An option for me to buy a house has come up very suddenly and it seemed like a good idea at first - but I look at a mortgage and think “that’s 15 years I’ll spend paying back, at absolute minimum. Probably more like 25 years” - how can I possibly plan that far in advance?
So, how did you feel about getting a mortgage and seeing such a serious commitment stretch so far into the future? I’m mainly talking about the emotional side of things rather than financial
It was terrifying. So much more so than buying a car.
I thought of it as “locking in my rent”. For me that helped as my rent kept going up.
Additionally, if you eventually want to move, you’ll usually come out ahead a little bit. I was in a popular market, but I think we bought at 220k and sold at 320k. After all was said and done, I think we had a nice 60k profit, and we did not take the highest offer, we took one from a buyer that we knew was a family that would move in. Not a bad consolation prize for a break up, and I think we were only in it for…3 years?
Selling is stressful, but not nearly as much as buying.
Yeah I thought of it as locking in my rent too! But then I found out that my housing payments have gone up each year like rent has. And it’s basically the same cost as renting. Oh well.
Taxes and insurance increase but you have to consider that taxes and insurance is increasing at the same rate for the individuals who own rental properties, which then get passed on to the renters.
Alternative: you can spend that same 15-25 years paying roughly the same monthly amount in rent at various places, and have exactly zero equity or assets to show for it at the end of the period. Zero zilch nada, the money is burned and gone forever.
Frame it in that sense and it’s a no brainer.
In the current market though either try to get a variable rate mortgage or be prepared to refinance it in a few years if/when interest rates cool down. the current rates suuuuuck.
In the UK, rent is substantially more than mortgage repayments.
Landlords will cry about their maintenance costs but I’ve never seen any maintenance that wasn’t the cheapest fix possible by a cowboy family friend.
You’ll likely wind up paying significantly more in rent. When we bought our house in 2020, our mortgage was around $300 more than we were paying in rent. I think within 6 months or so, average rental prices for a similar home were significantly higher. By this point, even an apartment costs more to rent than our mortgage (PITI).
Property generally increases in value while you pay it down.
My wife and I bought a $400k 3 bedroom flat near the university 8 years ago and we were both scared as fuck. paid $100k off it and just sold it for $600k
That $300k cheque we just used for the downpayment on building a “how do people afford these houses!?!” Thats going to cost $800k. But really our mortgage is only going to go up 20%
30 year mortgage at 52 and 1 heart attack… “The mortgage will outlive me!”
OTOH… locked in $2,000/mo. housing payment for 30 years… It’s already paying off as the rent on our old place is $2,300/mo. now.
Even if it was the same amount or a bit higher (or perhaps even a lot!), it would be better as you aren’t throwing the money away. Good job though, despite the health.
It’s not a 15 (or 25) year commitment - you can sell the house any time and use the money to pay off the mortgage.
Yup this was my thought. Either A) you locked in “Rent” for 15-20 years or you can sell it (usually at a profit) if you need to move or get rid of the property.
But the price of the property can decrease, so it’s better considering an asset with a stable value over time (given the area, energetic efficiency, etc.).
Property is one of the most stable assets; even if there’s a crash you can still live there until it recovers.
I was stoked. No more land lord, and instead of paying your landlords retirement you’re paying into yours.
keep building that equity!
It was scary. But my mortgage itself isnt too bad. The amortization schedule was scarier, as the first several years you’re almost paying just interest. And you get to see just how much it costs over the total life of the loan.
But I like my house, I feel a sense of pride and accomplishment. I can enjoy doing the fixes myself, and cry when things are so expensive to repair. There are so many things I want to do, but can’t afford to at the moment.
I am really enjoying getting my yard they way I want. And it’s even nicer to have a place that my girlfriend and her daughter can move in.
The house has appreciated 10% in the last two years. And as inflation keeps happening, it devalues the loan. The money I owe is worth less and less and the property I own is worth more and more. At least in general, that’s how it should work.
Property taxes are pricey, but I’m happy with paying them for what I get in the city and neighborhood I’m in.
