I knew mortgage rates made a huge difference in payments.....but.....

[winterwhite]

No.

Rent money is always lost money, Always.

As was said, you have a place to live.

what you don’t usually do is recover what you have spent on interest, taxes, insurance, repairs, and so on when you are a homeowner.

these are the sunk costs of living. Renters pay them via rent. Owners pay them directly. Either way, nobody is getting those funds back.

 

[bakerworld]

My daughter's company offered her a position in SoCal - she refused - she'd talked to too many fellow employees who transferred to the CA area so she told her boss it was a hard 'no' unless the salaries were tripled. She said even at triple the salary she'd be pinching pennies and probably wouldn't be able to afford to purchase.

 

[tvguy]

No.

As was said, you have a place to live.

what you don’t usually do is recover what you have spent on interest, taxes, insurance, repairs, and so on when you are a homeowner.

these are the sunk costs of living. Renters pay them via rent. Owners pay them directly. Either way, nobody is getting those funds back.

Yup. Homeowners pay their interest, taxes, insurance and repairs. Renters pay the landlords interest, taxes, insurance, repairs and PROFIT. As a a renter you can hope you have a landlord who has owned the property a long time and has a low cost of ownership.

 

[winterwhite]

Yup. Homeowners pay their interest, taxes, insurance and repairs. Renters pay the landlords interest, taxes, insurance, repairs and PROFIT. As a a renter you can hope you have a landlord who has owned the property a long time and has a low cost of ownership.

The market determines rental prices. Not the owners mortgage.

I had a 15 year on my house. No renter would be covering that payment, unless I wanted my house to be empty 2/3 of the time.

rents are always higher in places where the job market is high turnover. There is no reason to own if you will stay fewer than 5 years because the sunk costs of buying (say $10,000 on a $300k purchase)and selling (6% commission on $300k purchase) plus interest which is always more in the beginning means it is much more expensive to own if you will remain fewer than 5 years.

 

[barkley]

rents are always higher in places where the job market is high turnover. There is no reason to own if you will stay fewer than 5 years because the sunk costs of buying (say $10,000 on a $300k purchase)and selling (6% commission on $300k purchase) plus interest which is always more in the beginning means it is much more expensive to own if you will remain fewer than 5 years.

(you can also take an extra financial hit if you're in a state like mine where you get hit with a tax bill on the sale of your home).

 

[DLgal]

Ah, with 20% down and the current VA rate of 2.353$ for 30 years I get $1,848.92 a month. $417 a month property taxes. $100 a month insurance. Not sure whee $2825 comes from but your math doesn't agree with the mortgage calculators. So a huge savings over renting

Who says I have $100,000 for a down payment?

And no one is getting 2.353% on a VA mortgage right now. Try closer to 3%. I know 2 people who are in escrow right now at rates very close to 3%.

You might score 2.353 on a 15 year VA mortgage. Maybe.

I ran the numbers on an actual house for sale in Sacramento. Your quoted tax payment is too low. Try closer to $7000/year. I'm not buying YOUR house.

I ran the numbers again with another calculator and got $2720. So...

 

[barkley]

Who says I have $100,000 for a down payment?

And no one is getting 2.353% on a VA mortgage right now. Try closer to 3%. I know 2 people who are in escrow right now at rates very close to 3%.

You might score 2.353 on a 15 year VA mortgage. Maybe.

I ran the numbers on an actual house for sale in Sacramento. Your quoted tax payment is too low. Try closer to $7000/year. I'm not buying YOUR house.

I ran the numbers again with another calculator and got $2720. So...

the numbers are off to me as well, and i lived in california for over 40 years and owned 2 homes. the homeowners insurance figure has to be WAY off from what common sense let alone what a lender requires. i lived in a MUCH lower crime rated area than sacto and in order to provide adequate coverage (replacement value, housing during repair...) despite getting multiple policy and other discounts i was paying much more back in the 90's and early 2000's on a then much lower valued home/property (and that was exempt of earthquake coverage which cost an arm and a leg).

tvguy-when you are running the numbers on property taxes are you using the calculation for a current traditional home buyer or what i believe you have said you are-a second generation (inherited or pass on property) owner (someone who falls under the SIGNIFICANTLY better and lower property tax assessments in california)? i know several situations where individuals are the current owners of homes their parent's previously owned and by virtue of current property tax laws pay a fraction of what homes worth hundreds of thousands less pay in yearly property taxes.

 

[tvguy]

Who says I have $100,000 for a down payment?

And no one is getting 2.353% on a VA mortgage right now. Try closer to 3%. I know 2 people who are in escrow right now at rates very close to 3%.

You might score 2.353 on a 15 year VA mortgage. Maybe.

I ran the numbers on an actual house for sale in Sacramento. Your quoted tax payment is too low. Try closer to $7000/year. I'm not buying YOUR house.

