Will you buy a house now?
- Thread starter LCSilence
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mariner555
Registered Users (C)
My view is dont buy a house !! it gives you more flexibility. Cash will grow if you invest properly .. also cost of maintaining a house if high. also instead of going out of status it is better to move out and come back to USA after a year. ofcourse the equation changes if you are paying very high rent.newbies said:Cash is King but cash will not grown. 100K cash is still 100K for the next few years.
Let say one of my neighbor. They are on H1 also. They drop for the new house like you did in July 2003, move in Oct 2003 with 390K house. 2 weeks ago. They put their house on market with a bit lower than regular price due to moving (price: 570K) and got sold in 3 days with 600K.
Let see how they made: 80K drop and closing cost in 2003 becomes 290K today ( minus the cost of 2% plus 5K = 17K for selling). They got 273K today.
What do you see ? You can sell your house very fast if puting the price a bit lower than the market. However, you will get the bid price much higher than your current price
Yes, it is risky if you lose the job right after getting the house, but it is not so bad also.
The same story on my neighborhood. For 1 house, first guy comes in the first pharse and books for 400K (this is a big house, around July 2003). After few months before completion, he is affraid to lose his job (like you) and drop out. The second one come in with the price 460K on Feb 2004 ( builder loves this since they got 60K more because of the first guy drop out). The takeover guy put the house into market right after the whole neigborhood complete on 04/2004 and got it sold for 540K. So, he made 80K in less than 1 month of owning the house. Minutes all stuffs and tax, he made at least 40K in a month. What is an investment ? He is on H1B also, but he did drop 2 different houses. That is why he sold this one right after closing.
don't be another fool in the tax pool
Are you guys sure you wanna be another fool to be taxed by the local authority? Here is my opinion.
I bought my house a couple of years ago, ignoring my H1b slavery. Now let's do a simple estimate.
Every year end, I'll shed thousands of dollars, much more than Rajiv Kanna's published rate for his full blown GC service, to the local tax authorities.
The ISD tax rate rose to 1.72% this year from 1.69% in 2004, to offset the 2.2% decrease of appraised property value of my house.
My October water bill is $370.20 (about 8-10 times the average) based on the monthly reading, on October 12, of 48,000 gallons of usage. Last October's usage at the same property was 2,000 gallons. I read the water meter at 15:30, October 22, and found it only moved 2,100 gallons since the last official reading ten (10) days ago. I noticed some trickling leakage, though. Therefore, I'd pay for the repair job soon.
Given the current market condition and interest rate trend, those who complain of losing $30,000 over a few years of GC waiting might, on the contrary, be blessed of not having gotten into the housing market.
If you wanna make money, be short QQQQ or SPY by purchasing put options to expire 18 months later. I remember I made a few ingenious calls on these two index traded funds on this forum. I believe I'd continue to be a genius. If you wanna preserve your capital, buy physical gold, on the dollar profit of which the government does not tax.
Are you guys sure you wanna be another fool to be taxed by the local authority? Here is my opinion.
I bought my house a couple of years ago, ignoring my H1b slavery. Now let's do a simple estimate.
Every year end, I'll shed thousands of dollars, much more than Rajiv Kanna's published rate for his full blown GC service, to the local tax authorities.
The ISD tax rate rose to 1.72% this year from 1.69% in 2004, to offset the 2.2% decrease of appraised property value of my house.
My October water bill is $370.20 (about 8-10 times the average) based on the monthly reading, on October 12, of 48,000 gallons of usage. Last October's usage at the same property was 2,000 gallons. I read the water meter at 15:30, October 22, and found it only moved 2,100 gallons since the last official reading ten (10) days ago. I noticed some trickling leakage, though. Therefore, I'd pay for the repair job soon.
Given the current market condition and interest rate trend, those who complain of losing $30,000 over a few years of GC waiting might, on the contrary, be blessed of not having gotten into the housing market.
