Dwelling situation?

[Pointedstick]

Just curious!

[WiseOne]

Mortgage.

I bought in 2008 exactly one day before Fannie and Freddie went under.  I thought I'd made the biggest mistake of my life.  Instead, I just happened to have all my taxable assets in cash for the big stock market meltdown, and my apartment value has gone up 15%.  I hope to be mortgage free within 5 years (I hate debt).

Financially it's a lot scarier to own than rent, but the math has worked out so well that I am absolutely better off having bought, even leaving aside the increase in value.  The traditional rent vs buy calculation doesn't work well for the weird economics of NYC coops.  According to my figuring, in order for renting to be a better deal, my home equity would have to return over 7% per year after taxes - again, assuming no real estate gains.

[Tortoise]

Renting.

I'm very financially conservative, so before I started earmarking any savings for a home down payment, I chose to meet higher-priority goals first:

* I purchased a new car when my previous one suddenly died shortly after I started my first job (borrowed money from my dad and then payed him back gradually)

* After that, I accumulated an emergency fund of 12 months' expenses

* Lastly, I saved enough money to buy my next new car (and my wife's) with cash in several years when they break down so I can avoid a repeat of the first time.

All of that took so long that I was only able to start earmarking new savings as a home down payment less than a year ago, after working for about 8 or 9 years. It's coming along nicely now, but it will still take 2 or 3 more years to save a 20% down payment. (I live in coastal California, so homes are extremely pricey here.)

I'm liking renting in terms of freedom of movement, but there are certainly some drawbacks, too. Overall, I don't regret my financial conservatism and aversion to almost all debt. It feels absolutely great knowing that I'm well-positioned financially for almost any curveball life might throw at me. I sleep very well at night

[gizmo_rat]

Small house, paid off mortgage.

A volatile career with children and mortgage debt was not the best mix for my peace of mind, so the debt had to go and stay gone. Then I put the career down too, still got the kids. 

In some respects I quite like the idea of being the rental nomad, but I can't see that being a good fit with my family. Perhaps when I'm older and (even) less respectable. 

[barrett]

I own two places with no debt. I knew on a gut level that this was not smart but I didn't really understand why until I got hold of Craig & MT's book and started listening to Harry Browne's podcasts. So, for the moment... real estate rich(ish), cash-on-hand poor, retirement... well, not as high as it should be. Can't wait to extricate myself and our family from this situation (I know, rich people problems).

Where I want to get to is to own a home but one that is a small percentage of total assets and in an area with low real estate taxes. In CT we now pay 3% of the value of our home in real estate taxes each year. It reminds me of the old front-end-load mutual funds except that their are other "maintenance" expenses along the way.

[Pointedstick]

Own 2600 sqft house in suburbs. Had a 30y, refi into several 15y as rates dropped thru the 90s, and then paid off when the market was doing crappy and could no longer earn more on investments than mortgage rate. Been 100% debt-free and rent-free for close to 15 years. If only there were no real estate taxes... 

You're in Illinois, right? I feel your pain. My folks living in downstate IL pay about $10k a year for their pretty average 2,000 sf house. It boggles my mind. Here in New Mexico property taxes are low and I'm really hoping the situation stays that way for a long time.

[moda0306]

Own 2600 sqft house in suburbs. Had a 30y, refi into several 15y as rates dropped thru the 90s, and then paid off when the market was doing crappy and could no longer earn more on investments than mortgage rate. Been 100% debt-free and rent-free for close to 15 years. If only there were no real estate taxes... 

You're in Illinois, right? I feel your pain. My folks living in downstate IL pay about $10k a year for their pretty average 2,000 sf house. It boggles my mind. Here in New Mexico property taxes are low and I'm really hoping the situation stays that way for a long time.

How much is that house worth? 

[Pointedstick]

How much is that house worth?

I think their house is worth about $300k. All the more reason to have a house worth much less, IMHO! You don't get soaked by the local government.

[moda0306]

That's over 3% in property taxes!!!

Jesus!

I hope the government there runs like a top!!

[WildAboutHarry]

Had a house with a mortgage (primary residence).

Paid off mortgage.

Bought a retirement home, new mortgage.

Will sell primary and pay off retirement home mortgage soon (or will at least have the funds to do so).

Owning two houses simultaneously is not an optimal strategy.

[clacy]

Own with a mortgage (30 yr fixed, purchased last year).

3,000 sqft (family of 5).  Suburb with great school districts and little crime. 

Pay about 1% of value of home in yearly property taxes in an area that has wonderful services, etc.

[Mountaineer]

Jesus!

I always knew you would call on the Lord in a time of need. 

... Mountaineer

[moda0306]

Jesus!

