A neighbor of mine bought his house about 10 years ago with ALL CASH. Now his place is worth almost 3 times as much. He's living a very good life, and hes not even near retiring age yet! Of course most people don't have the luxury of paying down a place with 100% cash, but I think not having a big mortgage can help. Just look at that guy... Now I really wonder: What would happen if someone pays for a home with 100% cash but the money was never reported on their tax filings? Will they get audited by the gov like, where did all this money come from when their income level was much lower? Because I highly doubt that guy's job could afford him to make such a large payment.
financing for a house
- Thread starter jw01
- Start date
trueLiving in many of the condos in the Yonge/Finch and Yonge/Sheppard area would
cost $5,000 to $6,000 on yearly maintenance fees. Property tax amounts to around
$2,000. An owner of a condo can expect to waste only about half of what the tenants
have to pay.
Advice -in your situation banks are hard to deal with. Go with the big brokers. They can get you what banks deny.
When you really think about the bank really has no risk.... they get a house if everything completely fails.
I concur, in the end lender always wins.
I was suggesting that you pay cheap rent for now, until you can save enough to buy a house outright with cash, or at least a huge down payment.But you are still wasting the money you are paying into rent. So not really a win win situation.
I'm not harping on buying a house. My concern is the OP will get into a house and the bank will throw him all the extra money and he will dig a whole of which most people will not get out of. I;ve seen alot of my friends go through this, they buy a house and with that extra money the bank gives them they spend it like nothing to make themselves look good and in the end the loose their shirt and they will never get out of debt.
I say have a plan and stick to it. Save save save, buy the house make a plan and stick to it. But down more than your monthly payment, in a few years you will see that mortgage is paying down quick. But with that it is huge sacrifice you will have to make and live without some things. It is a huge thing and if you have the drive, but really sit down and think, question, research before you make that leap.
Yes, some rent money will be wasted. As opposed to what would have been spent on interest on the mortgage.
And what I've been mentioning all along with a house, you have improvements and maintenance. When you get older, you may not be able to do this on your own, and have to pay contractors.
A lot of older folk end up moving BACK into an apartment (assisted living) because they can't keep up with their house maintenance any more.
A lot of business owners, especially Chinese restaurant, shop owners and hardressers do this and they will eventually get caught. Not in 10 or 20 years but maybe in 30 years time. Then they'll pay all the taxes in arrears plus interest which will bankrupt them and make them want to commit suicide. Don't fuck with the Tax Man.Now I really wonder: What would happen if someone pays for a home with 100% cash but the money was never reported on their tax filings? Will they get audited by the gov like, where did all this money come from when their income level was much lower? Because I highly doubt that guy's job could afford him to make such a large payment.
I see no one has mentioned equity. When you pay a house the more you pay off the more equity you build. Down the road if you need to leverage some equity towards say a car , a cottage or boat or....Well lets just say because you made payments you have that ability. You do not if you rent.
You can get in to a house with as little as 5 % down. plus you may also be able to get a "first time home buyers" plan. Definately real estate is the way to go. Also housing has dropped off about 3%. this is now a buyers market. low intrest rates, lower housing costs, i would say it is better to buy then rent
You can get in to a house with as little as 5 % down. plus you may also be able to get a "first time home buyers" plan. Definately real estate is the way to go. Also housing has dropped off about 3%. this is now a buyers market. low intrest rates, lower housing costs, i would say it is better to buy then rent
There is no such thing as "cheap rent"
If a place is cheap, there is a reason it is cheap. It's a shit box, or it's in a shit neighbourhood, or (bestter yet) it's a shit box in a shit neighbourhood. If that's how you want to live, then knock yourself out. Not too many women will be too impressed (over the age of 28) with a man (so called) who lives in a shitty rental in a shitty area (or your parents basement). (Of course, all bets are off if you are simply "paying for it", but if that's all you're capable of, well, again.....)
