...and you thought Tysons had traffic now.

[Sijray21]

or option b: get the hell out of northern VA if you want to buy a nice piece of affordable property...

if you think you can't afford to buy the house you want...you probably can't and shouldn't

i know i won't be living in the same place for a while so i'm renting cheap to move somewhere else sometime in the 'near' future. ...now about that whole 'saving' thing...i need to work on that

[mrbaggio]

Are the two houses you are using in your example the same, (Sq footage, age, upgrades, beds/baths) or at least close? Physical proximity doesn't guarantee the same price (rent or purchase).

Not trying to start a fight, but if you want to use that calculator you really need to compare apples to apples.

[.RJ]

Are the two houses you are using in your example the same, (Sq footage, age, upgrades, beds/baths) or at least close? Physical proximity doesn't guarantee the same price (rent or purchase).

Not trying to start a fight, but if you want to use that calculator you really need to compare apples to apples.

Dammit, RTFT. They're right next to each other. One up for rent. One up for sale. Same development, same builder, same sq ft, same garage size.

[Maengelito]

i think you guys are arguing for essentially the same side, just using different extremes. the correct answer is "it depends". sure, renting might be cheaper in one house over buying, but rent is essentially throwing money away because you will always need a place to live. its not like a mortgage is just a bigger payment than rent is, because you will be paying either a rent or a mortgage unless you wanna live at home and play WoW all day. *depending* on the situation, you'll probably be paying a higher monthly payment on a mortgage, and for the first couple of years it'll probably be all interest *depending* on what kind you get and you'll also have associated closing costs, inspection fees and all those other associated costs. you'll build equity eventually and your credit assuming you dont default and make payments will be very strong. besides, when buying a house, you can have renters which is essentially reducing your mortgage payment short term and if your situation allows it, you can borrow against your old house to buy a new house, and get renters for you old house to basically pay most of the mortgage. in summary, "it depends"

[.RJ]

I hate the "rent is throwing money away" argument. Its not. You gotta pay to live. You throw money away on a big car payment. You throw money away going to the track. You throw money away eating out. No fuck that. You make good money, you are paying to live. Thats it.

[Jewels]

Why not?

C'mon Lee. Who am I and my wife going to room with?

Yeah but it's basically the same thing 'cause you have dual income.

Unless I get pregnant and decide that I don't really want to leave my child in Day care. Now, I don't see this happening any time soon, but should we live in a two income world if we don't have too. Right now, I have no job, Rex makes just enough to pay our bills. Should I get a job just to have a house, or should we look for a house we can still afford on one income. What if we get a house and we need both of our incomes to pay for it, and then something tragic happens and one of us gets cancer or the like. We then lose our house because we now do not have two incomes to make the hellacious house payment. Now, I'm not saying I refuse to get job just so we can get a house, but I gotta tell you that its sickening that in this day and age we have to have two incomes just to get a house.

[Maengelito]

I hate the "rent is throwing money away" argument. Its not. You gotta pay to live. You throw money away on a big car payment. You throw money away going to the track. You throw money away eating out. No fuck that. You make good money, you are paying to live. Thats it.

thats what i said, you have to pay to live. you can either have it go towards something or not. my rent is dirt cheap right now because i cant afford to buy a house that i want to buy. i'm not happy about renting but i will never ever see that money again

[Apoc]

I hate the "rent is throwing money away" argument. Its not. You gotta pay to live. You throw money away on a big car payment. You throw money away going to the track. You throw money away eating out. No fuck that. You make good money, you are paying to live. Thats it.

Says the guy who has argued on many occasions that leasing a car is waste. Somewhat the same principle, renting a brand new car rather than mortgaging an older one.

~cue why this isn't anywhere near the same thing~

I gotta tell you that its sickening that in this day and age we have to have two incomes just to get a house.

Blame all those silly women who insisted on getting jobs in the first place. :wink:

edit: that's half joke, half truth... the truth of it is dual income is necessary because people started doing it 20-30 years ago. the joke of it is obviously women have the right to earn and be successful. (didn't want there to be any confusion )

[.RJ]

Says the guy who has argued on many occasions that leasing a car is waste. Somewhat the same principle, renting a brand new car rather than mortgaging an older one.

~cue why this isn't anywhere near the same thing~

I have never claimed leasing is a waste. I think its a good idea if you want something new and you're only going to keep it for 3 years.

