Good question about upkeep. In the past, when determining my income level, loan officers have only counted about 70% of rental income because they assume the other 30% will go towards the cost of home ownership. Depending on the age of the house and local taxes, this 30% rule seems about right to me.

I disagree that home ownership is necessarily a bad thing. To have a valid comparison, the 300% figure you cite needs to be offset by what you would pay in rent during that time period. For the 3 houses I've owned in my life, I sold the first 2 for a profit and the 3rd one is worth at least 50% more than I paid for it. So, for me, home ownership has worked out very well.

As to the mutual fund idea, again, you need to offset the investment return with the return you could have gotten by the increasing value of the house.

but does the selling price include the amount you spent for repairs and upkeep, and the actual value of the house adjusted for inflation? I may have erred in my calculation, but if natural inflation is 4% per year, the amount you sell the house for would have to be at leat 300%, plus repairs, taxes, etc. Otherwise you would be losing money. As far as what I would pay in rent, if its lower than a mortgage payment there is no need to offset. It is already cheaper and will continue to be so. Only when rents equal or exceed mortgage payements does this become a valid argument.

#1 is correct. However, I pay $900 for a one bedrm and the mortgages would be less than my rent. However, factor in taxes & assessments and it would probably equal the $900. I dunno. It's tempting.

Yes, these articles are probably written by someone who has never owned a home. There are many, many, many expenses that go with a home besides the interest and principal depicted in the graph. Renters think that landlords are making a huge profit. But, who do you think pays for the gardner, repairs, new roof, paint, water, taxes, insurances, and more??

Owning a home is a big financial responsibility. In this era of job losses it is important to have flexibility to relocate too for an opportunity. You cannot easily sell a home now and relocate.

I would strongly encourage renting unless you have at least 20-30% as a downpayment and a secure job (+ a pension) so that you can truly afford all the expenses that go with a home.

It is articles like this one that led people who could not afford to be homeowners down a path that led to foreclosure. I hope people read past the title, read the article, and more importantly read these comments.

I would seriously look at renting.

Don't kid yourself, renters pay for insurance, leaky roofs, maintenance, interest and a profit to the landlord. It is all included in the rent. I've been a landlord and home owner for many properties during the past 30 years and during that period owning had always been the most profitable. Don't forget that during the last 90 years, at least, home ownership for the middle class has been their largest investment. Even though they pay interest over 30 years at the end they have a huge chunk of money that they never would have had if renting. That interest is tax deductible making home ownership still better to renting. Also consider how much your rent would go up in 30 years compared to a fixed rate of mortage.

For the vast majority of taxpayers the standard deduction is going to be more that itemizing and using the interest deduction, so that argument is not valid. An what if I do need to move for a job? Should I sell my house quickly and take a hit, or wait it out and be paying a mortgage AND rent? No, the traditional mortgage is for a different time. Things have changed, and those days arent coming back. A house may make financial sense to some, but it is not the right answer for everyone, and perhaps even less than most.

Just remember two factors that outweigh everything. Median Income of the Average Joe and Average Home Prices.. Those are both way out of whack, still, so Unless Corporate America decides to drastically raise salaries the latter will prevail meaning lower home prices. Can't have one without the other..

So if prices are still dropping, you wait.

Many people are out of the home buying picture unfortunately , because of their past financial difficulties....bankruptcies , foreclosure , job status , ect. .....

It is a good time to buy though...but the fees have surely risen...

"What about upkeep? Someone who rents for 7 years hasn't shelled out money for plumbing repairs, leaky roofs, cutting the grass, etc., not to mention property taxes, insurance and all the other expenses people never mention." Why do people think like this? Where do they think landlords get the money to pay for plumbing repairs, leaky roofs, cutting the grass, property taxes, insurance and other expenses? From the money paid by the renters. Wise landlords do not hold onto rental properties over a long term if the rental payments do not cover the costs mentioned. They may cover an estimated short term shortfall in rental payments, but they will attempt to make it up when the market improves by charging slighty more than what they would have otherwise.

Detroit, you seem to be missing the obvious point that inflation will cause your home value to appreciate that 300%. "Buying low in a boom area" has nothing to do with it - if your house isn't worth 300% more 30 years later then it has gone down significantly in value.

Of course a renter is paying for property taxes, insurance, and upkeep - they are simply included in your rental payment.