I ran the numbers again with another calculator and got $2720. So...

Remember, because of Prop 13 your property taxes are limited to 1% of your purchase p rice, so on the property taxes on a $505,000 house would be $5,050 a year. I can't speak to your down payment but 20% is pretty much standard. Except in Sacramento County over one third of all home sales have no mortagage at all, they are cash sales\.
Looks like VA 30 year fixed rates went up today to 2.98%
https://www.bankrate.com/mortgages/...VeteranStatus=NoMilitaryService&zipCode=95818

 

[tvguy]

The market determines rental prices. Not the owners mortgage.

I had a 15 year on my house. No renter would be covering that payment, unless I wanted my house to be empty 2/3 of the time.

rents are always higher in places where the job market is high turnover. There is no reason to own if you will stay fewer than 5 years because the sunk costs of buying (say $10,000 on a $300k purchase)and selling (6% commission on $300k purchase) plus interest which is always more in the beginning means it is much more expensive to own if you will remain fewer than 5 years.

Landlords would go bankrupt if they couldn't recoup their costs. They aren't a charity, they are in it for a profit.
Individual tax situations certainly can impact your decision to buy, but my daughter has been in her house a year and has made $50,000 on paper, more than enough to cover her costs on a $250,000 property.

 

[Starport Seven-Five]

Landlords would go bankrupt if they couldn't recoup their costs. They aren't a charity, they are in it for a profit.

It's funny you mention a "charity" as that is the a reason someone would rent you a property below market rate as well.

Why a landlord would rent below cost depends on strategy, portfolio, etc.
-Plenty of landlords in California who are not making money off the monthly rent. They are generally looking for property appreciation and just using rent to offset some of their costs.
-People like my neighbor who had to relocate in 2012 but was upside down on their home. They rented it out to cover the mortgage (and were losing ~$100/month based on a back of the napkin calculation).
-Then you have the landlords that are bad at math and think that $100/month is profitable. A month of vacancy would put them at a loss for the year.

Overall, much like when buying a car, what the owner paid is not my concern. The price I'm paying is going to be dictated by market rate. I'm not going to pay $500/month more than down the street because a landlord bought a bad rental property.

 

[tvguy]

It's funny you mention a "charity" as that is the a reason someone would rent you a property below market rate as well.

Why a landlord would rent below cost depends on strategy, portfolio, etc.
-Plenty of landlords in California who are not making money off the monthly rent. They are generally looking for property appreciation and just using rent to offset some of their costs.
-People like my neighbor who had to relocate in 2012 but was upside down on their home. They rented it out to cover the mortgage (and were losing ~$100/month based on a back of the napkin calculation).
-Then you have the landlords that are bad at math and think that $100/month is profitable. A month of vacancy would put them at a loss for the year.

Overall, much like when buying a car, what the owner paid is not my concern. The price I'm paying is going to be dictated by market rate. I'm not going to pay $500/month more than down the street because a landlord bought a bad rental property.

Depends on landlord. My wife's best friend works for a guy who owns 400 apartments, they have been paid off for 40 years. If a tenant at least pays half the rent, he isn't going to evict them because his expenses are low, he is still making money.

 

[dina444444]

Remember, because of Prop 13 your property taxes are limited to 1% of your purchase p rice, so on the property taxes on a $505,000 house would be $5,050 a year. I can't speak to your down payment but 20% is pretty much standard. Except in Sacramento County over one third of all home sales have no mortagage at all, they are cash sales\.
Looks like VA 30 year fixed rates went up today to 2.98%
https://www.bankrate.com/mortgages/...VeteranStatus=NoMilitaryService&zipCode=95818

You are assuming there are no city/county assessments with those figures. My property tax bill for just the general assessment is in the range you are talking about but it’s $1.7k more once I add in all the assessments.

 

[loves to dive]

If you are a seller those low rates are a godsend, if you are a buyer, not so much. My son is trying to buy a house and he has looked at two hoping to put an offer in. The first was sold the next day before his agent could submit an offer. The second was sold at $20,000 over selling price. It wasn't worth it either, I'm not even sure it was worth selling price. I'm trying to convince hubby now is the time to sell our house, we could get way more than we paid for it and not even have to do any improvements. Oh, by the way the house that sold over asking price was in an open house yesterday so he took me to see it. The sellers hadn't even bothered to clean the bathrooms, there was hair in the tub and a screen hanging off the door. Seriously, how hard it is to clean the tub and fix a screen before people come looking at your house.

 

[tvguy]

You are assuming there are no city/county assessments with those figures. My property tax bill for just the general assessment is in the range you are talking about but it’s $1.7k more once I add in all the assessments.

