Hot answers tagged

67

Compared to the other answers, I feel like I'm taking crazy pills, because: Is my following calculation correct? Sorry to be the bearer of bad news, but no, this is not correct. In 3 years, if the market gets soft, and I have to sell the house for $200,000. Am I still better off than renting, because, $180,000 (taking off 20k for the realtors and ...


34

The idea you present is not uncommon, many have tried it before. It would be a great step to find landlords in your area and talk to them about lessons learned. It might cost you a lunch or cup of coffee but it could be the best investment you make. rent it out for a small profit (hopefully make around 3 - 5k a year in profit) Given the median price of ...


30

Welcome to Money.SE. You know, questions like this can help point out good/bad for a given choice, but there isn't likely to be a 'right' answer. I can offer a well reasoned answer, only to find another respected member offers the exact opposite. Given the way you frame the question, I'd prefer the 'worse' house in the 'better' area. As you suggest, its ...


29

The standard answer is that if you need the money soon (less than three or so years), you should not be putting it in risky investments and just park the money in your savings account or similar "safe" holdings. Since you plan to buy in a year, you probably should leave it in your bank account. Sure, you won't gain much interest, but you also sound like you ...


28

There are other things you need to account for in your math: Property Taxes Home Insurance Utilities Maintenance Neighborhood dues (maybe) Yes you build up equity in the house, but you still pay interest on your mortgage plus all of the above factors. Closing costs of getting a mortgage should also be considered, but that's a one-time upfront cost and ...


26

It is certainly legal to ask you, but you are of course not required to 'donate' another 4000 - that is your choice. If the deal falls through because of these 4000, it is the seller's fault, and you could sue him for your damages - whatever you invested/paid to get into this closing. Probably not much, but I wouldn't know. Also, chances are that if he is ...


22

A lot of people do this. For example, in my area nice townhouses go for about $400K, so if you have $80,000 you can buy one and rent it. Here are the typical numbers: Monthly Payment 30-year loan at 4%: $2,027.73 (Includes Monthly Tax Paid: $416.67) Insurance: $80 per month Maintenance: $50 per month Rental Income: $2,500 per month So you would make $...


17

Not for the tax break, no; as others have said that still costs you money. However, with rates being low right now and brought a bit lower by the tax break, this is an opportunity for the safest form of leveraged investing you will ever find. If you invest that money, the returns on investment will probably be better than the mortgage rate, and that leaves ...


15

Just as a renter doesn't care what the landlord's mortgage is, the buyer of a house shouldn't care what the seller paid, what the current mortgage is, or any other details of the seller's finances. Two identical houses may be worth $400K. One still has a $450K loan, the other is mortgage free. You would qualify for the same value mortgage on both houses. ...


15

Leading up to the last big housing dip, many people borrowed near their limit planning on increased home values to provide them with equity, many of them were stuck in a bad spot when home values dropped. I don't know UK bank policy, but in the US a standard mortgage can be issued that makes your total monthly debt payment up to 45% of your gross income. In ...


13

There are no safe one-year investments that pay a high rate of return. If they existed, then everybody would be putting all their money into them. If you want to be confident that the money will still be there in a year's time, just put it into the best bank or building society account you can find. The interest over one year will be negligible anyway. ...


12

I will give a modified version of JoeTaxpayer's advice. First, congratulations on your marriage and house purchase. Next, do not use the Married Filing Separately (MFS) option unless you absolutely have to use it for very good reasons; and "our incomes are similar" is not a good reason.. The tax laws and tax rate schedules are written in a way that ...


12

This is a reasonable idea and many people have done it. But there are some risks that you need to mitigate. Overleverage. If mandatory payments are more than you can handle, you could lose your property. Think you get laid off during a recession when all your houses are empty. Managing property is a lot of work. A friend does this, but to keep 7 properties ...


12

This may end up getting closed as too opinion based but I'll take a crack at it. You'd probably have problems with appraisals because it would be difficult to find comparable properties. At a minimum, you'd expect to have a larger than normal variance in appraised values which would make getting a mortgage (either initially or for a new buyer) harder. ...


11

"Getting a mortgage for the interest write-off is like buying packs of baseball cards for the gum." That said, I'd refer you to The correct order of investing as much of that question really overlaps with this. This question boils down to priorities, the best use of the funds. There are those who suggest that a mortgage brings risk. Of course it does, just ...