Your claim about the standard deduction is again flawed - if you own a home, unless it is extremely cheap, you will be itemizing your deductions, because property taxes and interest payments will be much higher than the standard deduction for at least the first ten years.

And your claim about moving quickly is just as valid for leasing - unless you're on a month-to-month lease, having to move quickly is going to be a big hit. Moreover, homeowners can actually move fairly easily - you simply rent out your house.

In short, your arguments are facile and insubstantial. Home ownership is in general a good deal. It sounds like you just got some bad advice from someone who didn't bother telling you about taxes and insurance - I definitely knew about those things long before I bought my house.

I don't buy any of this Obama supporters left-wing propaganda. We still haven't seen the bottom of the real estate market.

The problem lies in how much harder it is now to get the mortgage. Granted, there were problems with the big lenders but they are now passing on their troubles to the middle americans trying to own a home. My husband is a CPA and you wouldn't believe the things banks ask him for on behalf of his clients. It has really gotten out of hand. We also have 3 rental properties and they have never been anything but big pains. We have never turned a profit on them and don't get me started on some of the renters we have had. You can do background checks all day long but until they move in you never really know what they are going to be like. I would sell them all in a minute but with the market it is not a good move right now.

good news is bad news to crazies

I have seen rent going up and up, but services going down and down. When there is a hike in gas prices, raise the rent. When the price comes down, rent stays high. When there is a raise in property taxes, raise the rent, when there is a raise in oil prices, raise the rent. Like the rest of the US, prices are going up and up. Our salaries aren't, when will we finally see the average citizen unable to afford rent and milk?

Whiners are nit-picking home ownership again. Have you never had to deal with landlords that make no repairs and jack up the rent each year? Speaking as a Real Estate Broker and Investor with 25 years experience, this chart means that economic fundamentals all point towards dumping your gold and silver at the top and buying at the bottom. When fundamentals screams buy or sell, pay attention. Its like a big current that carries you along to either hell or the promised land. Don't fight it, just learn to ride it right. Buy now at the BOTTOM.

Detroit - in order to pay 3x the home value in mortgage payments over a 30 year term (with 20% down), you'd have to finance at a fixed rate of 12.2%, or a comparable variable rate over that term.

Mortgage rates remain near 4%, which means, making minimum payments, you pay a TOTAL of 37.5% of the purchase price in interest over that 30 year period. You obviously also enjoy the appreciation of the property in that period.

Your numbers are simply wrong in the current lending environment. even with less than perfect credit.

"Moreover, homeowners can actually move fairly easily - you simply rent out your house."

Really? What if you don't want the PITA associated with being a landlord? Also, once you rent a house out, good luck ever selling it.

The problem lies in how much harder it is now to get the mortgage. Granted, there were problems with the big lenders but they are now passing on their troubles to the middle americans trying to own a home. My husband is a CPA and you wouldn't believe the things banks ask him for on behalf of his clients.

But, isn't this a good thing? Owning a home should be hard. The fact that it was so easy to get a mortgage in the first place is the reason why we are in this housing mess. I definitely got put through the ringer when I brought my home (even with more than 20% down), but it didn't really both me all that much. At the end of it I actually felt even better about my ability to carry the costs!

I do agree with you that renting out a home is not nearly as easy or glamorous as people like to think. I would do everything possible to avoid having to rent out my home. Between crazy renters, laws favoring tenants, 2am calls about an overflowing toilet, property upkeep from a distance, insurance, liability, etc. - it's a mess!

Buying a home isn't really much of an option for most people nowadays.

With the uncertainty of being able to have stable employment and also a stable livable wage at the same time seems to be a thing of the past. After all the greedy few must have ever greater profits at the expense of society as a whole, so to buy into something long term is foolhardy at best.

By the way, where is the flood of new jobs now that the exploiters got their big tax break extended ?

Interest rates should not be kept artificially low by the Fed. At these levels, bank accounts, CDs, treasury bills, and other low risk yield investments that many seniors use are now worthless with little to no interest paid.

Interest rates at these levels are also a big part of what got us into the mortgage mess in the first place. Beyond that most people are working for minimum wage or near it these days if they even can get a job, and who can afford a home on that ? The rich are getting all the money, and the middle class have been screwed !!!!!! Just my 2 cents ....