I always knew you would call on the Lord in a time of need. 

... Mountaineer

At least I did it in awe of someone else's taxes... Not mine...

Damn I wish selflessness would get you into heaven.

[Pointedstick]

That's over 3% in property taxes!!!

Jesus!

I hope the government there runs like a top!!

No, it is completely dysfunctional and actively works to discourage businesses (which they could tax, go figure) and over-regulates absolutely everything such that location-based businesses like contractors charge outrageous prices to keep their heads above water.

It's Illinois, dude! Ground zero for corrupt, ineffective, tax-and-waste, promise-and-underfund liberal dominance in the midwest. I think we had two current or former governors in prison the last time I was living there.

[dualstow]

Paid for house in cash, but I guess technically I have a mortgage because I got a home equity loan (3.5x%) last year to help pay for renovation. House is almost ready, and I should be in a position to pay it off immediately or to just keep paying $1k per month.
At least bank savings rates are nice and high. 

[flyingpylon]

I'm paying a mortgage, and I suppose I'm feeling lucky that property taxes are only about 1% here in Indiana.

For those that are also paying mortgages, I'd be interested to know if they are pre-paying them as well.  This is something I struggle with on a continual basis.  I am currently pre-paying my 30-year mortgage at a rate that will have it paid off in 15 years (I'm big on flexibility of cash flow so did not want to commit to a 15-year mortgage).  Everyone has different circumstances and priorities so there is no "right" answer but I'm always interested to hear people's thoughts on this.

[moda0306]

That's over 3% in property taxes!!!

Jesus!

I hope the government there runs like a top!!

No, it is completely dysfunctional and actively works to discourage businesses (which they could tax, go figure) and over-regulates absolutely everything such that location-based businesses like contractors charge outrageous prices to keep their heads above water.

It's Illinois, dude! Ground zero for corrupt, ineffective, tax-and-waste, promise-and-underfund liberal dominance in the midwest. I think we had two current or former governors in prison the last time I was living there.

That is sickening. MN is quite liberal, but frankly there aren't many faults I can hoist upon the government that are anywhere close to that bad.

Why don't they get the hell out of there?

[Mountaineer]

Jesus!

I always knew you would call on the Lord in a time of need. 

... Mountaineer

At least I did it in awe of someone else's taxes... Not mine...

Damn I wish selflessness would get you into heaven.

It may, if you use the appropropriate object and objectivity for your selflessness 

... Mountaineer

[Pointedstick]

That is sickening. MN is quite liberal, but frankly there aren't many faults I can hoist upon the government that are anywhere close to that bad.

Why don't they get the hell out of there?

MN is very culturally Norwegian, IIRC. They like things to work and don't tolerate much corruption. By contrast, Illinois's primary power center (Chicago) was taken over by various criminal elements a long time ago, and that corruption is still there. Additionally, Chicago is home to a vast underclass that has been politically manipulated by liberals to maintain their own power and perpetuate the underclass, allowing the liberal political elites to use use the machinery of corruption put in place by the gangsters of the past to control the whole state with near-impunity.

Most of the rest of the people living in Illinois hate this state of affairs, but there's very little they can do about since Chicago is the center of political power.

[LC475]

Cash.

But boy, I think renting would really be nice, sometimes.  I think next time (move or whatever) that will be the way I go.  Renting is under-rated.

[LC475]

And I want to hear our secret agent speak up with his experience and advice.

But then I guess he wouldn't be secret any more!

[WildAboutHarry]

[quote=Pointedstick]MN is very culturally Norwegian, IIRC. They like things to work and don't tolerate much corruption.[/quote]

Maybe so, but they did tolerate Jesse Ventura and they do tolerate Al Franken.  Not corrupt, but not first-stringers either.

[moda0306]

They're odd ducks to be sure.

Although, Michelle Bachmann is our real embarrassment, IMO.

[Libertarian666]

I'm paying about 1% in real estate taxes.
I have a 15 year mortgage at 2.625%, so I'm in no rush to pay it off. 
But we may be selling and moving into the city due to the lack of services out in "Green Acres" if something should happen to one of us...

[Pointedstick]

Mortgage.  One of the worst decisions I've ever made.  In general, I would say

(i) don't buy a house unless you like working on a house or don't mind paying someone else to do so and
(ii) don't buy a house that you don't plan on living in forever, unless you are confident that you can get full value for what you sink into it.

Property taxes are about 0.5%.

I heard countless stories of that nature, and they heavily informed my decision to buy a fixer-upper house in cash and do all the work myself. Gosh is it a lot of work, though. And MAN are contractors ever expensive. I try to avoid them like the plague.