honest numbers on home ownership
There are three philosophies I've run across in my life when it comes to financial planning and home ownership.
First is what I did: I was a renter until I was 30 years old. Then I bought a very modest house, and paid off the mortgage in ten years. I live in Wichita Kansas, low cost of living. There are $400K houses if you go out to the "nice" suburbs in the "nice" school districts but that was not a priority for me. My house was $130K. I think I had $16K down. Then for ten years every raise, bonus, tax refund I got went towards paying down that mortgage.
Second philosophy I ignored: Engineers around me who said I should buy a house as SOON AS POSSIBLE, stop throwing away money on rent, you just need like $5K down payment, take out multiple mortgages if you have to! This was definitely popular before the 2008 housing bubble. When I was 24, 26, 28 I had so many people at work asking why I wasn't in a house yet.
Third philosophy I ignored: My family who love nice suburbs said I should buy AS BIG A HOUSE AS POSSIBLE, interest is a tax write-off, find out exactly what you can afford for the next 30 years. The value goes up! This is an investment!
Here's why I'm okay with what I did.
Even with my mortgage paid off, this house thing is still not cheap. I just got notified that I need to start making monthly insurance payments since there's no escrow from the mortgage-holding bank anymore.
Insurance: $220 a month
Property taxes: $2000 a year
Home repairs: $6000 last year (roof, gutter, water damage repairs)
Grand total: Over $10000
That's over $800 a month of "throwaway money". Not paying off a principle, not fun, just money out of pocket. When you consider that my rent was $900 in the FUN bar district, $500 for boring apartments, that makes renting look really good!
I hope I do not have that high a repair bill this year. I fixed some water damage that had been around FOREVER, so once it's done it should be done. But there's always more... we want to fix up the back yard, we have rotting window trim, the basement paint is peeling off.
Maybe if I'd bought a nice new house and not a 90 year old one, the repairs would be less? But I know some people with new houses have to fix them too. Their insurance/taxes/mortgages are much higher. And in their nice neighborhoods, they can't get away with messy landscaping or a front porch in need of staining, they have to DO IT or else they look "dated". They remodel, they "update", they repaint, all to keep up with their Joneses neighbors and HOA requirements.
That's ASIDE from the mortgage so let's circle back to mortgages and interest. What is up with the idea that you should get a huge mortgage because the interest is a write-off? So you pay $1000, get $300 back in taxes... but I'll make that deal with anyone here. Send me $1000, I will send you $300. We can do this as often as you'd like.
Maybe that's how I could pay for fixing my house?
First is what I did: I was a renter until I was 30 years old. Then I bought a very modest house, and paid off the mortgage in ten years. I live in Wichita Kansas, low cost of living. There are $400K houses if you go out to the "nice" suburbs in the "nice" school districts but that was not a priority for me. My house was $130K. I think I had $16K down. Then for ten years every raise, bonus, tax refund I got went towards paying down that mortgage.
Second philosophy I ignored: Engineers around me who said I should buy a house as SOON AS POSSIBLE, stop throwing away money on rent, you just need like $5K down payment, take out multiple mortgages if you have to! This was definitely popular before the 2008 housing bubble. When I was 24, 26, 28 I had so many people at work asking why I wasn't in a house yet.
Third philosophy I ignored: My family who love nice suburbs said I should buy AS BIG A HOUSE AS POSSIBLE, interest is a tax write-off, find out exactly what you can afford for the next 30 years. The value goes up! This is an investment!
Here's why I'm okay with what I did.
Even with my mortgage paid off, this house thing is still not cheap. I just got notified that I need to start making monthly insurance payments since there's no escrow from the mortgage-holding bank anymore.
Insurance: $220 a month
Property taxes: $2000 a year
Home repairs: $6000 last year (roof, gutter, water damage repairs)
Grand total: Over $10000
That's over $800 a month of "throwaway money". Not paying off a principle, not fun, just money out of pocket. When you consider that my rent was $900 in the FUN bar district, $500 for boring apartments, that makes renting look really good!
I hope I do not have that high a repair bill this year. I fixed some water damage that had been around FOREVER, so once it's done it should be done. But there's always more... we want to fix up the back yard, we have rotting window trim, the basement paint is peeling off.
Maybe if I'd bought a nice new house and not a 90 year old one, the repairs would be less? But I know some people with new houses have to fix them too. Their insurance/taxes/mortgages are much higher. And in their nice neighborhoods, they can't get away with messy landscaping or a front porch in need of staining, they have to DO IT or else they look "dated". They remodel, they "update", they repaint, all to keep up with their Joneses neighbors and HOA requirements.
That's ASIDE from the mortgage so let's circle back to mortgages and interest. What is up with the idea that you should get a huge mortgage because the interest is a write-off? So you pay $1000, get $300 back in taxes... but I'll make that deal with anyone here. Send me $1000, I will send you $300. We can do this as often as you'd like.
Maybe that's how I could pay for fixing my house?