Absolutely... that's what we're doing. At the moment it seems hard not to have positive cash flow in our area with 20% down. This is really our retirement plan - another way we've diversified from SS, a pension, 401K and IRAs.

I would disagree with the 15 year note, but not your reasoning.

Get a 30 year loan but double up your payment or as much extra as you can afford each month. Or better yet make bi-weekly payments and pay extra. The loan will bet paid down in half the time or less. But if for some reason you are low on funds one month you have the option of paying the regular payment.

I am about your age, 40 in a few days...I had a house. Lost job and had to sell the house so now I am in your boat again.

The way I see it is that I may never be able to pay off the house. I dont even think about that aspect...living without a mortgage etc...

The goal is to avoid paying money every month to a landlord, period.

If you pay it off, great. The benefit comes when you want to move, or have to move....assuming you bought it at the right price, you should either be able to get your equity back or, make a profit.

I look at a house the same as a bank saving account.

I see renting as throwing money away.

Whether I pay it off has nothing to do with it

I think someone should have already asked this, but what is your budget? How much can you afford to pay on a mortgage to include insurance and taxes?

Houses are relatively cheap in Greenwood and surrounding areas.

15 year note, no more. Buy a home worth about three times (two times is MUCH smarter) your annual salary, no more. Of course, you could also spend less!

Some other good suggestions around on this post! Most important thing is to find a home in a good neighborhood that you enjoy. Make sure the foundation is well done, have the home checked over. Learn about home inspections and how to complete your own repairs. Get some tools! You can easily learn about how to tell a good home from a bad one!

Oh, and when the banker tells you the max loan is $400K, review whether you make 200K per year or less ;-) They are in the business of taking your money, you are in the business to save your money!

Also, a home is not an equity asset in reality. Equity assets are owned outright and have an easily marketable value (an original Van Gogh for instance). It only becomes an equity asset once you sell and take your money out. It is a utility in which you live. Financial people will have a differing opinion...

Excellent advice. Also remember that you may need to apply for other credit like a car loan someday. And when doing so, if you have a 15 yr. note on the house, that full payment will count against your income in loan underwriting. It's best to have the lowest min. required payments on your credit report. You can always double or triple up on payments to knock the loan(s) out early. Making one extra P&I payment per year can knock the last seven years or 84 payments off your loan. I'm doing that now on my main house.

I put 20% down on my second home purchase, had a 30 yr. 5/1 ARM, but when I moved to AZ couldn't sell it. The rent I'm able to collect doesn't cover that mortgage and condo fees. It's no fun having that huge monkey on my back when applying for other credit or having to explain it all when we bought our current house. Most mortgage underwriters will only count 75% of actual rental income and I was already $300 a month negative at 100% of rental income.

Im only wanting to spend about 1.5% what I make a year. My debt right now is pretty much $11000. Thats what I owe on my car. No other bills but water ect I dont even have a cell phone lol

If the primary focus is ownership to "self-invest" your rent, there are a couple different types:
1). Condo:
+Inexpensive in cost and taxes.
+Low personal maintainance.
+No obligations. Travel for a week or a year and return to your own home.
+Can be rented easier through a managment company when you move on in life.

-Association fees can be high and the board unresponsive to common problems.
-Co-owners can be idiots, or rent to other idiots.
-No lawn for pets and kids. No garage for fixin' stuff.

2). House:
+Ahhh, the freedom of ownership. Let's grill in the drive and throw ball in the back.
+Bring home a pack of rotweillers from the pound.

-Maintenance is very expensive: Roofs/water mains/water heaters/washing machines/windows/etc/etc.
-Taxes are more expensive. Insurance is more expensive. Realtor fees are more expensive.
-Mow the lawn every week or get a ticket.
-Property values can still decrease even more than the present. That equals big money.
-Interest payments will cost several times more than the house.

Compare tax rates, mortgage tables online, schools(for resale value), crime stats, ease of commute, parks or nearbye attractions, and where the city is going in the next 10-20 years.