Who ever is responsible for the mortgage crisis and booting people out their homes in the first place is sitting back in the easy chair trying to figure out what other B.S. they can come up with to put another spin on it.

Purchasing a home is reserved for those homes that can't be rented. Those "must have" properties not available for rent must be purchased. Otherwise, home ownership makes no sense. The issue is liability. TRenting limits your liability. Just ask anyone who has their head underwater with a mortgage.

Owning a home is FAR better than renting. Over 30 years, your rent will go up 300% or more. I was renting in 1971 for $150 per month. Today the rent is $2,300 for the same apartment in Santa Monica. So, yes, it depends where you are living. But, when I bought in 1991, the house was $195,000. Today it's worth a low of $800,000. And, the interest is a write-off. Writing off $9,000 per year really helps lower your taxes. Again, depends where you live. S. CA is more expensive. Kansas is cheap, but so is rent. Over all though, buying is great. I just got a reverse mortgage. Paid off the mortgage and cash in the bank through an equity account. My wife and I aren't moving, and can live in the house until we die, no matter what the house is worth. But, our house will start to increase in value in about 2014. So, we will always have equity.

If you buy a house on a 30 year mortgage you will be paying three times the home value in principal and interest payments. Taking into consideration inflation, you will most likely lose money on the deal. Unless you get lucky and you buy low in a boom area your home is not going to increase its value 300%. Sorry, but those are the facts.

Ok. lets follow this trough. when that 30 years is up, you own the house. If you'd rented, you shelled out a bunch of money, but don't own anything at all.

"...this article brought to you by the American Realtor Association."

Just keep sitting back, and let the banks and sellers fret more, as they have to lower prices, especially with the foreclosures continuing to flood the markets.

This discussion goes nowhere, until the lender says, "Yes". Right now, unless you have "numbers" in the high 700s, and can plop down 20%, you're outside looking in at the settlement process.

I've been a real estate investor for more than 25 years, and can honestly say that, although a SMOKING HOT time to buy is right now, banks are clutching on tightly to their cash in ways that seem bordering on stupidity. The term "Lender" is synonymous with tight-wad.

These numbers are way flawed, and when I found this out in 2002 I let the bank take the house.

Detroit-Storm - First, I'd like to say that you are one of the major reasons that we are in the financial mess in which we find ourselves. Why didn't you have the moral character to honor your loan agreement and sell the house rather than allowing the bank to foreclose? Housing prices were still increasing dramatically in 2002. You are a selfish coward. I hope that the incident at least ruined your credit for a period of time.

Second, your statements on the benefits of home ownership are significantly flawed. One thing that you forgot to mention is that there is significant savings on one's federal income tax when one can itemize and deduct interest on the mortgage. My mother bought her house in 1962 for 30K. When her mortgage was paid off in 1987, the house was worth approximately 150K. That's an increase of 500% in the value of the house and doesn't include the savings on her income tax. It was worth 310K right before the housing bubble burst, and is now worth at least 220K, an increase of 733% over a period of 50 years. Her only housing expense for the past 25 years has been property tax and insurance costs, which average less than 200 dollars per month. Meanwhile, rental rates for a decent but not luxurious apartment in the same area are about 900 dollars per month. That example is only one of many where your reasoning is significantly flawed.

Third, if you know of any low to moderate risk mutual fund that is currently paying 8-10% per years, then you should share your secret with the rest of us.

First, mortgage rates are on their way up.

Second, what kind of house can you buy for $700/month and where would it be located?

Third, you need a really good credit score (above 720) to qualify or you will have a higher rate plus points.

Good credit rules the mortgage business!

NO, MSNBC.Countrywide!

Moderators,

"Maybe" not intentional but Detroit-Storm, post 1.2, has embedded advertising link. Thanks.

(OK, 3's change... now #71.2)

UMGator

| These numbers are way flawed, and when I found this out in 2002 I let the bank take the house.

Detroit-Storm - First, I'd like to say that you are one of the major reasons that we are in the financial mess in which we find ourselves. Why didn't you have the moral character to honor your loan agreement and sell the house rather than allowing the bank to foreclose? Housing prices were still increasing dramatically in 2002. You are a selfish coward. I hope that the incident at least ruined your credit for a period of time.