It was a no-brainer for me. I’ve got to live somewhere in either case so instead of paying rent I could just aswell use that money to pay off my mortage (in reality I’m paying less).
In general my attitude towards loans is that if you can’t pay cash then you can’t afford it but house is obviously an exception as no one has that kind of money saved up.
Haven’t regreted a day.
My rent was about $200 bucks cheaper each month but I can sell this and my payments go towards something I own rather than something the landlord owns.
Plus I can upgrade something I own in ways I’m not going to do as a renter.
Rewiring the Ethernet in my house was exhilarating
It’s hard when you’re starting out, but think about it this way:
- you have to live somewhere-that means rent or a mortgage.
- rent goes to “the man”. So does most of your mortgage payment but you DO pay some of that to yourself. So when comparing the two you have to subtract that out.
- you get a tax break on mortgage interest - so you have to take that out
- the house is likely to appreciate in value - so any equity you build has to be taken out
- this means that a substantially larger monthly mortgage payment might actually be equal to or even less than paying monthly rent.
- rent goes up, nobody talks about this. Mortgages are fixed.
- renting is forever. Eventually (if you’re not stupid with refinances) you’ll own your home and have zero payments.
- in favor of renting - if something breaks in a house, you have to fix it. Renters just yell at their landlord.
- even if you have a crappy interest rate now, you can always refinance in the future if and when rates come down.
Paying for your first mortgage can be daunting when just starting out, but it’s often cheaper than renting when considering the above points, the one exception being how much money you sink into repairs. (Don’t buy a money trap of a house, stay away from major fixer uppers). Eventually your salary will go up and your mortgage payment will be less and less of a burden.
Being in debt sucks, but I’ve felt paying rent sucks even more. So a mortgage ain’t so bad. That’s the way I see things - ymmv
I was a bit nervous at the time but looking back it was absolutely the right decision. If you’ve always been a renter, you can’t know the sense of peace that comes with knowing your home belongs to you and you can’t be evicted by someone else’s whim. I wasn’t aware of how it was weighing on me until I was free of it. Yes, I have to pay a mortgage but only a few years later it is much cheaper than local rents that I’d otherwise be paying. Overall it’s a much better way to live as long as it lines up financially for you.
It’s daunting, and it should be. A person can lose a lot of money and time by buying a lemon of a house.
That said, most people don’t pay off their first house, because they move before the 15 or 30 years is up. And that’s okay.
As Dave Ramsey says, “It’s a house, not a marriage.” Meaning, if it turns out a house doesn’t suit you, sell it. You can’t hurt it’s feelings.
Before my first house, I didn’t realize how much I would appreciate not having to get permission to fix / paint / change my own wall / door / shelf / window blinds.
I also didn’t realize how much I would grow to despise having a Homeowners Association (HOA) up in my business.
It’s weird. The numbers are so big and the dates are so far out there that none of it feels real. The fact that (assuming you fit their magic profile) some bank will accept your signature in return for hundreds of thousands of dollars is stranger still. I honestly wish we lived in a society where this sort of thing was NOT the norm. But if you live in the US, home ownership is one of the few mechanisms in place for us commoners to generate and/or pass on generational wealth (assuming that the whole system doesn’t collapse like the house of cards it probably is while you own the house).
Its generally a good move but people can oversell it. Taxes will go up even if the mortgage is fixed. You can’t move easily if you need to go work someplace else or such. Upkeep is a thing and will cost. You can’t easily drop your monthly nut if you lose your job or such. That being said my general rule of thumb is if you can afford a 20% down payment and 15 year fixed and its somewhere you would like to live you should do it. Get a 30 year but make payments like its a 15 year and if you get into a crunch make the normal payment. If all goes well you will be in good stead and if you have to sell you should come out ahead. If you can’t do that much of a down payment then definitely think about it hard and I personally think if your doing a balloon or variable rate your asking for trouble.
If your mortgage is less than your rent, do it.
Even if it’s more than your rent RIGHT NOW, do it.
Your mortgage will stay the same. The rent just goes up.
Well… mostly true. My mortgage has gone up because insurance costs are out of control and the incompetent party running the state refuses to do anything.
