patrick.net

Let me get this correct,are you saying home ownership is not coming out as a benefit to you?

No that's not what I'm saying. I'm glad we owned our homes. We were able to have any pets we wanted. We had stable monthly housing costs. Our son had consistency while he was growing up. We didn't have annual decision making on whether to stay or move, nor did we have the expense and life disruption of moving every few years. Having a mortgage is good for FICO scores. And we did not buy more than we could afford.

I'm still not convinced it is a financial benefit. By staying in this home long enough to pay it off, the house is getting old. It is now eating maintenance money. We have reached a time in our lives when we are financially more comfortable, and we have this never ending list of things the house needs to have repaired, replaced or upgraded. What's more, I resent putting a lot of money into a house that I expect to sell someday. I don't intend this to be my last home.

Payoff2011 says

I’m still not convinced it is a financial benefit. The house is getting old. It is now eating maintenance money.
we have this never ending list of things the house needs to have repaired, replaced or upgraded.

This!

it sounds like you should have done the maintenance over the years instead of paying down the mortgage.

Now you have no mortgage but owe deferred maintenance. Which I happen to think is better since you can pay for that at your own pace.

Best of luck! Anyway more people should read your post before buying a home.

I'm still pretty sure that quite a number of people cheat on their taxes.

I'm pretty sure that there are many "investors" out there who actually use their rental home as a primary residence and write off fake losses and so forth.

I guess what I'm saying is that a home is ALWAYS an financial benefit so long as you are willing and able to cheat on your federal income tax return.

And yes schadenfreude dictates that I wish all these types were caught.

Congrats, you've beaten the game. Unfortunately, the govt is in essence bribing you to take a new loan out on your place. Only those working in RE who use the MID as a sales pitch would attempt to justify its existence. Our country's economy would be much better off without it.

What is the average yearly maintenance cost on a 1700 sq ft 4 bedroom home built in the 1950s? In southern california where u dont get snow damage, very little rain, and rarely ever high winds.... Earthquakes and mudslides excluded:)

Good article! Even if you NEVER defer periodic maintenance, most manmade structures have periodic mechanical failures. That how developers and builders build them. To last long enough so that they don't fall part too soon. Lets see, roofing, paint, plumbing, electrical, HVAC, insulation, foundation, chimney and landscapng ALL scream "FIX ME FIRST". Usually the only time large repairs are done is when its time to dump the house on the next fool. Most people fall into the trap (more like a pit of vipers) by getting a second loan or a Refinance to fix the $5,000 plus single item costs to maintain the house (roofing, HVAC, siding, dual pane windows etc).

I have been in a similar situation and used NO HELOCS or seconds to make major REQUIRED repairs. The math analysis pointed to the fact that as long as the neighborhood didn't turn into a slum...the total costs (don't forget the Realtor fees and loan origination fees) compared to renting during real estate bubbles was not quite a break even with renting.

The danger is LOCATION LOCATION LOCATION, AND any type of disaster like flood or fire. Insurance companies like Realtor's do not have a reputation for honesty. Home damage because of the Oakland hills fires of 1991 and Northridge Earthquake of 1994 have STILL NOT BEEN PAID by insurance companies, so you need a nest egg to pay for covered damages that insurers refuse to pay.

The Financial Services industries (Banking, Real estate, Finance, Mortgage and Insurance) are more dangerous to this country than all the crime and gang syndicates, drug operations and politicians summed together.

investor90 says

The Financial Services industries (Banking, Real estate, Finance, Mortgage and Insurance) are more dangerous to this country than all the crime and gang syndicates, drug operations and politicians summed together.

That's a very strong statement.

"...The financial sector is far and away the largest source of campaign contributions to federal candidates and parties, with insurance companies, securities and investment firms, real estate interests and commercial banks providing the bulk of that money.

The sector contributes generous sums to both parties, with Republicans traditionally collecting more than Democrats. Yet in the past two election cycles, bankers have suddenly shifted their cash toward Democrats. The sector gave at least 55 percent of their contributions to the GOP from 1996 to 2004, but actually gave a slight majority of their donations to Democrats in the 2008 cycle. This reversal may suggest an effort to remain influential as a Democratic-controlled White House and Congress consider new market regulations in response to the specter of economic decline.

In short- These organizations OWN our country. We vote for representatives that really work for them. The pertinent CONSUMER regulatory laws and regulations are designed to enable them to extract and take more power from the people.

http://www.opensecrets.org/industries/indus.php?ind=F

Federal Contributions 2009-2010:
National Association of Realtors $5,129,889 as an organization (not counting subordinate state organizations. HAVEN'T THESE PEOPLE HURT OUR COUNTRY ENOUGH?

American Bankers Association $3,045,360 Think about this when the next time you get charged an '"administrative fee" to check your checking account balance by computer.