Another shill. Have you ever read the loan agreement? The loan agreement says that I will let the bank take my house if I do not make my mortgage payments.

He let the bank take his house. This is exactly what he promised he would do.

When did it become dishonorable to do exactly as one has promised? What does he owe you? Who are you? What gives you the right to judge him?

Look at the loaded questions :

• Now, thanks to falling prices and low mortgage rates
• Maybe next year if prices stop falling
• Never, I doubt I’ll ever be able to afford it

How about :

Now

Maybe in a couple of years if prices continue to fall more

Never : owning has been shown to be an investment that returns -0.5% in the long term

Not sure about buying a home now unless the bottom has been reached or you are getting a really cheap house..which of course is going to mean the house will most likely need lots of work. Then,,,there is just getting the loan...that in itself is not easy to do today.

Good point, ivan. Here's an idea:

Call lenders regarding their REO inventory (Real Estate Owned). If you qualify for a loan, try to get an ARV (after repair value) loan to help you purchase and improve the property. A good, RELIABLE (key word)contractor's estimate will be needed. Banks are hopping for folks with good credit to reduce their inventory, and improve their (the bank's) investment, in the process. Win-win. No gimmick, just plain common sense and research. Good Luck. (Heard NC is REAL nice. Like to come to Cary NC to check out new digs).

The money men will do everything in their power to make sure not to many homes are sold, it may help President Obama and they do not want that!

yeah W ever . you aholes told me 2008 was "the time to buy!" dumba**'s. good thing I didn't fall for you crap!

Bought my first house when I was 18 (my dad co-signed and I saved up the down payment working in high school) sold it after 7 years and bought my second house when I was 25. In a few years I'll sell this one and by a bigger house.

Buy a house, it's better than renting and it's a wonderful feeling getting out there and working on the yard, or fixing something around the house. Nothing can compare to joy of owning your own home! I know that sounds cheesy, but ask the people you know who own their house if they would ever go back to renting (paying another person's mortgage).

Lot's of people are only concentrating about the upkeep, what about when you make money on your investment? I bought my home in 1997 and spent 100K and was able to sell(2004) and make a nice profit. I rented from 2004 until August of 2011 when I paid cash for my home thanks to the profit I had made from my previous deal.

People also need to put a price on the quality of your existence when you own your home vs. renting. Although I was renting in a nice place in coastal community in San Diego, you must NOT forget that most of the time you share common walls with your neighbors and hear things you should NOT and see things you should NOT. I will NOT rent again unless I have to.

Got my house in '99. Paid $97.5K. New tile roof and supporting structural(rafter joists, facia, soffet). Landscaped. Turned my 30 yr into 1 15 yr just over three years of advanced payments(knocks down the principal fast), took almost 3 pts off my rate. Six years left...

Coulda sold my house cash during the height of housing bubble madness for 400K+, but then what? All new taxes, insurance, and other rates. Screw that.

Stayed put. Need more upgrading, bigtime, on my 60 year old house, which I love. Can't afford them. Can't afford the mortgage and a life, so I gave up my life to keep the house. Homeowner's Insrance doubled, as well as rates on LX, Utilities, Taxes. Crap. Get into that old Art Deco Pink Pastel tub and LOVE IT!!!

<breath>

Just squeaked out of going into foreclosure (PHEWWW!!!!), just barely able to cover the nut for it all.

And I wouldn't change that for a thing. It is MY House and Home, and that is indescribable unless you've lived it.

:-))))))))))))

But if anything at all happens to my health/ability to work in my field, I'm living under a bridge in three years. That's how long I could probably get away with not being evicted from first unrecoverable foreclosure action notice.

Pick your Poisons VERY carefully...

Peace

Stinking FatAss Schoen is now farting for the NAR. It was the NAR that said real estate prices never go down. Buy Now! The NAR said home ownership is an investment rather than a place to live. Buy Now! Kick your landlord to the curb, you're wasting your money. Buy Now! Finally, the NAR has issued several propaganda since 2007 via journalists like Schoen, proclaiming housing market has reached the 'bottom.' Buy Now!

So, gaseous stinking farting Schoen presents a chart that would have you go out and buy a house, today, even though housing prices continue to spiral downward despite several government interventions.

