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Originally Posted by daveyboy
Of course there will be other bills to pay, but despite the scare stories in the press, banks will never lend you more than you can afford.
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huh? That makes no sense. Banks lend you a certain amount based on a formula. Not based on your individual lifestyle. Just because their formula (which happens to be different from market to market - after all we want to keep selling real estate...) allows you to borrow a shitload of money, doesn't mean you actually can/will/are able to adjust your lifestyle accordingly. On paper, I'd be able to take out a much bigger mortgage than I carry, but *I* know what expenses I have and how much I want to save for retirement, so I truly cannot afford a larger mortgage. I want to say that *I* know better than the mortgage broker eyeing that commission....
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If Kev is looking for a long term strategy to eventually have a nice family house in a nice area, buying now will make him more money than he could ever save, which will in turn put him in a great position 3, 5 and 10 years down the line.
Don't forget, if you do want to go travelling or whatever you can always rent your place out for a year.
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Yep!!!
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Originally Posted by Kathleen
I would also say BUY - don't rent.
I have been able to purchase a few houses that have increased in value tremendously in just a few years. My first house I paid $60,000 and sold it 2 years later for $130,000. The house I'm in now I bought for $200,000 in 1990 and it is now worth over 2 million in 16 years here - I'm blown away by how the real estate prices have gone up. That why buying is a good idea.
Kathleen
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That's assuming the real estate market it the same everywhere. Which, of course, it is not. While you probably won't ever have to worry about depreciating value, there are markets in the US and abroad, of course, that are actually on the losing end of the market.
When I was still married, I was contemplating buying a townhouse in Germany as a vacation home. I eventually decided against it as I saw a divorce looming. Lucky me. Those townhomes now sell for less than they did 6 years ago. This is in a prime location in the countryside. (perhaps my cue to revisit the buying part
).
I guess what you really need to look at, Kev, is how much is the smallest place in the most promising neighborhood to buy? Now is the time to buy a condo - you don't need anything big as you are still single. Once you are married and have 5 kids you don't have the luxury of getting in on a study apartment with incredibly promising appreciation. Now you get that small place, wait a while, trade up.
In most markets, you (or I) won't be able to save up to buy that starter home. Real estate appreciates so much faster than you can save. Get in as early as possible and buy the cheapest/smallest place in the most promising neighborhood.
One other thing: I'd never ever in my life consult a mortgage guy about what to do. I have yet to meet a loan consultant that didn't want to sell a mortgage, regardless of what made sense to me personally. Talk to a CPA instead. Or financial planner or whatever you call it over there.