I even suggested it here: <!-- m --><a class="postlink" href="http://mmsports.org/forum/viewtopic.php?t=4970&postdays=0&postorder=asc&highlight=lease&start=20">http://mmsports.org/forum/viewtopic.php ... e&start=20</a><!-- m -->

[Apoc]

I have never claimed leasing is a waste. I think its a good idea if you want something new and you're only going to keep it for 3 years.

Wow you are definitely smoking the hashish today. You may have recently changed your position but there were countless arguments on HT about leasing being stupid.

~runs to HT to get proof~

edit: You know what... I don't really care enough to argue it. I conceed.

[WRXtranceformed]

Why not?

C'mon Lee. Who am I and my wife going to room with?

Yeah but it's basically the same thing 'cause you have dual income.

Yeah that was the point I was making.

[WRXtranceformed]

Jewels I can see what you mean, and sure it's a shame that you might have to have two incomes to afford a place you want, but that's life unless one of you is making $150k+ a year and has fantastic (700+) credit... or you move somewhere where you can buy homes for ~150k and keep your mortgage payments around 1500 a month.

As far as something happening to you, I mean you don't live the rest of your life in fear of stuff like that do you? You can't be afraid of something with a remote chance of happening. Take out life insurance if it's that big of a deal. If you really can't afford the house you're living in when a significant other dies, then you sell it and downsize. There are plenty of married couples who have newborn children and still own a home too =P It just takes careful budgeting (among many other things).

Maeng hit it on the head. You can throw money away with absolutely no return back, or you can throw money away while paying interest (yes this sucks, but someone is making money off of you regardless of whether you're renting or buying) AND building equity. There are people that make a living doing this you realize, there's that much potential to get a return on the money you're INVESTING, not giving to a landlord who's making money off of you.

[Evan]

investing your money into something and not throwing it away always always always gives the edge to buying your own home.

Thats incorrect, and the #1 misconception about buying vs. renting.
When you buy, you pay an enormous amount of interest to the bank. IIRC for the first 5 years or so of a $3k mortgage payment you are paying $2650 to the bank and only $350 of actual principal, gained equity. This makes sense when you have an agressive market with high appreciation. However when the market is flat, you really are just throwing that interest away. And the interest is a lot more than rent, like RJ said you have to pay to live.

As a renter, you "throw away" around $600-$800 a month. In this market, it would be a smarter financial move to take that difference of $2k and invest it or save it for a higher initial down payment when the market turns back around.

[WRXtranceformed]

investing your money into something and not throwing it away always always always gives the edge to buying your own home.

Thats incorrect, and the #1 misconception about buying vs. renting.
When you buy, you pay an enormous amount of interest to the bank. IIRC for the first 5 years or so of a $3k mortgage payment you are paying $2650 to the bank and only $350 of actual principal, gained equity. This makes sense when you have an agressive market with high appreciation. However when the market is flat, you really are just throwing that interest away. And the interest is a lot more than rent, like RJ said you have to pay to live.

As a renter, you "throw away" around $600-$800 a month. In this market, it would be a smarter financial move to take that difference of $2k and invest it or save it for a higher initial down payment when the market turns back around.

Sure you are, but over the years that interest payment gets less and less as you pay off the principle. If you're not going to live in that house that long, shoot for a 5 year I/O with a lower rate so that you can build that equity without having a huge mortgage payment. Now is the time to buy, this is the best the market will be for buyer for a long time. Prices are only going uphill, unless there is a huge disaster or other unforseen event.

Renting to save money to use as a down payment is fine, but you've got to be realistic and understanding as to what the market is doing. This isn't just propaganda from someone who sells homes for a living, this is fact. If you wait and wait and wait for the market to "bottom out" you're going to wait forever and miss out on the chance to own your own home and make some money while doing it.

What happens after that 5 years if by the grace of God your house doesn't appreciate at all in value? (which in the DC area would be extremely surprising, especially with home prices the way they are now) You can refinance. You'll have to pay new closing costs, but you're still in your home and you can buy some time until your home appreciates to where you want it to be, or you can stay there if you really love it.

