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66 votes

Math Behind Buying a House

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 ...
TTT's user avatar
  • 47.2k
66 votes
Accepted

How does paying off the mortgage work if I demolish a home and rebuild another home on the property?

The existing mortgage is for that house on that land. It's (almost certainly) an "owner-occupied" mortgage. Thus, you'll have to talk to the bank. They'll want you to refinance the ...
RonJohn's user avatar
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52 votes

How does paying off the mortgage work if I demolish a home and rebuild another home on the property?

A mortgage is a secured loan, like a car loan. A secured loan has collateral - the thing of value that backs up the loan. When the collateral stops having value, the loan principal is immediately due ...
Harper - Reinstate Monica's user avatar
40 votes

We don't own the land so is our house nearly worthless?

That is quite common in Japan - an average house depreciates to zero in about two decades. And many houses are commonly built on land that belongs to someone else, much like your situation. That's why ...
Radovan Garabík's user avatar
34 votes

Does this sound like a great idea regarding being a landlord and starting a real estate empire?

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 ...
Pete B.'s user avatar
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31 votes
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Can you self-direct a 401k to buy you a house?

No - you cannot directly or indirectly benefit from the assets in an IRA, which is most pertinent for a self-directed IRA where you can own real assets like rental property. Neither can your spouse, ...
D Stanley's user avatar
  • 137k
30 votes

Best ways to invest for a planned house purchase in 1 year?

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"...
pboss3010's user avatar
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30 votes
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Should I buy a nicer house in a worse area for less than I budgeted?

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 ...
JTP - Apologise to Monica's user avatar
28 votes

Math Behind Buying a House

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 ...
D Stanley's user avatar
  • 137k
26 votes

Offered money to buy a house, seller is asking for more to cover gap between their listing and mortgage owed

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 ...
Aganju's user avatar
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25 votes

Wired to the wrong account

You will have to pay for an attorney. Initiate a SWIFT recall. You've already tried the easy thing - simply asking for it back, and that didn't work. They likely don't have a legal right to keep the ...
sevensevens's user avatar
  • 4,099
22 votes

Does this sound like a great idea regarding being a landlord and starting a real estate empire?

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 ...
Five Bagger's user avatar
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19 votes
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Buying a house. I have the cash for the whole thing. Should I still get a mortgage to get the homeowner tax break?

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 ...
keshlam's user avatar
  • 48.2k
19 votes

If a home has increased in value, why would an essential component of the home depreciate?

Insurance companies pay for the cost of unexpected events not for the cost to maintain your house. Without any unexpected events, you need to replace your roof about every 20 years and insurance won't ...
minou's user avatar
  • 7,536
18 votes

Is investing in S&P 500 a wise choice if you plan to purchase a house in 10-15 years?

I am not checking your math. I as assuming that you feel confident that if you start with 50K, add 5K a month, that in 10-15 years you can have $1,000,000 after taxes. All this is to be able to put $1,...
mhoran_psprep's user avatar
17 votes

Can you self-direct a 401k to buy you a house?

This is called "self-dealing" and is not allowed. See the list of prohibited transactions here.
littleadv's user avatar
  • 177k
15 votes

Buying a mortgaged house

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. ...
JTP - Apologise to Monica's user avatar
15 votes

Should I buy a nicer house in a worse area for less than I budgeted?

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 ...
Hart CO's user avatar
  • 70.5k
14 votes

Best ways to invest for a planned house purchase in 1 year?

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 ...
Simon B's user avatar
  • 10.4k
14 votes

Why would a bank not "buy a house for me" if they own the house until I've paid it anyway?

Simple answer, they are in the banking business not the landlording business. The same reason a coffee shop won't sell you a car even if there was some scheme where it benefitted them.
JohnFx's user avatar
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13 votes

Options for building equity while living with parent?

My first thought - Cash is also "equity". You don't say how much you're contributing to the loan on your MIL's house, but one way to built "equity" would be to save as much cash as ...
D Stanley's user avatar
  • 137k
13 votes
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Strategy to Negotiate a House Purchase in an Uncertain Economy

In my view, there's no good reason not to make an offer now at the price you want. If you're coming in low it's best if you can add strength to your offer in other ways. For example you could offer a ...
Hart CO's user avatar
  • 70.5k
12 votes

Buying a house. I have the cash for the whole thing. Should I still get a mortgage to get the homeowner tax break?

"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 ...
JTP - Apologise to Monica's user avatar
12 votes

Does this sound like a great idea regarding being a landlord and starting a real estate empire?

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 ...
zeta-band's user avatar
  • 3,997
12 votes
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Bought a house last year should I hire a tax consultant?

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 ...
Dilip Sarwate's user avatar
12 votes

Container Homes, do they hold value?

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 ...
Justin Cave's user avatar
  • 27.3k
12 votes

If a home has increased in value, why would an essential component of the home depreciate?

These values are completely disconnected You say "price of a house" but that's wrong. The sale price is the value of house + the land it is on. Shockingly often, the value of the house ...
Harper - Reinstate Monica's user avatar
11 votes

Home sale: No right to terminate?

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 ...
Brythan's user avatar
  • 21k
11 votes

Why not pay down payments on multiple houses and hand them to rental management companies?

The same thing that keeps everyone from investing in any "on average" profitable space - risk and opportunity cost. Renting a house isn't always profitable, for a wide variety of reasons. ...
Nuclear Hoagie's user avatar
10 votes

Bought a house last year should I hire a tax consultant?

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 ...
JTP - Apologise to Monica's user avatar

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