Anyway, not to be accused (again) of anti-semitism, but if you look at what the Jews do - they all buy property. All the places I've ever been involved that were rentals were owned by Jews. They're not stupid. Make the goy pay for the mortgage. Smart. Even if real estate CRASHES in Toronto by 30 percent (which unless interest rates spike about 5 points, it's not going to) - that's still less than you can lose in a week on the stock market in the wrong play AND your stock won't give you a place to call home and bring women home to.
As to having to fix the place up. Well, a real man knows which end of the hammer is which and there's very little that can go wrong on a house that will send him running with his head in his hands screaming like a little girl. Some of us truly enjoy building things because we get the sense of satisfaction that comes from it.
If a place is cheap, there is a reason it is cheap. It's a shit box, or it's in a shit neighbourhood, or (bestter yet) it's a shit box in a shit neighbourhood. If that's how you want to live, then knock yourself out. Not too many women will be too impressed (over the age of 28) with a man (so called) who lives in a shitty rental in a shitty area (or your parents basement). (Of course, all bets are off if you are simply "paying for it", but if that's all you're capable of, well, again.....)
Anyway, not to be accused (again) of anti-semitism, but if you look at what the Jews do - they all buy property. All the places I've ever been involved that were rentals were owned by Jews. They're not stupid. Make the goy pay for the mortgage. Smart. Even if real estate CRASHES in Toronto by 30 percent (which unless interest rates spike about 5 points, it's not going to) - that's still less than you can lose in a week on the stock market in the wrong play AND your stock won't give you a place to call home and bring women home to.
As to having to fix the place up. Well, a real man knows which end of the hammer is which and there's very little that can go wrong on a house that will send him running with his head in his hands screaming like a little girl. Some of us truly enjoy building things because we get the sense of satisfaction that comes from it.
Either you are paying the bank, you are paying the landlords mortgage or you are paying the opportunity costs of the money that is invested in the property.
The whole renters are idiots because they pay their landlords mortgage is ignorant shallow thinking. However this is Terb and not Sparta.
In Canada at least housing prices are overprices vs rent at least according to a recent economist magazine article looking at the world wide situation.
When you consider all costs, interest, lost gains on the equity that could be invested elsewhere, repairs and maintance, grass cutting and snow clearing [time=money] or condo fees etc, there is little difference.
Where there is a huge difference is in mobility. If you got a firm job or a place you know you will be for a while, unless the market is really fucked, it would not be a bad idea to set down roots. OTOH if you are young and full of cum, do you really have to pay those realtor jackasses 5 or 6% every few years. Depending on particulars, I think I'd rather rent than pay interest and put any savings into a REIT or other investment, you would do equally fine especially if it is tax sheltered.
Also there seem to be many complaints of people who buy a condo and can't make enough on rent to cover the mortgage. I'd rather be renting in that situation.
The whole renters are idiots because they pay their landlords mortgage is ignorant shallow thinking. However this is Terb and not Sparta.
In Canada at least housing prices are overprices vs rent at least according to a recent economist magazine article looking at the world wide situation.
When you consider all costs, interest, lost gains on the equity that could be invested elsewhere, repairs and maintance, grass cutting and snow clearing [time=money] or condo fees etc, there is little difference.
Where there is a huge difference is in mobility. If you got a firm job or a place you know you will be for a while, unless the market is really fucked, it would not be a bad idea to set down roots. OTOH if you are young and full of cum, do you really have to pay those realtor jackasses 5 or 6% every few years. Depending on particulars, I think I'd rather rent than pay interest and put any savings into a REIT or other investment, you would do equally fine especially if it is tax sheltered.
Also there seem to be many complaints of people who buy a condo and can't make enough on rent to cover the mortgage. I'd rather be renting in that situation.
Don't listen to what he is saying, ones who can't afford always say never buy. In the long run you will end up ahead and sometimes even in the short term. Buying a house is the best investment you can ever do with your money.Just rent a place and save as much as you can for retirement. Financially you'll be much better off that way. A house is not an investment, but simply a place to live. Don't let the media and society try and convince you otherwise. Buy some bonds and preferred bank shares instead.