11

The most likely reason for this is that the relocation company wants to have a guaranteed sale so as to get a new mortgage in the new location. Understand that the relocation company generally works for a prospective employer. So they are trying to make the process as painless as possible for the homeowner (who is probably getting hired as a professional, ...


10

There's no reason to file separately. And your situation is pretty simple. You can use the most basic level of tax software. In fact, given that we are less than 3 weeks to tax day, any tax guy worth going to will not have the time to take you on as a client.


10

First, some general advice that I think you should consider A good rule of thumb on home buying is to wait to buy until you expect to live in the same place for at least 5 years. This period of time is meant to reduce the impact of closing costs, which can be 1-5% of your total buying & selling price. If you bought and sold in the same year, for example,...


9

the house's appreciation, if any, is unlikely to keep pace with average market returns is ENTIRELY the wrong way to look at this. The house's value will appreciate (or depreciate) based on its entire value, no matter what the loan-to-value ratio of your mortgage is. An extra 5% downpayment is not an investment into real estate, it is a reduction in your ...


9

Is there anything else I could do to make sure my offer got accepted and I do not get outbid? Having been in this position both as buyer and seller, the only thing that springs to mind is getting the seller to like you. This is of course tricky if you haven’t met. Conventionally, all the contact is via the agent. (We were lucky in that our second viewing the ...


8

If someone owns a house that is not paid off...can someone buy it by taking another mortgage? Yes, but I'm not sure why you think the buyer would need to take another mortgage to buy it. If someone sells their home for X dollars, then the buyer needs X dollars to buy the house. How they get that money (use cash, take out a mortgage) is up to them. During ...


8

The most important thing you did was have the opportunity and discipline to save a significant amount at a young age; this was not a mistake. You might have earned a little more in the next 2 years in a more sophisticated investment, but even if you'd got a great yield of 5%, that is only $4k difference. And if you'd made some unsuitable high-risk investment ...


7

There is no exception for traditional 401(k) withdrawal limitations for first time home purchases; if you read that somewhere, you read incorrectly. If you take a distribution from your traditional 401(k) to purchase a home, you will pay taxes and a 10% penalty, even assuming you're able to at all. The first-time homebuyer exception is for IRAs, not 401(k)...


7

Am I better off? Not necessarily. Renting: Buying a service. You are paying 54k for the 'service' of housing. You do not own any asset. Buying: Buying an asset, of course. Not only are you purchasing an asset, but you must also service the debt associated with it. You must also maintain the asset. This must all be done to provide yourself the same housing ...


7

I'm not aware of any age limit for signing over a house in the UK What I would be cautious about is how this may look if something does happen the council may refuse to pay care home fees or pay at the rate they would have done before assets were given away (this is assuming that they would do anyway) on the basis the house was signed over to avoid charge ...


5

If you buy a townhouse, you often are in a condominium arrangement in the US (when you're really in a rowhouse in particular). So that's a downside right away: you have to have a HOA, or at least some sort of common agreement, though it might not have formal meetings. Everyone who owns an interest in the entire group of townhouses gets some say in ...


5

The main replacement is a Lifetime ISA. You can open one from 6th April 2017 if you're under 40 at the time, and can then save into them until age 50. You get a 25% bonus up to £1,000 per year (i.e. for £4,000 saved), and can withdraw the money penalty free to buy a house worth less than £450,000, or after the age of 60. If you withdraw under other ...


5

Yes you should invest; and yes you should save for the house down payment. These should be two separate pools of money and the goals and time frames for them are different. With a 3 year time frame for the down payment on the house, the risk you should accept should be essentially zero. That means it is less of an investment and more plain vanilla savings ...


5

There is a 3rd option: take the cash back offer, but get the money from a auto loan from your bank or credit union. The loan will only be for. $22,500 which can still be a better deal than option B. Of course the monthly payment can make it harder to qualify for the mortgage. Using the MS Excel goal seek tool and the pmt() function: 3.2% for 48 months ...


5

You normally would not need a cash deposit in these circumstances. If you are selling and buying at the same time then the deposit you receive for the sale (at exchange of contracts) can be used as the deposit for the purchase (ditto). Obviously at completion you have to make it all square up but at that point you have the money from your sale. Last time ...


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