I'd base your decision on logic and numbers.
Do not fall into the emotional trap while looking.....there will always be others.
Life may change.

True, but it depends on your circumstances. For instance right now I'm committed to a certain area due to the schools. There is no way I can buy in this area unless we either moved to a small condo or really extended ourselves. And given the market, I'm not convinced that in 3 years we'd have any equity built. So my plan is to stick out the next 3 years renting, then when I'm no long constrained by school district, we could look at buying a place elsewhere.

Reveiw the loan documentation carefully.

Some banks...cough...crimminal fraud...parf...have been "known" to apply extra payments to future interest(instead of primary), delay the processing of payments to charge extra fees, or they just resell the loan which violates the original contract.

Don't be misled, its 18 acres of CA canyons and brush, plus a few hundred oak trees. I can't subdivide or anything, but what I do have is privacy. I own the ridgelines and can't see my closest neighor who is about 500 feet away.

Owning a home is not always about paying it off. That is a goal and is my goal. But there are other benefits along the way.

One is the tax deduction. No matter how much Congress talks about eliminating that, it won't happen. That pretty American pie stuff. And then there's the fact that some landlord is not going to tell you what you can do and can't do.

Just don't buy a house in a bad neighborhood. Buy a POS in a good neighborhood as opposed to buying an overbuilt house in a ratty neighborhood.

Lastly, look hard and find an owner willing to finance. They are out there. Realtors will probably not steer you towards those. I'm not sure I remember why that is.

The US has some obviously good areas where real estate prices are rising and some areas where they are dropping. I consider it a risky market. If you buy a house , there is no guarantee the price will rise. You must realize how much interest u are paying if you borrow money to buy a house. The more savings u have, the more $ you have if you buy a house. If you dont buy a house right away, then u can save the cash till a later date.

Consider that if you buy, think about resale. Can u readily resell it if you want to move? I see there is lots of advice for u and much to ingest. This is the biggest financial risk at your point in life. Renting is not a bad idea in uncertain times and believe me these are uncertain times.
Cheers:)

If not now when?

Just go out. Find a house you feel good about and buy it. I promise you. You'll never look back.
Who nows what the future holds? Regardless of that you'll be in a better position owning/buying your own home.

Its also about leverage, 20% down, market goes up on the house from say $100,000 to $200,000 in a few years you make the profit, not the landlord. Also, you gotta live somewhere, might as well put it into your house, not someone else's. Downside is you can't up and leave and move as easily as a renter.

This is a very good article;

Renting vs. Buying: The Realities of Home-Ownership


If our potential homebuyer has that $85,000 saved up for a down payment and deposits it along with just half of the monthly savings over buying ($578 per month) into an account at 8% interest, the balance will be nearly $300,000 in just 10 years. That’s a liquid investment, that can be used for whatever you want, no relocation required. Buying a home is not a savings plan. Actually saving money every month is a savings plan.

Please tell me where I can get 8% today. The article is dated 2007.

It still blows my mind - my grandparents raised 10 kids in an apartment, and bought their first house when they were darn near 60. It was a 5 bedroom, 2 bath post-ww2 build that cost them $14,500 in 1970 and they took out a 30 year mortgage (who gives people in their late 50s a 30 year loan?) and my grandmother flat-out refused to pay it off early. Both my sisters are accountants so I had the older one jack her paperwork so I could pay the darned thing off for her when I started making decent money (it was only a few grand by then).

Even so, he made it to 95, she made it to 104, so they had a long run with their house and it's still in the family.

Odds are I will do the same - houses there are in the 50s-70s for my old neighborhood and I figure I'll buy something there when I retire.

Shop around. There are banks etc that will pay that provided you put x amount in per month for a fixed period. Anway, as the article says it's just a guide. Not everyone is the same boat. Like people who say I bought my house for $150K and sold it ten years later for $300K. I made a $150K profit. BS you did. You made $150K gross profit.

I did better than that: I bought my first house for $155k, and sold it for $365k 7 years later. That was $210k gross profit after real estate commission.

Then I lost $110k on the sale of my second house :rolleyes:.