The bursting of the housing bubble will follow the same trajectory as the Tulip, SouthSea, Railroad, and Dot-com mania: Their collapsed prices will stabilize at an equilibrium point where supply and demand meet. This point has not yet been reached due to government interference. The decline of the current housing prices have been temporarily slowed due to government supports and the Federal Reserve. But as the government supports gradually expire, the housing prices will resume its decline.

While the self-serving NAR wants people to buy housing, local government operations depend on home ownership. Property tax, one of the unique taxes of America, funds local government and provides jobs to the government labor union workers. Local government encourages real estate ownership as it provides ample opportunity for revenue enhancement as well as a legal remedy to civil and criminal claims.

With so many people leeching off the homeowner, is it surprising that propagandists such as FatAss Schoen is a proponent of home ownership for the masses?

I don't know how this graph was calculated but I am assuming many depressed economies are included.

Here in mid-Hudson NY you cannot rent or buy for these low amounts. Rents for a 2-bedroom start at 1200/mo, not including any utilities. And it aint the Taj Mahal.

A mortgage for a decent (not a handyman special) home will start at 1200, assuming low taxes without municipal services.

onejulia - Part of the reason that graph is misleading is that it does NOT include taxes and insurance or anything else beyong Princpal and Interest. I'd say half my housing expense is P&I. The rest is taxes, insurance, maintenance, etc.

Your math is fuzzy.

When my mortgage broker told me when I bought my house that I'd pay DOUBLE in principal and interest, I replied, YOU MEAN I GET A FREE HOUSE????

The house will be worth at LEAST DOUBLE with inflation in 30 years, meaning if I sell in 30 years, I get back everything I paid in principle and interest - free rent.

The best time to buy a home is when you can put 50% down or pay cash. Honestly, who wants to be stuck with a 30 yr mortgage and all the shenigans that go on with these mortgages by the banks? People today are not stupid.

Cash is the way to go, I bought my Florida (retirement) home with cash. When I done with my Career, I dont plan on retiring. I just plan on a job at home depot or on a golf course for extra side money. I dont want to have to pay a mortgage. Plus I put my son on the deed so he will have a place to live when Im gone.

Good point. Regardless of direction, when I'm ready to buy a house, I will, because I'll want to build equity. Sure beats paying all that rent, and owning nothing.

One thing I want to point out to most people, is that a house is not an asset. It is a liability (that which costs money) until the point you sell it off, then you realize its value.

My parents had that "depression mentality" - bought a home,not for cash,but at the end of their working years,the house was paid. My husband's philosophy was always to keep moving up in house value. Although we have no debt(except the house) we are looking at retirement amidst an economy that has hit us hard and will still have house payments. It might be old school,but I wish we had done as my parents did.

Many of the things that are causing rents to go up also apply to living in a house you own - it's a lot more than mortgage payments. Property taxes, insurance on the structure, maintenance and repair costs, utility payments - when these go up, rents go up (and they also make the cost of living in your own house go up.) When a water heater fails in the rental property, the renter will eventually help pay for it (spread out among all the renters in rent increases.) When one fails in an individual's own house, they must pay the full amount right away if they want hot water.

It would be unwise to count on a home value as an investment - it may not increase continually, and it certainly may not increase as fast as inflation. But it provides a place to live with more privacy, freedom, and perhaps more safety/security than renting. If you are not forced to move every five years (for employment, etc.) buying a house can work out. Don't plan to use it for a piggybank.

I bought my house 3 years ago. I have paid about 300.00 less than in rent. Yes I have repairs, so it does equal out. With inflation, I would have paid more for rent, but my house payment stays the same. At the tend, (I do pay extra on principal to same money in the end), I have a house and no payment, (yes I do know insurance and taxes).

If you have the cash and no income tax, I agree with paying cash!

The whole point of financing a house is to have some place to write off a portion of your taxes.

A point on your statement, Auzziegirl. A home mortgage is a "Liability". It produces NO CASH FLOW.

Even if you factor in the interest deduction, payments far outway the deduction, especially at the initial years of amortization. If you have the means to buy your home cash, do so. If not, plop down as much as possible and barter for the best interest rate. At current rates, one can probably get near 3.25% with a 20% down. Practically free cash. Although, if you don't have a credit score hovering around 750, you're probably begging the bank, anyway. Times are tough, banks are being idiotic.

They could piss and whine without knowing the first thing about economics.

