Hot answers tagged

68

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 ...


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. ...


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 ...


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 ...


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 ...


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

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

($0 down-payment loans to unqualified borrowers are a big part of what caused the early 2000s housing bubble, and subsequent crash.) Here are the three ways I know of for getting a zero-down mortgage: Veterans Administration USDA Rural Development mortgage guarantee program Borrow from family Some "regular" lenders will go as low as 3.5% down, but you'll ...


4

First things first - make a budget Figure out how much money you earn, what you spend it on, and how that will change when you have kids (will one of you stay at home? if not, how much will daycare cost and how do you finance the first few month when your child is still too young for daycare?) You will usually plan to spend your current Kaltmiete (rent ...


4

Pricing a house Go on a website that has real estate listings. Find similar homes in the same neighborhood and list out the prices. Once you have prices, pick out two with different prices and call the realtor of the more expensive listing. Tell that realtor about the other listing and ask why their listing is more expensive. Compare their answer to the ...


4

This is a common and good game-plan to learn valuable life skills and build a supplemental income. Eventually, it could become a primary income, and your strategic risk is overall relatively low. If you are diligent and patient, you are likely to succeed, but at a rate that is so slow that the primary beneficiaries of your efforts may be your children and ...


4

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 ...


4

I actually did a very similar calculation recently, and I think it is a good exercise. It is difficult to be precise, but useful to get a general idea to help with your decision. Here is the general formula I used, which you will need to do once for buying and once for renting: gross cost - value gained/saved = net cost Deciding what goes into those ...


4

Some things you missed in your analysis: How will financing change your insurance costs? I.e. what is the difference between the insurance that you would buy for yourself and what they require? Note that it is possible that your insurance preferences are more stringent than the financing company's. If so, this isn't a big deal. But what's important ...


4

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 ...


4

From a real estate legal advice site, the seller may be liable if: The seller gave the buyer some sort of warranty or guaranty The seller committed fraud - usually a material (or important) misrepresentation (or lie) It's also possible that your home inspector is at fault, having done a poor inspection. As noted on the legal advice page above: As to the ...


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