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Originally Posted by oil pan 4
See if you a 30 year mortgage is worth it do the math. Chances are at loan maturity even with 6% interest over 30 years you are paying for the sale price twice, if you don't ever refinance.
Then you sell it you might break even. If you cash out the government takes half of any amount you don't put it into another house with in I believe 3 to 6 months.
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The math is quite easy, and on average, the math says people are usually better off buying a house if they will live in the same place for 5 or more years.
BTW- Old Mech has it right about no tax on the appreciated value of the home. As long as it's considered your primary residence, and you have owned it for 2+ years, you pay no tax.
I just sold a 4-plex in Oklahoma that was my friend's primary residence (4-plex is considered a primary residence, while anything over 4 units is considered investment property and taxed at a higher rate), and I was a 50% stakeholder. No tax since it was his primary residence.
Quote:
Originally Posted by rmay635703
My grandmother only had a shoebox of receipts after paying for a house her whole life, the house was condemned and the county repo'd it.
In terms of renting it depends, I rented a studio apartment for $240 a month all utilities included for many years.
And "owning" a real house just gives you the ability to pay $200+ a month in property tax, I do not see this really as being any different than renting, at least if you are intelligent enough to rent the right size at the right price.
Land and houses are setup as pure liabilities in this country, beyond enjoyment there really is no justification for any of it.
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Anecdotes are pointless because anyone can come up with a story of a renter getting screwed, or a landowner going underwater, literally or figuratively.
My anecdote is that I lived in a Subaru Legacy for close to 2 years and banked 95% of my net pay. After that, I moved in with a friend for 6 years and paid $400/mo all inclusive. This allowed me to put 20% down on a 4-bed house at the age of 30, pay for a wedding, ring, and wife; pay off her school debt, pay off her CC debt, own my vehicles outright, and now pay $10k every 4 months to put her through medical school... and loan $50k to a friend.
By purchasing a 4 bedroom house as a single guy, I was able to charge $500 per room and have the tenants more than pay the mortgage, insurance, and property taxes.
What I'm saying is that paying to utilize assets (renting) rarely is as profitable as owning the assets. Renting is usually cheaper than paying a mortgage only because people rent smaller places than they purchase. Compare a rental of equal size and quality to paying a mortgage on something similar, and you will see it's cheaper to take the mortgage.
Lastly, fixed-rate mortgage debt is a good way to hedge against inflation. As cash devalues over time, the fixed monthly payment remains the same. In real terms, the payment amount reduces over time while the property value tracks (keeps up with) inflation.
The only way to reduce national debt is to reign in spending, increase taxes, or devalue the debt through inflation. Considering China owns much of our debt, which method do you think we'll be utilizing the most? If you think inflation, then hedging against it is a wise decision.