Its ok, everyone gets a Gold Star, an A+, a free pass for all. Fully trained, brainwashed, and sanitized.

America needs a very serious enema.

yes, houses should only be for those who deserve them. The American dream is available for some of us. The rest should thank the 1% who have trickled down on them.

Byl, nobody said anybody "deserves" anything. It was more like after you have worked your buns off and can afford it, then you buy a house.

I hate this article. Don't tell my tenants to buy a home. They keep me lucrative! LOL.

I live in Detroit most of the year, I see homes everyday for anywhere between 10k and 50k on the market. Nice brick homes than do need some work as they are 50 years old or so. The problem is, your taking your life in your hands living there. Once the people in the area know you have anything worthwhile in your home your a target.

Jolly,

So are you saying "ordinary guys" like Mr. Mittens don't live in your neighborhood?

right on dave...we're all living in the sewage out flow from these easy loan getters who inflated the bubble...biggest boon for trailor trash in history...bank useful idiots...now obomber useful idiots...

let us know how that goes. I hear a lot of people whining about everyone doing this, I don't know anyone this actually worked for. Wah the other guy got something, I want to live in a country where only the rich can get stuff for free.

Right on Dave and Bob! The bubble bursted when Obama was President. Lets make up history over and over. Lets be completely delusional!

harrow---read comments more carefully before responding

Bush bailed the banks . . .THAT is history. Politics aside, banks aren't lending to anyone unless they have numbers hovering around 750. So, the whole article is somewhat ambiguous.

Let's leave the politics out of this. Banks suck, we all know it, and banks will always cater to the wealthy, and screw the middleclass. Why else would the banks be lending RE investment loans at 70% LTV. Really, what middleclass RE investor can shell out $300K plus settlement costs for a million dollar multifamily. Only the rich will make out in this down market. VERY TOO BAD!

Correct, John. Taxes, insurance (on structure), upkeep, and in some cases, utilities/services like water, sewer, trash collection, snow removal, lawn mowing are included in the rent (sometimes even heat.)

I love owning my home, but I live in a townhouse where they cover yard work and snow removal. Of course, I pay dues for that.

I do find it shocking though that I pay mortgage, tax, interest and dues for a two bedroom townhouse where I live now and all of that is equal to or less what I was paying in rent for a railroad 1bdr in the New York City area.

Then, Josh, don't buy a house. Home ownership is not for everyone. Somewhere in American history, somebody said the "American Dream" is owning a small plot of earth with a shelter build on it. Somewhat like being a little "Land Baron", of sorts. Kinda' like dark ages stuff (lord of the manor, serfs, etc. LOL)

Americans like to own crap. I know, our company has a nice RE portfolio. Kinda like Lord of the manor, serfs, etc. Again, LOL! Do good! Peace!

Richard

Because it's not really an "investment" anymore (investments represent an instrument that cause rise or fall in value). But here in Obama amerika, if the value of your "investment" falls, you scream that it's unfair and the good socialist government that we have now gives you a bailout !!

dave, you obviously don't know what a socialist government is.

Dave and all the other Cons want us all to rent our houses from the "job providers" as they sweep into our country from Canada; putting 20% down on houses and renting them out for 1200 dollars a month, to us-the serfs. Super rich Dave and all of his super rich friends, like Romney, do not want us to own anything in this country and we should just let any country buy our property here and rent out to us because it is a FREE MARKET you commies. Its fine for Bush to bailout the banks because they are rich and you are not. And we ultra rich Daves out there, want this class warfare to continue until all poor people are dead. They will be homeless and hungry; will super rich Dave allow you to get a food stamp? Hell no. Sympathy for no man woman or child. Bail out the banks per Super rich Dave and his Cons; try and save the housing market then you are a socialist. Super Rich Dave, I hate to say it but you are a Socialist.

Believe it or not some people buy homes because they want to put down roots and have a stable environment for their family. Does it really matter if you lose money in the near future if you plan on LIVING in a house not sucking out equity or expecting some kind of return. I am in the process of buying a first home right now. If we lose money I really don't care I never lived in the same place for very long as a kid moved on average every year it sucked. I don't want my kids to go through that.

That's how it works in Germany, only its the Russians that build houses and jack up the rent.

anana, yes, and some of us move around a lot, so renting often makes sense. I've owned a few houses along the way, but renting is great. Just turn off the lights, drop off the key, hop in the car, and go....