I do this every day for people. There are tons of programs out there for first time homebuyers that make the experience less painful. That, combined with renters if you need them, makes homebuying the way to go if you have the funds for a downpayment (right now, most builders will even help you with the majority or all of your closing costs). Renters are actually in a BETTER boat than current homeowners because they don't need to sell a home in order to purchase.

[.RJ]

Sure you are, but over the years that interest payment gets less and less as you pay off the principle.

But, over time you're still paying an enormous amount in interest to the bank. There is no way around it. And THAT Is throwing money away in the worst sense. Your total bill for that $600k house is almost $1.3 million. Not including property taxes and HOA/Condo/etc fees.

Now is the time to buy, this is the best the market will be for buyer for a long time.

If you are in it for the long haul, maybe. But prices are still dropping....

If you wait and wait and wait for the market to "bottom out" you're going to wait forever and miss out on the chance to own your own home and make some money while doing it.

How are you going to make money? I'm really lost here. Owning a home is a very long term investment, and its not an investment in the traditional financial sense.

That $600k house you bought will probably sell for $1.3 mil when you sell it in 10-15 years, but then all the other houses you're going to buy have gone up in price just as much.

Lee you're gonna have to bring some numbers to the table - otherwise it just looks like you're freebasing the kool aid mix. Sure its the great american dream to have a house with a white pickett fence (or go-kart track, pherhaps) but lets be realistic about the costs.

[BLINGMW]

But, over time you're still paying an enormous amount in interest to the bank.

Isn't the guy that owns the property paying interest to the bank? And he's making money off of you.... so you're paying that interest, principal, and profit to him.

No?

Of course, if the market is REALLY bad, and the guy isn't making $, but just barely hanging onto the property, then yes, the renter wins.

[Apoc]

But, over time you're still paying an enormous amount in interest to the bank. There is no way around it. And THAT Is throwing money away in the worst sense.

Didn't you finance your truck and RC51?

Worse sense would be doing so on luxary items that you can't deduct.

[.RJ]

You missed the point...

You're going to pay interest. Its throwing money away. I'm just laying out the obvious, i'm not saying that you shouldnt do it.

[WRXtranceformed]

But, over time you're still paying an enormous amount in interest to the bank. There is no way around it. And THAT Is throwing money away in the worst sense. Your total bill for that $600k house is almost $1.3 million. Not including property taxes and HOA/Condo/etc fees.

RJ what the fuck are you talking about? You're not going to spend anywhere close to twice the cost of the house with interest!

Here are some numbers, which is really pushing it b/c this is my day off =P

$600,000 loan, we'll be REAL generous and say you're doing 100% financing, and let's be real conservative and say you have a 7% interest rate on that loan, locked in for 30 years. The total amount of lifetime interest that you'd pay on that loan would be $42,000. And your interest payment would gradually decrease over the years as you pay off more and more of the principle. This is called negative amortization.

You're paying more of that principle in the first few years, and I think this is what you're hinting at.

The way you calculated it would be that much every single year of your 30 year mortgage term.

If you are in it for the long haul, maybe. But prices are still dropping....

Are they? I competitively shop every builder in the area weekly and they're telling me otherwise. Maybe resales are dropping their prices because they're desperate to get into a new home, but like I said, those are slowly dwindling off of the market right now.

How are you going to make money? I'm really lost here. Owning a home is a very long term investment, and its not an investment in the traditional financial sense.

Almost every single one of our homeowners who has purchased from us and previously owned a home for anywhere from 2-10 years has made money off of their purchase. It's all about where and when you buy.

[.RJ]

RJ what the fuck are you talking about? You're not going to spend anywhere close to twice the cost of the house with interest!

Here are some numbers, which is really pushing it b/c this is my day off =P

$600,000 loan, we'll be REAL generous and say you're doing 100% financing, and let's be real conservative and say you have a 7% interest rate on that loan, locked in for 30 years. The total amount of lifetime interest that you'd pay on that loan would be $42,000.

I just stopped reading right here.

<!-- m --><a class="postlink" href="http://www.bankrate.com/brm/mortgage-calculator.asp">http://www.bankrate.com/brm/mortgage-calculator.asp</a><!-- m -->

Using your numbers. $600k loan, 7%, 3 years.

Monthly payment: 3991.81

You pay this for 30 years, 12 months per year - 360 months. 360 x 3991.81 = 1437051.6

Maybe I am missing the kool aid discount.