again.

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.

terriDeaner says

Sigh… poor, gentle, easily confused tatupu. Is that the ONLY possible (or even probable) situation for a renter who loses his/her job and can no longer afford their rent?
Again, when was the last time you rented?

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....

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

klarek says

In fact, if it weren’t for reality, you would always have a really good point.

OK--let's talk about reality. 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.

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.