Dave, why are you politicizing this rather inert subject. Point here is that the housing market offers some credit-worthy renters the chance to purchase a home at a smoking hot value.

As Richard points out very precisely, the banks are lending at 20-25% LTV, making it almost impossible for the typical middle-income earning to fess up the down cash, plus settlement costs. E.g., the current lending environment is very "wealthy-leaning". Lenders right now aren't politicizing their decisions, they're just asking the American worker to bail them out, then in return, screw them royally. Not really a "Socialist" concept; rather Capitalistic.

PS: Your home is NOT and investment. It is a liability. It makes no positive income to your bottom line, unless you buy it cash, appreciation is desireable, and re-sale proves lucrative.

Home ownership is a project. If one is not responsible to see the project to fruition, so to speak, one should rent and let the property investor do the hands-on.

Uncle Gar: Congratulations on your purchase. You most likely will have a positive appreciation on your condo purchase. Mobile homes, in many states, are viewed by lenders as "cars / vehicles", and subjected to the same scrutiny for valuation.

Condos are at a fantastic value right now, given the beating our RE in America has taken. Some VERY nice condos in big cities are a fantastic grab. Again, congrats!

Glad you found something Uncle Gar, sorry that it is a condo. I inherited one and I saw it being built and told my father no to buy it, my mohter, his ex-wife said the same thing. It's paid off, stuck with HOA fees and a bad HOA. I personally hate HOA's and at the momement stuck with this POS condo. Dad paid 59,900 for it, worth 39 to 40K at the moment. I do not like being constrained by an HOA. I have a totally private entry I don't see other condo owners, if it snows here I have to wait for the condo's hired co to clear it, well this can be 1 to 3 days after it has snowed, I can't wait that long so I do it myself.

Good luck

P.S. I have hired a HOA attorney so I will likely be taking the HOA to court.

But you do realize that if you rented for 30 years and paid $600 a month let's say, you'd have paid $216,000 with nothing to show for it really. You would feel it's a waste to lease a car for 3 years, so why would housing be any different? I do understand there's a freedom of not having to worry about fixing things, but the landlord can raise rent and continue to do so or worse, not pay the mortgage, take your rent money, and you find out you have 60 days to leave as the property is being foreclosed on. Property taxes, unless you live in an affluent area or see your home value shoot up exponentially, may only run about $200 a month. And when your house is paid off, you do have equity in it. May not be much, but you have something to show for it.

because some of us have no way to get 20-30,000 for a down payment, let alone maintenance costs.

Renters pay property tax too, of course. It is included in the rent, with maybe a little markup for 'handling'. In my state, property tax for homeowners is capped at 1% of market value/year, while residential rental property is capped at 2%. Do you think the landlords pay that extra tax?

At least the state allows renters a deduction from income tax, to give credit for the property tax they pay indirectly.

You know what I love Jeff, the people at my job who are pissed that they have lost all equity in their homes and btch that they can't sale them for what they are worth. They keep paying taxes on houses they don't even live in because they are too greedy to just sale them and get out from under them.

Hint: If you move for a better job, sell your house. If you only sale it for 75% of what you paid and put into it, you are still only paying 25% of the rent normal people would have paid. Not a bad deal, but NOOOOOOO, they want their equity, they want their invisible money that wasn't earned thru sweat, like real work, they want the pie in the sky.

That sht is dead and gone people. You will all see soon enough when you are killing each other for a crust of bread and selling your dead neighbor's daughter to a local gang for more ammo.

David? What !?

Jeff:

If the home value goes up guess what else goes up, yep, property taxes.

In some states (I speak for PA), only after a sale/purchase.

David...lay off the Meth

But you have CC&R fees which are not tax-deductible. That is a deal killer for most people. Over the life of a mortgage they can really add up and there is no guarantee that they will not go up.

Readabook --- I think your last comment "don't buy what you can't afford" really sums it all up.

I purchased a nice home (in Texas) about a decade ago --- saved every extra nickel and paid off my 30yr. mortgage in about 7years. Home has risen (slowly) in value and my taxes/insurance are much less than being able to rent an apartment the size of my home.

Bottom line? Do your homework, don't over-extend yourself and you'll do just fine.