If you wanna make money, be short QQQQ or SPY by purchasing put options to expire 18 months later. I remember I made a few ingenious calls on these two index traded funds on this forum. I believe I'd continue to be a genius. If you wanna preserve your capital, buy physical gold, on the dollar profit of which the government does not tax.
will_get_there1 said:
hi folks, here is my experiencewith buying a house. i bought a new home a couple of yrs ago when i was about to get my gc. i got the gc. i cleared my medical license exams and got into the training this yr ( the salary is less now compared to what i was making in my previous job). my cars were paid up and had some balances in the credit cards which i accumulateddue to my house purchase,application process for the residencies and recent trip to india etc. well my estimate was i have an equity of 40-50 thousand dollars in it so when i sell the home i can come out of all these debts and can have a peaceful training with this modest salary. it didnt go as per the plans. my house is not sold till now, the economy has gone bad in that area and lots of houses are on sale, all my equity is vanished due to the market downtrend,weii iam willing to take a 10k loss to get rid of the house, still no buyers. iam paying mortgage through my nose . i tried to take equity loan, but it was appraised for very less than what it was before, trying to rent the house, well its a small town, there are not many people out there who want to spend that kind of money(1000 bucks per month) in that small town. my credit card balances are killing me, before, the credit card companies used to loom around me like hell due to my good credit rating, now when i spoke to them to go easy with the payments for the next couple ofyears as i have a lots of potential to make good dollars, they said they cannot assist me because i dont have any money to pay after the living expenses. now my options are to go for bankruptcy and continue with the trg or move back to my own home, do a tech job to make the house payments and forget about all my physician dreams in usa. well moral of the story, dont buy a house if u want to move out of it in a couple of yrs, also dont buy a house in a small town, if at all u buy, have some liquid cash to play with, if u move out of the house due to any circumstance. my best suggestion is, go rent a home to ur liking and live in it till u need. this owning a home, putting equity into it is all bull crap. in reality we mostly pay interest and not toward the prinicple, ofcourse u can claim that in the yr ending in ur tax returns. but its all a headache, the lesson i learnt now, not to buy a home in the coming yrs in this country. between me and my wife, we have a potential to make a boat load of money per annum if things work out ok and if i can tide over this situation and dont go back into that money pit. well my life had become a financial hell due to this house mess. so decide for urself. good luck to the home buyers. i just gave my honest experience to this topic, thats all.
Jackolantern
Registered Users (C)
Agreed, you do have to be careful about which state and city you buy a house in. Unless you have GC and are sure you'll be in the same place for 5-10 years, don't buy a house in a small town that has people moving out; only buy it in a city that has a lot of people moving in every year. Also don't buy something for which the mortgage is much more than the rent.hcgcwait said:
For the places I am looking at buying, the mortgage is about exactly the same as rent. On top of that there are property taxes and insurance, but the mortgage interest tax deduction cancels out most of that. There is still maintenance expense and the loss of liquidity, but overall it still would not be terribly more expensive to buy than rent. In places where the mortgage alone is already 25%+ more than renting, it would be nuts to buy.
I was looking to buy a house since last 6 months. The place where i live currently i have access to train to go to work. I will not be able to afford a home in the current area. So i was looking for something about 10 to 15 miles north of where i live.. That means i will have to commute for more than 1 and half hr each side to work. The houses are 10 to 15 yrs old.
Now the financial part... the mortgage + insurance + taxes + HOA fees comes out double than my current rent. The closing cost.. will be approximately 2 and half % and escrow charges comes to 1 % at the time of closing.
Now if the house is 10 yrs old there is a possibility that the roof needs to be replaced in couple of yrs...and the regular maintenance is also another headache. The commute will add stress, mileage on the vehicle and will the vehicle will depreciate faster.
My friends who bought houses in that area complain daily about the commute, the maintenance on the house over the weekends and other expense.. They have bought homes around 2 yrs back and the value of the house has increased only 8 %. If they sell it right now they will not be able to recover what they paid.
One very important thing that they mentioned was there is lots of space and their kids can play freely and safely in the backyard which i guess is priceless.
Now the financial part... the mortgage + insurance + taxes + HOA fees comes out double than my current rent. The closing cost.. will be approximately 2 and half % and escrow charges comes to 1 % at the time of closing.
Now if the house is 10 yrs old there is a possibility that the roof needs to be replaced in couple of yrs...and the regular maintenance is also another headache. The commute will add stress, mileage on the vehicle and will the vehicle will depreciate faster.
My friends who bought houses in that area complain daily about the commute, the maintenance on the house over the weekends and other expense.. They have bought homes around 2 yrs back and the value of the house has increased only 8 %. If they sell it right now they will not be able to recover what they paid.
One very important thing that they mentioned was there is lots of space and their kids can play freely and safely in the backyard which i guess is priceless.
Need to see
You should buy house only if
1) If u can afford it ..at the max of 150-175% of your rent including all expenses ( TAX+HOA+Maintenance). For example, if you are staying at $1200 for 2 bedroom then u can afford $1800-$2000 house ( 3 Bedroom and more space ) since u can get $300-$400 in tax return ..still u will be paying $300 more than ur rent.
