Posted on 01/12/2015 8:45:57 AM PST by SeekAndFind
When you buy a home, a lot of the money you spend isn't going toward your home equity. The cost of homeownership includes the money you spend on fees, taxes, and interest. These costs do not increase the value of your home nor do they reduce the principal on your mortgage.
We did some analysis on the cost of homeownership versus the cost of renting. Rental costs are offset by the interest you make on the cash you did not have to put toward a down payment. Homeownership costs are offset by the tax deduction you get on your mortgage interest payments.
The cost of owning a home will typically exceed the cost of renting when the price-to-rent ratio (the cost of buying a home divided by the annual rent of similar property) is greater than 20. We used data provided by Zillow for this analysis.
(Excerpt) Read more at businessinsider.com ...
I agree totally. People should honor their financial commitments. I know it’s unpopular to say this (with some), but the banks did not screw anyone. Terms of mortgages were mutually agreed upon and were put into the contract when the money was borrowed. The fact that external circumstances changed the borrowers’ ability to repay is not the fault of the banks. Borrowers should have been more careful about signing anything other than a fixed rate mortgage to buy their house. The lure of being able to buy a house that is more expensive than you can really afford, though, seems to have led many astray.
I am not a lawyer, but I don’t think you are quite correct with this. It may be practically true, but I believe that the note you sign when you get a mortgage carries with it a contractually binding obligation to repay the loan. The lien placed on your property by virtue of the mortgage is intended solely as default protection for the lender, not to be a suitable option for the borrower to satisfy the contractual obligation. It’s more like an option for the bank rather than the borrower - the bank has the option to foreclose the property in the event that the borrower breaches the contract. Further support for my take: if you are foreclosed and the proceeds from the sale are insufficient to cover the remaining principal (plus allowed legal costs associated with the foreclosure), you are still legally liable for the remaining amount owed. A bank may recognize that they are unlikely to ever collect this amount and settle for a short sale, but they are not obligated to do so. Foreclosure itself does not satisfy the obligation unless the funds from the sale are sufficient to repay the debt.
Also, make sure about the neighborhood. Never buy property that is near urban blight, has a highway running next to it or where other homes surrounding you are not kept up. Take a drive around the neighborhood on a Friday or Saturday night to make sure there are no street toughs or other riff-raff in the vicinity. What you want is a quiet neighborhood where people work hard and keep up their properties.
I've read about the financial benefits of renting vs owning but renting just has too many drawbacks to me. I don't like being at the mercy of a landlord. Being told to turn my music down, being subject to surprise inspections, or having my rent raised - just because. I don't want to be told what colors I can paint my rooms or have crappy home repairs done because the landlord doesn't want to spring for a professional handyman. And the list goes on and on.
It actually varies from state to state.
I'm not going to chastise people for backing out of their bank loan promises, but it's not for me. I'll repay my loans just like any other promise I ever made... I keep my word, no matter how much it may hurt. Grandpa was right, a mans word is his most prized quality.
Buy in rural areas, don’t live in major cities.
You either buy a home as a residence, or an investment
...and remember, as an “investment” you get to shelter up to a half Mil if married when you sell. Plus you fix your payment while inflation helps you with tax free gains over the LONG term.
and yes you should chastice scofflaws since all honest borrowers pay more because of the default crowd...
ymmv
Then your sister is a thief. She entered into a contract with the lender and is obligated to abide by the terms of the mortgage.
Poor timing is no valid reason to quit making payments.
Then your sister is a thief. She entered into a contract with the lender and is obligated to abide by the terms of the mortgage.
She’s just playing their game.
Yes. If they signed up for a scheme assuming more future income than they actually realized it is their own fault. If I have to choose between cheating or being cheated, I would rather be cheated. In this case I do not even think they were cheated. They knew the terms and the risks and when the risks kick in bad, they do not want to take responsibility.
Some of the time it is not even that they can’t pay. They won’t pay because home values have dropped. That is the worst!!!! They want the appreciation benefits of owning without the depreciation risk. That leaves the bank holding the bag in the other direction: no benefit of appreciation but holding the bag if there is depreciation. Those were not the terms of the contract. Fraud charges should be filed against the non-payers.
You don’t think your rent doesn’t include the owner’s property tax?
It stuck in my mind long ago that the largest purchase you will make in your lifetime is probably not your home but the interest on your home.
I seriously doubt the contract gave her the option. The “option” to give the property back is called being in default. The property was merely collateral. It is legal in the sense that the bank can take the property back to cover some of its losses. It is not legal to the original terms of the mortgage except as a safety net for the bank in the case of deadbeat customers who default on the agreement. Sounds like your sister is even taking advantage of that and living in a house she is not paying for. Shame shame shame!!!!
The “or give it back” condition applies to leases, not mortgage purchases. Was it a lease purchase? If it was, even then the sister should be paying a payment while she lives there.
Legal is not a relative term meaning “whatever you can get away with.”
“Default”, “option”. You say potato, I say potahto.
It’s a clause of the contract that all agreed to.
If you live in a city with tenant protections, you can avoid a lot of the problems you mention. NYC has the best of these, as far as I know. They have to. Half the landlords would have half the tenants out on the street if they didn’t.
This is not just rent regulation but a necessary attitude of bias toward the tenant.
Bloomberg, for all his faults, hated noise. Most of the complaints that were phoned in to 311 were noise complaints of one kind of another, and may still be.
Other protections are also firmly in place.
So it depends where you rent too, among all the other factors.
Of course your rent is taxed...Ya think the landlords who are repeatedly taxed are not going to pass it on to you?
Come on....
Outside of those in corp land and the super rich, everyone is paying the korrupt kingdom...But it’s just not enough to keep up with the kingdom’s spending. They need more.
Well, those cops and teachers don't work for free. Schools and fire stations don't just grow by themselves. Someone has to pay for them and that's what property taxes do. We knew it going in and nothing was kept secret. If they get out of hand, we can run for the Board of Supervisors and try to set it right. I've lived here for 40 years and so far, so good.
In all fairness, NYC is just a mess no matter how you look at it. Millions of people wanting to live on a small island with a rather confusing history of real estate.
No they don't and some states have racked up multiple billions$ in debt, just to pay their generous tax paid retirement pensions alone.
Government now employs more people than any other business in the U.S. There are now more unionized government employees than in private sector America...
BTW, you seem to be one of those who've not yet experienced the steep decline...Yet.
Three cheers for you.
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