Goldman Sachs $2,622,477 (not including all subordinate organizations)

Has top managers of any one of these organizations ever violated any federal regulation? Of course not---they are too busy with fundraising. Even Ponzi master and convicted bankster and swindler inmate Bernie Madoff states he could never have pulled off his 20 year multi billion dollar scam without the help of "our favorite" and largest Wall street banks. Bernie named names anmd still there are NO perp walks as in the S&L crisis (there were thousands of banskters indicted for lesser crimes) Look at this reference--->
Dr Bill Black http://www.youtube.com/watch?v=sA_MkJB84VA

The best way to rob a bank is to own one." The FBI publicly warned in 2004 that there was an epidmenic of mortgage fraud.. BUT VERY FEW ARE PROSECUTED. Dr. Black beleives there are over one million /year instances of mortgage fraud---orchestrated mainly by the highest levels of these organizations-- FROM THE LENDERS -80% 20% by borrowers allowed by no or low underwriting. ie "CONTROL FRAUD"

READ the links.

I like Cab's answer to #3. It looks like houses eat up insane amounts of their owners' time and money compared to apartments.

Live in an apartment in the city -- I've got five supermarkets within walking distance, as well as just about every other daily necessity. Plus it's a lot more environmentally sound than a big house in the suburbs. Find a good city neighborhood and live there!

Rent vs buying. My whole point has been this. Especially with the new type apartments. The same people that finance homes. Finance and own the majority of apartments as well as condominuims.

This goes back to price fixing. Which is actually a monopoly. See you can set the sales price of an apartment complex. YOU give them a work up of how you intend to pay the loan off. Another words they will know what you are going to charge renters. What a home owner is saying to a renter is. Look the rent I am paying. (homeowners aren't entirely stupid). Over a thirty year span. Is about the same as what I would pay in rent over a thirty year span. So why not "buy"?

See the people that lend money on houses aren't stupid. THEY know if you rent you won't buy houses. So they build all kinds of apartments and condominums things like that. There are more factors here. I'm not going to go into it all. Takes way to much time. Basically what you need to do is figure out what you can afford. (most people make themselves house or rent poor). Go out and figure out what an apartment is vs a house payment in that price range you will be paying. I garauntee it will be similar in payment over a 30 year period.

I don't have to live where you are to know this. WHY. Price fixing. It's everywhere you buy. The store. Grocery store. Carwash. Gas station. Gee, get a clue gas is the same everywhere. Don't tell me one country can't undercut another one. Well, golly gee beav. Why wouldn't one gas station buy from the cheaper company. Commodity markets my ass. It's price fixing folks your drowing in it.

What can you do about price fixing? NOTHING. Your screwed. Keep feeding the whale it just gets bigger and bigger. Not a damn thing you can do. But ole grandma says. When that bastard whale turns around and dosen't see rip a nice piece out of its tail and get out of there.

crazyness won't stop this year. wait a few more. Here is a link to some bail outs, they are federally sponsored, but the program is ran by the state:

http://patrick.net/?p=657702

CA is a strange state, it's where the legislature is just skimming money from the top making a killing while screwing everyone else.

Congress refuses to repeal the mortgage interest deduction on its face. But Congress is going ahead with a stealth repeal of the MID by the clever ruse of increasing the standard deduction.

The standard deduction is now up to $11,400 for couples.

Take a US median priced home of $180K. Financing 80% ($144K) at a 5% note is $7,200 per year. Add in say 1.5% property tax on the $180K - another $2,700. That only adds up to $9,900. A couple under this example would be better off with the standard deduction.

Rich people with expensive houses can still take advantage of the MID - but only up to a point. Deductions are limited above certain income levels. And once they get hit with AMT they lose things like the property tax deduction.

My state income tax payments alone make using the itemized deductions worthwhile.

American in Japan says

Best of luck! Anyway more people should read your post before buying a home.

Hey American, Joys of homeownership!

investor90 says

The sector contributes generous sums to both parties, with Republicans traditionally collecting more than Democrats. Yet in the past two election cycles, bankers have suddenly shifted their cash toward Democrats. The sector gave at least 55 percent of their contributions to the GOP from 1996 to 2004, but actually gave a slight majority of their donations to Democrats in the 2008 cycle. This reversal may suggest an effort to remain influential as a Democratic-controlled White House and Congress consider new market regulations in response to the specter of economic decline.

I agree with all that you've said; I would caution that contributions from a company or sector does not really indicate if the candidate is in their pocket. I'd focus more on the CEO/Board contributions than the aggregate employees.

I know my contributions are different than many of the Partners here, and mine and others' contributions make it appear quite different at the FEC.

Thanks for all the replies. For those who are trying to figure out what it costs in maintenance. Here goes.

House is built 1974. When we bought it in 1991, it had been cosmetically updated (floors, bathrooms, some lighting, original kitchen appliances and counter but new floor, tile and sink/faucet). The house didn’t need much done to it for several years. In the first 15 years, other than paint, we replaced the roof, some lighting, installed a fence and repaired or replaced basic stuff that broke.

