Comments on: How Much Should You Spend on a Home?

by: Jeff

Sun, 13 Jul 2008 03:51:45 +0000

Anyone who says rentingos for suckers is indeed the real sucker. I have bee a long time renter and would love to own my own house. However, the last 10 years has been a brutal time to consider doing so. Rent money may have been thrown away, but I’ve moved accross Canada a few times free as a bird as I enjoyed my younger years. Many friends tied themselves to houses. Of course most had to go with less house for more money than they wanted. All experienced expensive repairs that caused great stresses in their lives and of course - zero mobility. So yes they have equity and I dont. But I actually have more money than all of them as my costs have been much lower and my mobility allowed me to make suddens changes to expand my business - earning more cash.

Now I’m considering buying and prices are still insane. So I’m looking on the low end and once again people are calling me crazy and stingy. Of course these are the same people who are tied to a 35 year mortgage and I’m buying with cash.

The real estate craze was a carrot before the horse and thats all their is to it. Las Vegas is the perfect example. That city has fallen 5 years ago in prices in the last year alone. Proof that real estate does not always go up. a 350k house in Las Vegas 2006 is now under 200k. Imagine being the poor sucker tied to a 350k mortgage on a house he could probably rent for $1200 … well of course the bank would have stepped in by now since his collateral is worth less than the loan. Those poor saps are broke, renting anway as their house will have been taken away and their credit is shot. This I predict is going to happen all over North America. Hotspot like Vancouver that have seen 130k condos go to 450k … well thats one hard fall coming.

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by: Mike

Fri, 29 Sep 2006 03:22:26 +0000

I’m no finance expert, but for a while now I’ve been thinking along the same lines as this article, although I wouldn’t think as conservatively as to ignore appreciation. This is the first I’ve come across someone who isn’t caught up in the “renting is throwing you money away” mantra.

I am in the market for a house (even though I recognize it’s probably financially better for me to rent in my situation). I was looking at a house recently and the realtor kept bring up the amazing tax benefits of buying vs. renting. I ignored it at first, but finally I told him, “Well, I’ve done the math and that really assumes that I’m itemizing now, but I’m taking the standard deduction so the tax benefit isn’t as great for me.”. His response… “Uhh… I suggest you talk to a CPA if you want to work out the details for your situation.” No thanks, I can do the match for myself: itemized deduction - standard deduction = amount I’m saving in taxes. Not rocket science.

Also, I’ve talked to people who tell me about how they bought a house and sold it years later for a profit, but they’re not taking into consideration all of the interest/maintenance/property tax they paid over that time… maybe it wasn’t such a great profit.

by: moon

Thu, 07 Sep 2006 14:32:38 +0000

Regarding the points being made on inflation, the monthly payment for a home is not entirely fixed. As the assessment and/or replacement value of a home rise over time, so do the property tax and/or insurance payments.

I learned this in South Boston about 7 years ago. I bought a recently-remodeled SFH in 2000, and at that time was still paying property taxes on the home’s assessment prior to the remodeling. Within a year of purchase, my monthly payment popped due to City of Boston re-assessing based upon my purchase and the gently rising local market at that time. That was a rather extreme jump, but cities do re-assess properties from time to time. And insurance companies do revise replacement values.

by: frugal

Wed, 28 Jun 2006 18:07:05 +0000

If you want to get the exact tax benefits, you can go to my website at http://www.1stMillionAt33.com/java_codes/tax_cal.html.
It gives you the EXACT tax benefit for owning your home. Why is it exact? Because my calculator do your taxes twice, one with home deductions, and one without. Both calculations of which can be standard or itemized deductions (whichever one is better for your tax).
I’ve run thru many calculations myself. The tax benefits are way over-hyped, unless your income is more than $160K.