For many that are in "trouble", they didn't do their homework or had dumb assumptions (i.e. people thinking they could "flip" for a profit in a couple of years) and/or they overextended themselves.

You are in the minority Dave R-307255

Dave is in a sensible minority. If I had not lost my job, our mortgage would have been paid off in 7 yrs also. It isn't that tough to do...when there are jobs out there.

How in the world do renters expect to be able to pay their monthly rent when they retire? Social Security doesn't come even close to covering rent. I know several people in their 80s who each get about $700 a month in Social Security. When they were young, rent was maybe $50 a month. So when you are young, it looks like a feasible proposition I suppose. But these 80 year olds would be paying $1500 a month in rent today for the same properties today. We used to be a strong country because our citizens used to look past the end of their noses when they made decisions. Today, all they think about is the next iPhone or iPad coming out.

Good work Dave.

Great comment, Deb.

Then settle for something within your budget.....

Over borrowing is what got many in trouble...

Storm everyone has to start out walking before they run. You can apply for some high risk credit cards or even some cards that are secured which after a year will offer you unsecured. Its not enough to just have the income but you need experience saving for the unexpected and paying obligations other than rent on time.

After being married for 15 years an never having credit, I started out much as you three years ago. Now I am almost ready to apply for a mortgage. If home ownership is something you wish to commit to, take the baby steps now.

Storm more footnotes for you,

Currently the prices of homes are still on the down-slope but are cheap enough to get the itch to buy. I do not live near or around the lavish neighborhoods of the Mcmansions or the 3 acre estates, so property values have remained fairly constant. I also live in a smaller rural town where property taxes have remained in check with population growth and any expansions for the city remaining sutle but services and the schools remain in the better 20% of the state. I own 2 homes, the one I reside in and another smaller home for an equity piggy bank. Both are paid for. I was in your shoes, no credit, some trashed medical bills haunting my progress towards home ownership but guess what? It can be done, but it cost more money. How? Owner financed both properties, but was to paya stiff 9.5% rate for 15 years. Then paid them off earlier with an increase of 20% more than the actual mortgage payment. As an after thought 12 years later, credit is 720. Not too shabby and 4 years ago started a personal business on the side. Keep your chin up you will be a home owner if you want it, just read the fine print and watch out for any loop holes install by the Bank or self financed home owner your buying from. Good Day!

What I am tired of hearing are these people that "claim" they can afford a house, well there are other ways to obtain your own house without breaking the bank or even taking out a loan.

I paid cash for my house in Arizona, I live about 3 hours north by plane at the moment. This is what I wanted: 4-5 bed rooms,4-5 bathrooms, pool, land. Thats all well and good and very nice. Well then I thought what could I really live with and this is what I got:

3 bed rooms, 2 bathrooms, no pool, 3 1/3 acres of land.

Eventhough I was paying cash, and I paid just under $28K yes thats right UNDER $28,0000.00, No loans or anything, it still took 3 months for the bank to accept my offer.

Yes there are things I have to do with a house someone that rents may not have too, but I 2rather own then rent, renting are for those people that don't want to do anything to their property. If know you are moving then rent, if you don't mind hearing your neighbor snore then rent, if you don't mind smelling Mr/Mrs. Whatever's friday fish fry then rent.

I don't want to rent and have not rented in many years.

All the people keeping mentioning "up keep" expense, well, if you do your budget right there are 6 things you should be budgeting for monthly:

1. Personal savings

2. Retirement

3. Food/clothing

4. Transportation (loan if any, gas, insurance)

5. Home repair and Insurance

6. Anything left is your entertainement budget.

Note I did not mention credit cards, I don't have any real credit cards, I have debit cards and they work just fine you do not need to live off credit. If you shop wisely, No I didn't say go coupon crazy, I don't even use them. You can live well. I do shop at Aldis now and then because when 2 cans of black beans costs me $1.10 and at super center walmart (which is 300 feet away)and their 2 cans of black beans costs $1.36, that's 26 cents I saved, and I can do that on many canned goods there. I also don't eat out a lot I cook at home, another way to save. I do not have cable or satelite, I do have Netflix. There are ways to save if you want too, you just have to want to do it, just like a proper diet and physical fitness you have to want it bad enough. It can be be done.

Im glad to hear of someone talking about a house and turning it into a home rather just talking about money and whatnot. Congrats.