Wish more renters heed your advice and switch to living in a placeDon't listen to what he is saying, ones who can't afford always say never buy. In the long run you will end up ahead and sometimes even in the short term. Buying a house is the best investment you can ever do with your money.
they own. That will help keep the rent down for suckers like me. In a few
years such advice would come off as timely as it would have been to
our southern neighbors back in 2004--2006.
I used to subscribe to the rent is better than owning philosophy, and still do in a way. I'm not convinced a mortgage is a good way to save. However at one point i got completely screwed over by my landlord of the day and there was nothing i could do about it because it was his place.
So then i bought my home not because i think it's the best way to save, but so that nobody can tell me what to do in my own home ever again. I value the freedom.
So then i bought my home not because i think it's the best way to save, but so that nobody can tell me what to do in my own home ever again. I value the freedom.
what a beautiful life...Buy a rental property. Live in the smallest unit in the basement. ..... And don't spend your money foolishly on a hot car. Property increases in value, cars decrease ...
The maintenance on an old building like that has to be brutal. Looks like a shithole. It is also fun and games until the business goes under and you can't find anyone to come in, seen many store fronts empty in Hamilton. It is even more fun and games when a tenant realizes that under the law you are his bitch and decides to to stay as long as possible rent free and just for kicks toss some cement mix down your drains. Then there is the fun of dealing with all the tenant bullshit, and getting new tenants every so often, or hiring out some management firm that will give you good greeking in a Health Inspector from boondocks style. Then you get that stress of being highly leveraged and worried if the vacancy rate is high and it takes a bit of time to find someone and you are in the minus, or not being leveraged and being highly diversified not only in asset class but in terms of location. Don't forget the joys of rent control and the ass stretching you will get should one of the major parties feel the need to buy votes with your money. I suppose if everything works out well, you can do OK, and if everything works out well I will be able to fuck your daughter/wife/sister/mother whatever is in the 20 to 40 age range.Buy a rental property. Live in the smallest unit in the basement.
Yeah, you might still have to toss a few hundred bucks a month toward the mortgage but other suckers .. I mean renters ... are paying the bulk of your mortgage. And don't spend your money foolishly on a hot car. Property increases in value, cars decrease ... and become money pits.
...
Example: Without even trying to whittle the seller down from the $275k asking price, $15k down will grab you this building in a great location in the heart of Kitchener:
[Image of a unibomber style shack deleted]
You can live in one unit, and collect rent from the other apartment plus the two businesses on the ground floor ... a variety store and a massage parlor.
There aint no such thing as a free lunch. If something seems so much better than something else, there is probably a very important difference you are overlooking.
You seem to think that mortgage payments are two to three times rent payments....This is simply not true outside major markets. You also seem to assume that one will invest the money saved through renting-a major and usually false assumption. Even if the saved money was invested what are the current returns? The best thing to do is own but own at a price point below what one can get approved for. Do this while expediting the process to pay back the mortgage.Set a goal for 10-15 years as opposed to 25-30 for payback. Cut out needless expenses in the process. Living simply is the key to a lot of things.
Let's say, for argument's sake, a house costs $300K. With interest on the mortgage, the true cost could be $600K.
Obviously, $300 K is cheaper than $600 K.
So while I agree that rent money gets you "nothing"; you're paying a WHOLE lot more for "something". Unless you buy the house with cash.
If the rent and the mortgage are the same, then I'd agree that the house wins. If the mortgage is significantly higher than rent, then I would tend to think that you'd be better off renting and investing the savings.
But most people need to live in a major market ... where the jobs are.You seem to think that mortgage payments are two to three times rent payments....This is simply not true outside major markets. You also seem to assume that one will invest the money saved through renting-a major and usually false assumption. Even if the saved money was invested what are the current returns? The best thing to do is own but own at a price point below what one can get approved for. Do this while expediting the process to pay back the mortgage.Set a goal for 10-15 years as opposed to 25-30 for payback. Cut out needless expenses in the process. Living simply is the key to a lot of things.
