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Old 03-02-2013, 06:40 AM  
BigRedChief BigRedChief is offline
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Interest rates. WTF? Why are we getting almost free money?

I put a contract on a house yesterday. Locked in a rate and loan. Got 3.625 and they gave me $8,800 towards closing costs. Which is obviously more than it costs.

We were able to lower the purchase price because we didn't have any closing costs.

Last time we bought a house we got 5.25% which at the time our loan guy said was the lowest rate since WWII.

So my question for the board is why is the public getting home loans that are maybe 1%-2% above inflation? Where's the money being made or lost?
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Old 03-02-2013, 03:22 PM   #61
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Originally Posted by DaneMcCloud View Post
Never pay cash for a home. First off, if the housing sector crashes again, you've just immediately lost cash. Secondly, the interest write off is beneficial come tax time.

I somewhat understand the obsession with people that want to live "Debt-Free", but home ownership should never be considered "debt". There are far too benefits to owning a home, which of course includes equity.
I think the good of paying cash for a home outweighs the bad. The bad would be as you say, a crash. The good is the financial secuirty you have otherwise.
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Old 03-02-2013, 03:24 PM   #62
DaneMcCloud DaneMcCloud is offline
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I think the good of paying cash for a home outweighs the bad. The bad would be as you say, a crash. The good is the financial secuirty you have otherwise.
Absolutely NOT.

Homes across the nation in many cities saw their value cut in half, if not more. So if you paid $400k in CASH for a home in 2007, half of your money was GONE in 2008, never to return.

That's ****ing stupid.
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Old 03-02-2013, 03:26 PM   #63
DaneMcCloud DaneMcCloud is offline
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The good is the financial secuirty you have otherwise.
Financial security? Ah, no.

If you're financing, you can sell or rent if you need cash for health issues, divorce, etc. If you've paid in cash and the market's down OR you need to take a HELOC, good luck getting a bank to give you a loan in a timely manner and for a low interest rate.

There is NO benefit in 2013 for paying in cash. NONE.

Plus, money is dirt cheap. Why blow your life savings on a home?
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Old 03-02-2013, 03:28 PM   #64
Comrade Crapski Comrade Crapski is offline
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No, I mean for everything, especially a mortage. Do you know how much financial security you gain by not having any kind of a mortgage? Again, I don't care how low the rates are. If my home is paid for I can lose my job, watch my savings tank in the market, whatever and I am secure in the fact that I don't have to panic because I don't owe anyone anything.
Except property taxes.

And when the economic collapse hits, I'm concerned municipalities will raise them astronomically, thus putting even more people out of their homes.
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Old 03-02-2013, 03:30 PM   #65
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Originally Posted by DaneMcCloud View Post
Absolutely NOT.

Homes across the nation in many cities saw their value cut in half, if not more. So if you paid $400k in CASH for a home in 2007, half of your money was GONE in 2008, never to return.

That's ****ing stupid.
So what's the deal if I have $400k into it or I owe someone $400k for it? It's still $400k on the table out of my pocket unless you just want to **** your cxredit.
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Old 03-02-2013, 03:31 PM   #66
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Financial security? Ah, no.

If you're financing, you can sell or rent if you need cash for health issues, divorce, etc. If you've paid in cash and the market's down OR you need to take a HELOC, good luck getting a bank to give you a loan in a timely manner and for a low interest rate.

There is NO benefit in 2013 for paying in cash. NONE.

Plus, money is dirt cheap. Why blow your life savings on a home?
Actually real estate is cheap right now. To each their own but again, I'd rather live my life not owing anyone anything.
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Old 03-02-2013, 03:31 PM   #67
DaneMcCloud DaneMcCloud is offline
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Except property taxes.
Even moreso, let's just say you live in an affordable area and can purchase a nice home in a nice neighborhood for $200k.

After putting 20% and financing at even 4%, wouldn't you prefer to have $160k in the bank for emergencies and whatnot, along with a small interest writeoff each year, as opposed to no many in savings?
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Old 03-02-2013, 03:32 PM   #68
DaneMcCloud DaneMcCloud is offline
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Actually real estate is cheap right now. To each their own but again, I'd rather live my life not owing anyone anything.
Maybe where YOU live, not where I live.

There's a entire world outside of Olathe, Kansas, Pete.
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Old 03-02-2013, 03:50 PM   #69
petegz28 petegz28 is offline
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Maybe where YOU live, not where I live.

There's a entire world outside of Olathe, Kansas, Pete.
I should say to you that there is an entire world outside of CA, contrary to popular belief
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Old 03-02-2013, 04:01 PM   #70
Pawnmower Pawnmower is offline
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Where is this hidden cost?
one of the main hidden costs is the fed is giving the money away instead of making more % interest on it, if I understand correctly....(havent read the thread yet, though)
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Old 03-02-2013, 04:07 PM   #71
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Originally Posted by DaneMcCloud View Post

There is NO benefit in 2013 for paying in cash. NONE.
This , while true in theory, is not true in the real world.

Nearly 40% of the real estate deals over the last couple years have been all cash.....theres some good reasons why 'paying in cash' is a VERY good idea.

The main ones being you can often get a lower price, and your offer may have a better chance of being accepted, and the deal will be much smoother.

Then, (perhaps after a holding period of 6 months to 12 months , you can always refi your money back out and do it all over again..or get a HELOC if you need cash.)
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Old 03-02-2013, 04:10 PM   #72
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Except property taxes.

And when the economic collapse hits, I'm concerned municipalities will raise them astronomically, thus putting even more people out of their homes.
In most places there are caps and laws in place to prevent this sort of thing......but anyhow, the main way that property taxes rise , is if property values also rise....

During the recession/depression....property taxes lowered significantly, (which is one reason local governments were/are very short of cash)
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Old 03-02-2013, 04:13 PM   #73
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I think the good of paying cash for a home outweighs the bad. The bad would be as you say, a crash. The good is the financial secuirty you have otherwise.
I think it's safe to say that your risk level is way out of whack with 98% of investors and is more akin to a 98 year old's.
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Old 03-02-2013, 04:17 PM   #74
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The main ones being you can often get a lower price, and your offer may have a better chance of being accepted, and the deal will be much smoother.
This seems odd. I've never bought a house, but why would the typical seller care if you're paying in cash or having a bank finance it?

It seems like most of your information would apply to a particular subsection of the market (purchasing foreclosures, for example), and not the typical housing transaction.
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Old 03-02-2013, 04:21 PM   #75
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Even moreso, let's just say you live in an affordable area and can purchase a nice home in a nice neighborhood for $200k.

After putting 20% and financing at even 4%, wouldn't you prefer to have $160k in the bank for emergencies and whatnot, along with a small interest writeoff each year, as opposed to no many in savings?
That's a fair point. But what if inflation skyrockets and that $160 grand depreciates in half?

Now you're not only broke, you're homeless.
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