dantfmly Posted August 26, 2004 Share Posted August 26, 2004 woo hoo. i love housing in my area (Virginia Beach). I bought a house here a little over 4 years ago for $97,900. I am getting ready to sell it and they are telling me it is worth $175,000-180,000. That is one hel# of a jump in four years. I owe 101,000 on the house still (VA loan, 100% of the loan was finaced plus closing costs, plus a refiniacing in there with more closing costs) so after relator fees i could make $65,000 to 70,000. that would make for a really nice system. , but i have a couple of bills i want to pay off (new car and consolidation=30,000), plus i have to buy another house (ones we are looking at are roughly 210,000 to 250,000). We are actually doing this so we can pay of the bills and get a bigger/better house. but boy that is the disadvange is buying back into that kind of market. We are going to put down as much as we can as a down payment on the house. Quote Link to comment Share on other sites More sharing options...
neomartic Posted August 26, 2004 Share Posted August 26, 2004 why not stay in your current house for 4 more years and see what happens? Quote Link to comment Share on other sites More sharing options...
shoe11 Posted August 26, 2004 Share Posted August 26, 2004 Well stay down in VA Beach then cuz in Northern VA, new townhomes will run you $300k and you don't even want to know how much even basic single family homes will cost. ~shoe Quote Link to comment Share on other sites More sharing options...
J.4knee Posted August 26, 2004 Share Posted August 26, 2004 Come out to sunny San Diego, median price is around $550,000, I'm really glad we got in the market 9 years ago. Quote Link to comment Share on other sites More sharing options...
fini Posted August 26, 2004 Share Posted August 26, 2004 You should look up the definitions of "good debt" vs. "bad debt." Suze Orman has some good books on the subject. Basically, you want to use debt (like pulling equity out of your home) for things like another or a different home, a college education, OR paying off high-interest credit cards ( after which you use credit cards for their convenience only, paying off the balance monthly). You did good buying your house four years ago. Try swinging a second piece of property. Keep you old car (or buy used), and sock away money for a new car in a separate account. Sorry to sound like a lecturer. I try to follow my own advice (but have been known to slip-up a time or two... ). Quote Link to comment Share on other sites More sharing options...
edwinr Posted August 26, 2004 Share Posted August 26, 2004 Yes, you could definitely salt away some of that hard earned profit for a pair of Klipschorns! Quote Link to comment Share on other sites More sharing options...
TBrennan Posted August 26, 2004 Share Posted August 26, 2004 "Single family home"--I remember when the concept was expressed by a simple, honest, one syllable word---house. Quote Link to comment Share on other sites More sharing options...
garymd Posted August 26, 2004 Share Posted August 26, 2004 I bought my house 10 years ago and its more than doubled in value. I think the housing market may hit a brick wall as rates continue to rise over the next couple of years though. You have to remember that the historically low interest rates we've seen over the past few years have enabled many to spend more for a home then they could have otherwise. Like Fini said, pay off any credit card debt first. Even if it means a lower downpayment. Mortgage interest is deductable, CCs and car payments aren't. Congrats on your windfall and good luck with the new home! Quote Link to comment Share on other sites More sharing options...
dantfmly Posted August 26, 2004 Author Share Posted August 26, 2004 yeah all of your prices are really high, but back in Indiana (where i am originally from) 250,000 will get you close a 3,500 sqft house vs a 2,000 house that we can get here, so it is all relative. that is not what i was talking about though. I was talking about how much the value of my house went up in just four years. we want those bills paid of bad, having no debt, and start using that money to invest for retirement,instead of waiting the 2 years on our present plan to pay stuff off. Plus, we have outgrown this house (1500sqft), we need more space. basements do not exsist here, so there is no storage space, plus we are planning on having another child soon, so we need another room. I would rather not live in VA at all. I want to move back to Indiana. Two reasons stopping me though. I would be AWOL/UA (I'm in the Navy stationed here), and my wife is from here. Quote Link to comment Share on other sites More sharing options...
dantfmly Posted August 26, 2004 Author Share Posted August 26, 2004 ---------------- On 8/26/2004 8:33:12 AM fini wrote: You should look up the definitions of "good debt" vs. "bad debt." Suze Orman has some good books on the subject. Basically, you want to use debt (like pulling equity out of your home) for things like another or a different home, a college education, OR paying off high-interest credit cards ( after which you use credit cards for their convenience only, paying off the balance monthly). You did good buying your house four years ago. Try swinging a second piece of property. Keep you old car (or buy used), and sock away money for a new car in a separate account. Sorry to sound like a lecturer. I try to follow my own advice (but have been known to slip-up a time or two... ). ---------------- I don't want any debt at all, except for a house, which to me is a living expense, not a debt as per say. To me a car is bad debt, along with a consalidation loan. My wife and i need to start our retirement now. I am almost 30 now, and i am starting late. we pay off all debt except for the house, we can do that. We can do it now by selling the house or wait two years to be able to pay it off fully by our pay, but to do that we were living pay check to pay check and we don't want to dot hat anymore, so we are going to sell the house and stop living pay check to pay check to pay off the debt. yes our payment will by near twice as high or more for the house, but the rest of our money is free and clear for savings and spending, except of course for utilities. we were trying to pay off a 32,000 six year car loan in three years, along with 12,000 consalidation loan. We are now down to 30,000 between the two but we have been having to charge gas (just two tanks so far in the last 6 months), because we ran out of money. We don't want to live like that so we are taking the quick way out. 70,000 - 30,000 still leaves 40,000 to put into the new house though. Quote Link to comment Share on other sites More sharing options...