2) if you are staying in the house for at least 5 years ( kind of stable job)
then only u can breakeven with the selling price ..I assumed that your home did not appreciate.
3) Have buffer about $20K in your bank where u can continue to pay if you losse ur job.
4) if your are on H1..u can take the risk depending upon ur nature of job & stability
5) if you are not buying the house then make sure you invest the money somewhere else.
6) If you have stayed in the house for 10 yrs..then to be sure you will not loose money.....in 10 Yrs..you would have spent $200K in your rent ..with no return
Least but not last...you need to have courage and strength to take the risk
but at this moment ..interest rate are going up and real state is about to take the hit for sure, not a very good time to buy to high priced home but if you can afford it easily then go for it since you can't wait another 10 years for pass the wave.
You should buy house only if
1) If u can afford it ..at the max of 150-175% of your rent including all expenses ( TAX+HOA+Maintenance). For example, if you are staying at $1200 for 2 bedroom then u can afford $1800-$2000 house ( 3 Bedroom and more space ) since u can get $300-$400 in tax return ..still u will be paying $300 more than ur rent.
2) if you are staying in the house for at least 5 years ( kind of stable job)
then only u can breakeven with the selling price ..I assumed that your home did not appreciate.
3) Have buffer about $20K in your bank where u can continue to pay if you losse ur job.
4) if your are on H1..u can take the risk depending upon ur nature of job & stability
5) if you are not buying the house then make sure you invest the money somewhere else.
6) If you have stayed in the house for 10 yrs..then to be sure you will not loose money.....in 10 Yrs..you would have spent $200K in your rent ..with no return
Least but not last...you need to have courage and strength to take the risk
but at this moment ..interest rate are going up and real state is about to take the hit for sure, not a very good time to buy to high priced home but if you can afford it easily then go for it since you can't wait another 10 years for pass the wave.
texancanadian
Registered Users (C)
One issue that everyone seems to bring up is the Tax deductable nature of Interest portion of Mortgage.
I have one clariication to make here - Ladies & Gentleman this only affects you if you are contributing the maximum allowable in your 401 K Plan. So if you are already contributing 14 K this yr and 15 K next yr in your 401K plan than the tax deductableness of mortgage makes sense.
I dont know how many of you contribute max on 401k and pay mortgage, but for ppl on H1B who decide to rent and not buy it is best to first max out your 401K since that is non taxed contribution also..
I have one clariication to make here - Ladies & Gentleman this only affects you if you are contributing the maximum allowable in your 401 K Plan. So if you are already contributing 14 K this yr and 15 K next yr in your 401K plan than the tax deductableness of mortgage makes sense.
I dont know how many of you contribute max on 401k and pay mortgage, but for ppl on H1B who decide to rent and not buy it is best to first max out your 401K since that is non taxed contribution also..
JackO,
"In places where the mortgage alone is already 25%+ more than renting, it would be nuts to buy."
How to compare a mortgage to a rent? You mean 30 year fixed rate mortgage? The rent is for two bedroom apartment or one bedroom or a house comparable to the house you want to get mortgage for?
Thanks
"In places where the mortgage alone is already 25%+ more than renting, it would be nuts to buy."
How to compare a mortgage to a rent? You mean 30 year fixed rate mortgage? The rent is for two bedroom apartment or one bedroom or a house comparable to the house you want to get mortgage for?
Thanks
Jackolantern
Registered Users (C)
I meant 30 year fixed with a 20% down payment (adjustable-rate and interest-only are too risky given that fixed rates are still low and interest rates in general are threatening to go up a lot). And the comparison is between renting and buying a similar place. For example, renting a 2-bedroom apartment vs. buying a 2-bedroom condo. Or renting a 3-bedroom house with a 2-car garage vs. buying a 3-bedroom house with a 2-car garage.LCSilence said:
True, in some cities it is difficult to find a 3-bedroom house or bigger available to rent, but with today's inflated selling prices, if you can find one it will usually cost a lot less to rent than mortgaging a similar place. Also, close substitutes such as 3-bedroom townhomes with garage are common enough in most places.
In some places in California a 3-bedroom that would cost $1800/month to rent would cost $3000/month for the mortgage even without property taxes and insurance. In those cases it would be nuts to buy. If you need the space of 3 bedrooms, rent it and save the difference.
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