Yes, it's true that most renters don't save; most people end up buying a house, as soon as they have the income and the minimum down payment.
But the housing bubble (08 meltdown), imo, changed a lot of assumptions, mainly that homes will always increase in value, and that mortgage debt is good debt.
Given what happened in 08, I'm more inclined to believe that one should stay out of debt as much as possible.
And most people don't buy less than they can afford ... look at the McMansions, and what led to the crash in 08.
As for job loss ... if your rent is $1K, and mortgage payment is $3K, what's easier to come up with while unemployed?
I think a point that people are missing is that just because you rent, or pay mortgage (death contracts...) you should always be saving for retirement. Ownership of a house is not your retirement savings. That 800K house you purchase in 2012 will not be worth 1.6 in 2052. It will probably only be worth about 800K or so. All those years of false hope that you can retire when you sell your house, you should have been saving anyway. What if you can't sell the house? Or sell it for as much as you thought? Then what.
My point about renting is that your rent will be less than overall costs of ownership, and you can in fact save more that way. But saving is the key, if you piss it all away you will be screwed regardless. Whether or not people have the ability to save is beyond me. I don't know about everyone here, but I don't want to be working when I'm 60 just to make payments on that 0/35 mortgage I got when I was 25...
Just wait a couple of years and watch all those house-rich boomers try and sell their homes for retirement money. Who is going to buy them all? Then what are they going to do?
My point about renting is that your rent will be less than overall costs of ownership, and you can in fact save more that way. But saving is the key, if you piss it all away you will be screwed regardless. Whether or not people have the ability to save is beyond me. I don't know about everyone here, but I don't want to be working when I'm 60 just to make payments on that 0/35 mortgage I got when I was 25...
Just wait a couple of years and watch all those house-rich boomers try and sell their homes for retirement money. Who is going to buy them all? Then what are they going to do?
To me purchasing a house vs renting comes down to more than just a financial decision. To me there is satisfaction in owning my house (okay, co-owning it with the bank right now). As I'm now on my second house I would like to share some things I think are useful for the OP.
- see a mortgage broker to find out what you are eligible for.
- don't go for a 0% down (if they are still available) as it leaves you no room should the property value drop in the short term. Friends of mine did that, now they need to sell and it's not moving because they have to ask too much in order to pay the bank
- don't spend the maximum mortgage they offer you unless you have done a thorough budgeting analysis of your life. With both my houses they were willing to lend me enough that at the maximum yes I could afford the house, but there wouldn't be much money for anything else above and beyond the house. Talk to your parents/family/friends who already own and ask them what sort of expenses they have - utilities, property taxes, maintenance costs...
- when looking at a prospective house look at what upcoming repairs might be needed - is the furnace/hot water/roof/ windows/doors... Going to need replacing in the near future? With the mortgage payment can I save up enough in time? A home inspection can be the best money you spend.
- what are you going to need to purchase to go along with the house? Lawn equipment, snow removal equipment, ladder.....
- see a mortgage broker to find out what you are eligible for.
- don't go for a 0% down (if they are still available) as it leaves you no room should the property value drop in the short term. Friends of mine did that, now they need to sell and it's not moving because they have to ask too much in order to pay the bank
- don't spend the maximum mortgage they offer you unless you have done a thorough budgeting analysis of your life. With both my houses they were willing to lend me enough that at the maximum yes I could afford the house, but there wouldn't be much money for anything else above and beyond the house. Talk to your parents/family/friends who already own and ask them what sort of expenses they have - utilities, property taxes, maintenance costs...
- when looking at a prospective house look at what upcoming repairs might be needed - is the furnace/hot water/roof/ windows/doors... Going to need replacing in the near future? With the mortgage payment can I save up enough in time? A home inspection can be the best money you spend.
- what are you going to need to purchase to go along with the house? Lawn equipment, snow removal equipment, ladder.....
