Main > Everything Else

Buying a first home

<< < (5/17) > >>

Wade:
Apparently banks care more about what a person has done, than what he might do.  Versus insurance companies, they are relatively fair. ;)

Your points are valid, but the truth is that a guy who has held a steady job for several years and paid his bills is a much lower risk than a student with no income and debt, regardless of the degree.  Banks probably don't view degrees as the guarantee that you do, either.  The income level isn't the primary factor on whether a person keeps good credit.  High earners can be the worst offenders -  plenty of doctors go bankrupt.  Some people just don't know where to stop, and lenders will give you enough rope to hang yourself.

Wade

jbox:
[rant]
I've had a lot of my friends go through this whole "should I or shouldn't I buy" debacle and I've never understood what's so hard about it. The maths really isn't that hard. You only need to work out one number to decide if there is any point whatsoever in spending the next six months of your life getting stressed over the paper each weekend:

buy ratio = rent cost / (loan interest + non-trivial property costs)

Especially if they have no principal (or worse) then they are almost universally better off renting for 2-5 years and saving the difference. Then, as they build principal the expected interest repayments will go down over the years until they reach the point where they will actually be doing this "building equity" crap that parents cannot ---smurfing--- shut up about instead of the reality where they are really just giving the bank 99% of that money purely as interest repayments. Plus the council rates, the stamp duty, the 'because we can' federal taxes and all the other stuff that people seem somehow incapable of understanding go on top of that big house price to make you bleed even harder.  :angry:

If I had to guess why people feel the need to give the bank 50% of all their income for the next five years of their life is if they:
(a) have a cunning plan for bumping off one of the other insuree's to get a 'free' house
(b) have cancer and a cunning plan for bumping off themselves so their family can get a 'free' house
(c) are trades-people and really can increase a house's value in a few years (I do know a very small number of people do actually make a living out of this)
(d) are tax accountants and know how to cook the books to make money off the house loan/family trust/baby board members/dead pets/etc... in a few years
(e) are psychologically incapable of actually budgeting their income and thus can never save up for a deposit since there is no nasty red letter for having *excess* money in your account
(f) are psychologically imprinted on a particular house, or living in a house, or have a phobia of gypsy-ism or a husband/wife/kids that nag them for "stability" (possibly the most common reason)
(g) they don't understand the maths of principals vs interest, but still think they're smart and everyone else is dumb

Plus, you have a relatively set time to buy, a relatively set time to leave, and what is a small gap (property wise) in between. Economics 101 says that you are in the worst possible position to play the market since you have the least range of choices available to you.  :-[
[/rant]

Now, if you still want a house because you are like Drew and fredster and think National Service, home cooking and owning your own home are just dog-gone-it the way man is meant to live that's perfectly fine because capitalism says you can spend your money in any way you think will make you happy. But as a business proposition you couldn't possibly propose a worse scenario especially if (say, god forbid, fingers crossed, please don't be offended) your wife were to get seriously ill or any other number of life's ways of screwing you over?  :-[

AtomSmasher:

--- Quote from: jbox on March 21, 2007, 03:29:16 am ---If I had to guess why people feel the need to give the bank 50% of all their income for the next five years of their life is if they:

--- End quote ---
So you feel its better to give 50% of your income to whoever your renting from?  At least when your paying loan interest, you get to write off that amount from your taxes.  When I figured out my taxes this year, I found out I'll be paying around $6000 less then I would if I did not buy a house this year.  Add to that the fact that I could sell the house today for $20000 more then I paid for it and my mortgage payment is only $100/mo. more then I was paying for rent.  Buying a house was a very good thing for me.  With the tax breaks, it will actually saves me money each year.

ChadTower:

Add property taxes and property upkeep costs.  Most people dramatically underestimate the cost of upkeep on a house/property.  A cost they did not have renting.  When you add property taxes and upkeep costs then the tax break usually washes out about even.

AtomSmasher:

--- Quote from: ChadTower on March 21, 2007, 11:43:22 am ---
Add property taxes and property upkeep costs.  Most people dramatically underestimate the cost of upkeep on a house/property.  A cost they did not have renting.  When you add property taxes and upkeep costs then the tax break usually washes out about even.



--- End quote ---
property taxes are aronnd $2000 and the house is under warranty so upkeep costs are negligible.  Still, since I saved around $6000 on taxes, it would have to be $4000 in upkeep costs a year, which is quite a bit more then it actually will be anytime soon, especially with a brand new house.

Navigation

[0] Message Index

[#] Next page

[*] Previous page

Go to full version