Is now the time to buy a home or wait it out? - Page 3

DaveF · 05-03-2008, 02:33 PM

Quote:

Originally Posted by mylan

Paying a bit extra on the principal can only help the situation, i've been told an extra mortgage payment a year can reduce a 30 yr. to about 23 yrs. although we haven't been able to do that yet. We bought in 2004 at the height of the boom with a bit more than the 20 % down but taxes and insurance seem to be eating up more of the mortgage pie these days. We were adament about not paying PMI though.

That applies for ~7% interest rate, I think. I ran the numbers for my 5.3% rate, and it only saves about 5 years on the mortgage. And you compare that to investing the same money elsewhere, and it tends to work out better.

That said, there's an emotional aspect to paying off one's mortgage.

Adam -- WNY, indeed. What's happening in Saratoga to boost housing? Ah well. No earthquakes. No two hour commutes. No droughts.

KurtEP · 05-03-2008, 07:48 PM

Quote:

Originally Posted by DaveF

That applies for ~7% interest rate, I think. I ran the numbers for my 5.3% rate, and it only saves about 5 years on the mortgage. And you compare that to investing the same money elsewhere, and it tends to work out better.

That said, there's an emotional aspect to paying off one's mortgage.

Adam -- WNY, indeed. What's happening in Saratoga to boost housing? Ah well. No earthquakes. No two hour commutes. No droughts.

Arguably, you can run the numbers and often make more investing the extra money somewhere at a higher interest rate. I'd say that's fine so long as you pay the mortgage off with it when the amounts intersect.

One important thing about paying off your mortgage is that it dramatically reduces your exposure to things like problems stemming from job loss and a bad economy. You have to sink a lot farther into the hole to lose a house you own outright than you do to lose one when you are mortgaged to the hilt.

Philip Hamm · 05-03-2008, 08:41 PM

Quote:

Originally Posted by DaveF

So what do people think about 5%, 10%, 20% down these days? When I bought, I bought a house for which I could pay 20% up front -- I wasn't going to have any PMI.

The past year, I've been paying a bit extra towards the principal, but
I'm realizing that doesn't make much financial sense. Do people do that these days: pay ahead on their mortgage to try and help reduce the long term mortgage? Three years ago, there was no point: you made more in appreciation just waiting. Unless you live in upstate NY where housing has been almost flat for 30 years...

If it's a choice between paying a little extra on the mortgage and funding an IRA, then fund the IRA. If you've got a little extra to put into the mortgage after the IRA and other important things, go for it! If you intend to stay in the house it can only be a good thing.

DaveF · 05-03-2008, 09:16 PM

Quote:

Originally Posted by Philip Hamm

If it's a choice between paying a little extra on the mortgage and funding an IRA, then fund the IRA. If you've got a little extra to put into the mortgage after the IRA and other important things, go for it! If you intend to stay in the house it can only be a good thing.

It's really a matter of, I need a financial advisor

The mortgage is paid on time. The 401k is funded. After that, is where do I put further savings and investments...CDs, extra principal on the house, mutual fund, etc.

Paying ahead on the house has its merits. But perhaps it's not as valuable as I thought. And money put into the house is illiquid - in case of job loss, I'd be better off investments I can cash out than a five years shorter mortgage.

Adam Lenhardt · 05-04-2008, 03:13 AM

Quote:

Originally Posted by DaveF

Adam -- WNY, indeed. What's happening in Saratoga to boost housing? Ah well. No earthquakes. No two hour commutes. No droughts.

Here's a recent article on the sheer math of it:
Housing market bucks the trend -- Page 1 -- Times Union - Albany NY

I can't explain the why myself. Within Saratoga itself, there's the trendiness factor. It's hip place for affluent, artsy people to say they live. There's also been a lot of investment in the general area lately which is helping to hold jobs in the area. The greater Albany metropolitian area never expands very fast (though faster than Western New York) but the heavy government footprint isolates it from the worst of housing slumps like this one.

For me, the biggest difference between western New York and eastern upstate is a foot or more snow each storm and about 10 degrees in temperature.

Philip Hamm · 05-05-2008, 08:44 AM

Quote:

Originally Posted by DaveF

It's really a matter of, I need a financial advisor

The mortgage is paid on time. The 401k is funded. After that, is where do I put further savings and investments...CDs, extra principal on the house, mutual fund, etc.

My financial advisor stresses the importance of having both an IRA and a 401(k). My statement of funding the IRA was assuming that both a 401(k) and an IRA are being funded.

todbnla · 05-05-2008, 10:36 PM

Update: We went back to the home for a 3rd viewing, while there we went ahead and made an offer of $92 p/sf versus the $112 p/sf asking price. So now the game begins...Round one.

Quote:

So what do people think about 5%, 10%, 20% down these days? When I bought, I bought a house for which I could pay 20% up front -- I wasn't going to have any PMI.

In 2003 when we purchased our last home due to having good credit, we were able to finance 100% of the purchase price, we had to get PMI of course, in 2005 we tried to have our PMI removed and our home had proven substantial equity but our bank (CHASE!) after we paid $500 for an appraisal, would not budge because we were shy by like 2% of what they considered a safe amount of appreciation, WTF! Anyway in 2007 when we sold our home, it sold for almost double what we paid...I will never get PMI again, we plan to put 20% down on the next home we buy. And no more CHASE loans for us.

YMMV

todbnla · 05-06-2008, 11:12 PM

Our seller countered our initial offer with a reduction of $8500 and that was all she had in her so we walked away from the table. Looks like she may have more in it than it may currently be worth?
Oh well, bring on more listings.

Dennis Nicholls · 05-07-2008, 09:58 AM

Here's the link to an interesting set of US maps, by individual county, showing housing and other economic parameters (e.g. employment). Maybe this will help your thought process. (PDF format.)

http://online.wsj.com/public/resourc...df?mod=WSJBlog