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A conundrum (lemmy.world)
submitted 1 year ago by to c/lemmyshitpost@lemmy.world
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[–] 19 points 1 year ago* (last edited 1 year ago) (2 children)

I always find this to be such a poor argument.

Yes unexpected maintenance can sometimes be a huge problem, especially in the first couple of years, but after that you can tap into home equity and repair say a roof. Everything else while expensive is still cheaper than renting. Using the OP's example 1k vs 500, I can assure you you will never have consistent 500 repairs per month.

As for the taxes the people in my city nearly went ballistic when the city increased the rate by 5%. At the end of the year it costed me $200. Per month that's about $16. I've never lived in any apartment anywhere where rent didn't increase by at least $50 per month each year. Even if someone had a home twice as valuable that's still a very small monthly cost.

Additional once you get past the first 3ish years rent prices have greatly outpaced your mortgage and you will be saving a lot of money compared to of you were renting.

I'd like to wrap up with a question. If owning a home was such a sink of resources why do people become landlords?

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  • [–] 5 points 1 year ago (1 child)

    Speaking to the post, I feel like there is a tipping point between OP and your points and the post is showing that. If you can convince the bank to loan you the money somehow you then start to build more capital which can pull you out of being “poor”. There are many variables and wildly varying degrees of this scenario, but once you start your ownership experience, some people can work it quite hard and build enough capital to own multiple residences and rent them out. (Those already in possession of capital are out of scope of OPs post.)

    Rent is paying the landlord for everything every month. No repairs lately? Too bad, you’ll still pay for the possibility. The exchange is that you should never worry about repairs (or taxes) as the landlord handles everything. Once the landlord figures his margins are too tight, they raise the rent. Lots of variables here too and that makes blanket statements about which is better more difficult. I advocate home ownership, but I feel terrible for young people. Runaway greed by those that already had the capital has changed things. The young folks I know that are able to manage it all had help from relatives.

    The act of convincing the bank and owning a home is getting more and more difficult. Impossible in many places and improbable in others without Herculean efforts. OPs post expresses this perspective.

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  • [–] 5 points 1 year ago* (last edited 1 year ago) (1 child)

    I personally grew up quite impoverished and me and my wife did manage to get our home in medium COL area. We don't have exceptionally high paying jobs nor did we have any help from our families. We just made a lot of effort to build our credit. We're also not old at all under 30 to not dox myself too much.

    A lot of people simply have some wrong assumptions about the amount needed to get a loan. We put down 3%, sure we didn't get the most competitive rate and our payment is higher, but it worked out to the cost of our then comparable rent. There's quite a few federal programs that ensure the opportunity for a low downpayment mortgage for first time homeowners.

    But that was just slightly before interest rates went insane, kinda on the way up

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  • [–] 4 points 1 year ago

    In a previous life I was a mortgage loan officer at a broker. I bent over backwards helping folks get into those programs whenever possible. I was impressed with how little was needed when everything slotted in place in some cases. Glad it worked for you too!

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  • [–] 5 points 1 year ago (1 child)

    after that you can tap into home equity and repair say a roof.

    There's no, "tapping into home equity." There's only extending the mortgage with more debt.

    20 years ago my sister did all sorts of home improvements that she said were free because she was "tapping into equity". Now she's nearing retirement and complains she still has giant mortgage payments.

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  • [–] 1 point 1 year ago (1 child)

    I never said it was free and I never said it wasn't a debt. Like obviously it is a debt, anyone that reads "tapping into home equity" as meaning free money doesn't understand basic finance.

    It doesn't have to extend your mortgage. You can take it out as a second line of credit as an additional loan to pay back monthly. Obviously the ideal would be to have the savings to cover necessary home repairs, but if you don't this is typically the cheapest way to get a loan to do necessary maintenance.

    Sounds like your sister used her equity to refinance her loan and recieved a payout for the difference. That's going to restart your mortgage and is probably not the best way to go about accessing home equity.

    So yeah don't take on reckless debt you can't payback. You can responsibly use your home equity for maintenance if you need to though.

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  • [–] 1 point 1 year ago* (1 child)

    Second line of credit or mortgage, its still debt. The two are equivalent because you could also make more mortgage payments to pay it down quicker.

    Your suggestion translates to "Don't worry about home repairs, just take on more debt to pay them."

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  • [–] 0 points 1 year ago* (last edited 1 year ago)

    Once again everyone knows that is debt. Of course it is debt. Once again if you don't understand that taking out a loan = debt you don't understand basic finance.

    It just so happens to be the lowest interest form of debt you can take and even when added with an existing mortgage payment is still insanely cheaper than comparable rents for the same property.

    My statement is "yes homes have maintenance and that can come at unexpected costs. However you can access low interest debt if you need to. And even if you do you'll still pay less than renting a comparable property for the same amount of time"

    Please consider the whole and dont just take snippets out of context. Homes come with costs, still way cheaper than renting. You don't have to take out a loan for home maintenance. You can, but you don't have to.

    One final note, debt doesn't necessarily have to be bad. You should never take on debt you cannot afford but if utilized wisely you can maintain cash reserves for emergencies and build your credit. Credit scores are made up bullshit, but it's a system that we're trapped in. With a better credit score you can get much better terms on certain things that we need to survive. It's better to take on a manageable debt that at least gives you some benefit than to dump your money into some landlords profit margin.

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