Mello Roos etc are rare here. Voters don't like taxes so didn't approve them. My property taxes are $2,480 a year. They tried to add a Park tax, it would have add $75 a year

 

[DLgal]

Remember, because of Prop 13 your property taxes are limited to 1% of your purchase p rice, so on the property taxes on a $505,000 house would be $5,050 a year. I can't speak to your down payment but 20% is pretty much standard. Except in Sacramento County over one third of all home sales have no mortagage at all, they are cash sales\.
Looks like VA 30 year fixed rates went up today to 2.98%
https://www.bankrate.com/mortgages/...VeteranStatus=NoMilitaryService&zipCode=95818

The STATE property tax may be capped, but the county can charge whatever else they want on top of that. The newest neighborhoods under development in my area have a 1.8% tax. The house we live in is 1.3%.

Like I said, I used an actual Realtor.com listing and it had the ACTUAL tax rate for that address included in the mortgage. It was not 1%.

VA loans don't require down payments and they no longer have a loan limit. They also don't charge PMI, so why wouldn't someone who is eligible put zero down. The loans are so cheap that sinking 20% into the house upfront makes no sense when you could invest that money for a far better return.

 

[dina444444]

Mello Roos etc are rare here. Voters don't like taxes so didn't approve them. My property taxes are $2,480 a year. They tried to add a Park tax, it would have add $75 a year

So you don’t have assessments to pay for your local schools? That makes up half of the additional assessments on my bill.

 

[DLgal]

It's funny you mention a "charity" as that is the a reason someone would rent you a property below market rate as well.

Why a landlord would rent below cost depends on strategy, portfolio, etc.
-Plenty of landlords in California who are not making money off the monthly rent. They are generally looking for property appreciation and just using rent to offset some of their costs.
-People like my neighbor who had to relocate in 2012 but was upside down on their home. They rented it out to cover the mortgage (and were losing ~$100/month based on a back of the napkin calculation).
-Then you have the landlords that are bad at math and think that $100/month is profitable. A month of vacancy would put them at a loss for the year.

Overall, much like when buying a car, what the owner paid is not my concern. The price I'm paying is going to be dictated by market rate. I'm not going to pay $500/month more than down the street because a landlord bought a bad rental property.

My landlord is one who is counting on appreciation. She buys the houses she rents in CA with interest only mortgages, and then just lets them ride. She primarily owns houses in my city (that has always seen major appreciation due to the school district's reputation) and in Boston.

She bought the house we live in and another identical model a few streets away in 2015. She paid $787,000. This model with less upgrades is selling for $1M right now. I'd say she has already done well on just those 2 houses in the last 5 years.

She grew her portfolio by purchasing commercial real estate in Downtown Boston about 30 years ago. She bought one big building and has 5 retail tenants. She made enough money on that venture to begin buying houses for cash. She has a total of 8 single family homes in her portfolio. She told me this whole story over coffee while we had plumbers here doing a pretty major job because of a clog from our attic HVAC unit. I watched her haggle the plumber's price down to $300 from $750. That lady knows how to hold onto her money.

She rents us this house for $700/month under market value because she values long term tenants who take care of her houses. In a span of 6 years, she raised our rent $50 one time, at the 3 year mark.

 

[DLgal]

So you don’t have assessments to pay for your local schools? That makes up half of the additional assessments on my bill.

He lives in an old house. Mello Roos (tax assessments for schools and infrastructure) expire, usually after 30 years. They are SUPER DUPER common in most suburban areas in California, especially anywhere there is new construction.

I'll bet he doesn't have an HOA payment either. Finding a house without an HOA in my city is impossible. Literally. This was one of the country's first master planned cities and even the very first neighborhood has an HOA. That's an additional amount that we would have to tack onto our monthly payment. Many houses here have TWO HOAs (A "Master" one and a Neighborhood specific one). Many of our developed areas are small neighborhoods within larger master planned communities. The newest location has houses with HOA costs averaging $500/month. The amenities are mind blowing, so you actually get something fir your money.

 

[tvguy]

So you don’t have assessments to pay for your local schools? That makes up half of the additional assessments on my bill.

That's all a part of my $2,480 tax bill.

 

[tvguy]

He lives in an old house. Mello Roos (tax assessments for schools and infrastructure) expire, usually after 30 years. They are SUPER DUPER common in most suburban areas in California, especially anywhere there is new construction.

I'll bet he doesn't have an HOA payment either. Finding a house without an HOA in my city is impossible. Literally. This was one of the country's first master planned cities and even the very first neighborhood has an HOA. That's an additional amount that we would have to tack onto our monthly payment. Many houses here have TWO HOAs (A "Master" one and a Neighborhood specific one). Many of our developed areas are small neighborhoods within larger master planned communities. The newest location has houses with HOA costs averaging $500/month. The amenities are mind blowing, so you actually get something fir your money.

My house is 40 years old. Mellos Roos are a big negative for selling a home here.. HOA's are around, but usually in condos and gated communtieis.