I estimate we have put $35K (cash) into the house in the last 5 years. And yes, some of this was deferred because life happens. Illness, disability, lack of income. We needed time to recover from some big hits. Here is some of what went into that $35K: HVAC, Windows, Interior and exterior paint, minor kitchen upgrade with appliances, complete accessible bath remodel, some flooring, some lighting, landscaping, tree removal, partial finishing of basement, washer-dryer.

In about 8 years we will need another roof $7-9K. Sooner than that we need an electrical upgrade $3-4K. The kitchen cabinets are original. New kitchen cabinets are on the list of future expenses. But that comes with a lot of other costs and a lot of disruption. We need to decide if it is worth it, and if not, then we will at least replace the floor.

cab
That's a very long comment so I'll just touch on a few things. It sounds like in NY, a rent controlled apartment is the smart housing choice. In fact it seems like the "norm" for NY. I live in the midwest. Husband and I were raised in SFH owned by our parents. We purchased our first SFH 6 months after we were married. PITI was less than the rent we had been paying. It was a small fixer upper. We moved up a couple of times. That's our "norm".

I did not say I was going to purchase again. I am seriously considering renting. Part of the reason is that I think I may want to move around after I retire. For now, I have to live in this home. My husband has said he is never moving. Part of marriage is knowing when something is important enough to the other partner to accept it without negotiation. I expect to outlive him, as his life expectancy does not look to be very long. I will make whatever decision when the time comes, but I prefer not to stay in this house.

No reason a person can't have good FICO score without a mortgage. But it does help. Part of the score is the mix of types of debt. FICO likes mortgage debt better than revolving credit. I don't make up the formulas.

Thanks for your input.

a href="/post/658038#comment-730079">cab says

ANSWER : 1) You can have pets in some apartments. I live in an apartment and my neighbor has 2 cats. There are plenty of rentals and plenty of pets in my neighborhood.

Ha ha ha . Cats. Yeah, we had cats from time to time. I like cats just fine.

One of the reasons we bought the house we live in is my son wanted a big dog. For 14 years we shared our house and 1/4 acre yard with a Weimaraner who was 100 lbs when he died.

cab says

If I get inspired by the Peace Corps or Scandinavian rock bands or want to go off and write a book somewhere, I can just pick up and go for several months and not be bothered with worrying about the building.

You're obviously single with no family. I am too and
If I feel like picking up and leaving which I do often sometimes 6 months or year at a time, I just leave. There's no rent to be paid on time, no landlord notes showing up at my door. I just go.
We're talking about owning outright here.

I am also a landlord so I see the renter perspective. I see potential tenants come to me almost to the point of tears because they're losing their apartment and no landlord will take them due to unemployment, bad credit or other factors.
not exactly a situation I envy.

It's very strange that the only two things that have loss of value are homes and cars. There is the gain of value of course. Like an old mustang or something. Everything else well it's just someones old unwanted stuff and no good for the most part. In new homes and cars. The prices are disimilar accross model lines and home prices. See way to much coinciedence.

If you notice the example old unwanted stuff well you set the price. Sometimes you get really good deals. Question is who's setting the prices on all the so-called new stuff. See the similarities are way to convient to dismiss. Monopoly is even a stupid word. If I broke that one down you would shout hey dude IM FREE. hahaha. Deal is I think people have been scammed from birth in a lot of this stuff. Schools even so called universties will never hand you a calculator and say hey look moron. This is what this house REALLY costs you. Hey school. Im spending all of this money in property taxes. Why don't you do me a real favor and tell me what A CAR REALLY COSTS TO MAKE. Or HOW MUCH DOES IT REALLY COST TO BUILD A HOUSE. Or better yet teach me how to build a house that I HAVE TO SPEND 30 YEARS PAYING OFF WITH MY LABOR? Takes a couple of months to build. See.

Nope I get to hear about Andrew Jackson and Anita Bryant and shit that really does nothing but confuse everyone. Which well they just really like doing. See.

DennisN says

Congress refuses to repeal the mortgage interest deduction on its face. But Congress is going ahead with a stealth repeal of the MID by the clever ruse of increasing the standard deduction.

Do you mean decreasing?

ArtimusMaxtor says

It’s very strange that the only two things that have loss of value are homes and cars.

Huh? Most of you folks are pretty smart. Do you want to rethink this statement?
Stocks' value is in constant flux, anything used is worth less than it was when new (unless there is a demand for it as vintage or collectable), new stuff with more supply than demand is priced at discount (last year's/season's merchandise), electronics have continually come down in price, anything with a "shelf life" is discounted until it sells or is discarded (food, medications, flowers).

Oh sure I guess I am pretty smart. I could bring the hachet down on that statement really, really quick. Bringing up stock market isn't really all that smart at this point. In my opinion. People are tired of being conned. So. I'll just leave that alone. See the confusion is really simple. All of this isn't complicated at all. It just complicating senario's. So people become confused again. It's really not a nice thing to do.