Hi all, I just found the Rule of 72 thread and was helped out by it a ton! Hopefully those active in that thread can help me ;-). We are getting ready to buy a home and can get 100% LTV financing at 5 3/4%. Now, we can qualify up to 140,000 which can buy us a beautiful home in a great school district -- or we can go down to 115,000 which gets us a nice home (a bit older of an area, not as well maintained), but still decent (not great) schools. With the couple hundred dollars a month difference, we could start saving and putting money back . . . .but, I have no idea if the appreciation on the latter property will be as much as the former ---- We plan to be in this house 5 years while DH finishes school. Any ideas, experiences, etc. will be very helpful. I want to start getting my financial ducks in a row --- right now they are scattered everywhere. We have 3 kids, no money saved, no college funds, and my retirement is only at 8,000 in a TIAA-CREF. We are in our early 30s. No more time to mess around. Thanks for any and all ideas . . . p.s. no credit card debt at all . . . Finzup!
Go for the better home with better schools. It should appreciate more than the other one. Remember that investing in the stock market is also a risk and it may be years before you see any return on the investment.
The problem with that is that you still have no money for unexpected occurrences--accident, loss of job, illness of someone in the family (could be one of the children). If you buy the lower cost house and save the money, you'll have something in time of emergency. If you buy the higher priced home, you will be forced to sell or be foreclosed, and prices may be down if you sell. If you lose your job, you won't be able to get an equity loan, because you won't have a job. Besides, you're getting 100% LTV, which means you don't even have a way to get money for unexpected repairs. Don't worry right now about what appreciates more, worry about having some emergency funds available. Most good financial advisers tell you to have AT LEAST 6 months of expenses in ready cash. If you don't, you will really have a hard time when you have big repairs, maintenance, or some emergency. The time to worry about appreciation is after you have some cash reserves.
I think you should go for the better home. You can always use the equity in case of an emergency. It is always better to stretch your self a little at your age. Ideally you are going to make more money in the future and the payments will not be as painful. www.creditsense.com
1*Go for the better home with better schools. It should appreciate more than the other one. 2*Remember that investing in the stock market is also a risk and it may be years before you see any return on the investment. alent1234 ================= 1*After you get this better home paid for what do you have to show for it? How do you get the appreciation out of it? The drawback with this suggestion is that you can only have the home or the appreciation but not both at the same time. This method of buying a home which almost everybody uses is what I call the Cash value system because it basically works like a cash value life insurance policy which BTW is a very bad deal. 2*If he pumps the extra money into the better home instead of the other one how much money will he have in addition to the home? THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
I think you should go for the better home. You can always use the equity in case of an emergency. creditwork | ===================== There are 2 ways to tap the Equity. 1*Sell the house. But what if housing sales are in a slump when you need the money. 2*Barrow the Equity. But what if you're out of a job or have bad credit when you need the money. Selling the product or borrowing the cash are the same two problem you find with cash value insurance. This set up don't work any better in housing than it does with life insurance. THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
LBrown59... I'd be really interested in hearing your ideas on this. Shelley ================= Have you read the rule of 72 thread below? Also read my comment on the Buy more expensive house or invest thread started by fins2left . http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&postid=343038#post343038 THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
Before you figure your costs- you should find out EXACTLY how much your taxes and insurance will be for each house. Strange as it may seem, these expenses are NOT always proportionate to the value of a house. In addition, you may wish to consider the costs of "fixing up" the lower priced house. You may find to your sorrow,that the repairs will wipe away the cost difference, OR you may find that the higher priced home has VERY high taxes and insurance costs which will be a BIG strain on your budget.
Re: Re: Buy more expensive house or invest Going by Peter Lynch rule of investing #1. Before you invest in any stocks or retirement plan you first buy a home which is one of the best investments by itself. If they are going to have kids then the better schools are worth the cost. If no kids are planned then it should still appreciate more since good schools are one of the biggest price factors of a home.
Re: Re: Buy more expensive house or invest 1* Before you invest in any stocks or retirement plan you first buy a home which is one of the best investments by itself. 2*If no kids are planned then it should still appreciate more since good schools are one of the biggest price factors of a home. alent1234 **************************** 1*Why do either or if you can do both? 2*What's better appreciation or cash or both? Appreciation on a home is like cash value in a life insurance policy. To access the money you have to either forfeit the product or borrow against it. If you sell the home where do you live? If you borrow whose equity are you paying interest on? What if your financial situation won't permit borrowing when you want or need the money? THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