dantfmly Posted August 26, 2004 Author Share Posted August 26, 2004 ---------------- On 8/26/2004 8:46:24 AM garymd wrote: I bought my house 10 years ago and its more than doubled in value. I think the housing market may hit a brick wall as rates continue to rise over the next couple of years though. You have to remember that the historically low interest rates we've seen over the past few years have enabled many to spend more for a home then they could have otherwise. Like Fini said, pay off any credit card debt first. Even if it means a lower downpayment. Mortgage interest is deductable, CCs and car payments aren't. Congrats on your windfall and good luck with the new home! ---------------- Credit cards have already been paid off, no debt there. Just car and consolidation loan. that is what i am worried about that brick wall that you are talking about with the interest rates going back up, that is another reason why we are doing this now. Thanks, we are meeting with the realtor monday, to start the process of selling our house, and buying the new one. Oh and how well i know about deductable Home interest. Quote Link to comment Share on other sites More sharing options...
ZAKO Posted August 26, 2004 Share Posted August 26, 2004 All your doing is driving up your realestate tax,s....Every body thinks their sh!thouses are worth a million. Your just taxing yourself into oblivion. Waite till you retire and youll find out that you have to move into a tent to pay down the tax,s Quote Link to comment Share on other sites More sharing options...
TBrennan Posted August 26, 2004 Share Posted August 26, 2004 Well it would take being in Virginia to make one want to go to Indiana. I'll tell ya, eastern Virginia is the ugliest, used-up and worn-out bit of country I've seen, worse than Texas brush country even. I wouldn't give the entire state of Virginia east of The Valley for a half-section in Champaign County. Whereas Indiana is damned near as green and fecund as Illinois. Now if it wasn't for the Hoosiers that inhabit the place.... Quote Link to comment Share on other sites More sharing options...
gullahisland Posted August 26, 2004 Share Posted August 26, 2004 I've gotta' agree with Gary. Current housing prices are simply a function of two factors. 1) LOW interest rates. Say, for example, $1,000 per month buys a $150,000 house with a fixed rate of 8%. If interest rates DROP to 5%, that same $1,000 will buy a $225,000 house. (Just an example) 2) FUNKY, FUNKY loan products. The proliferation of variable, interest-only, indexed (can you say LIBOR?) loan products now means that anybody can "qualify" to buy a home. The obvious risk is that, when interest rates rise (and they already are) many of these loans are going to adjust to the newly normalized interest rate environment and that "affordable" mortgage is going to become increasingly difficult to pay every month. The above two factors have worked together to cause a feeding frenzy and has been driving up prices for the past 4-5 years...especially the last 2. The first three years supplies were tight because many of the people who were losing their money in the stock market pulled it out and put it somewhere "safe"...real estate. People who become euphoric about the housing market need to take pause and think logically for a moment. REAL WAGES have not increased significantly. With so much LEVERAGE (debt) being harnessed to "afford" the American Dream, unless wages increase significantly, people WILL lose their homes when the interest rates rise...and they WILL rise. What goes UP, must come DOWN. The higher the increase in "value", the harder the fall. Did everybody forget 1990-1993? I had just graduated from high school, but I sure remember. My best friend's dad had been relocated to the SF Bay Area at the peak of the last housing bubble and then got laid off when it tanked. He was upside-down by $100K on his home and unemployed. He ended up moving to Oklahoma for a job and his wife stayed in California until they could pay down the debt and sell the house. Remember the dot.com bubble burst? Lots of people got hurt...badly. When this real estate bubble bursts, it's going to be much more far-reaching in its' effect on American families. Quote Link to comment Share on other sites More sharing options...
neomartic Posted August 26, 2004 Share Posted August 26, 2004 A word to the wise.... Take a higher fixed rate mortgage now even if it means paying a little more on your monthly payment. You don't want to end up in trouble if the rates skyrocket like in the early 80s. An with this economy you never know what is going to happen. In fact, historically, fixed rate mortgages have been less expensive over the life of the mortgage than a variable rate mortgage. PS... yes, I'm a finance major. Quote Link to comment Share on other sites More sharing options...
gullahisland Posted August 26, 2004 Share Posted August 26, 2004 ---------------- On 8/26/2004 9:12:48 AM Maron Horonzak wrote: All your doing is driving up your realestate tax,s....Every body thinks their sh!thouses are worth a million. Your just taxing yourself into oblivion. Waite till you retire and youll find out that you have to move into a tent to pay down the tax,s ---------------- Another reason for staying put. Brilliant observation, Maron. Another observation is that so many people are putting so much of their income into their home (and then re-financing, taking a second, re-financing again, consolidating credit cards and cars with ANOTHER second, then re-financing AGAIN!, etc., etc.) that they're NOT saving for retirement. They hold out this false hope that values will continue to increase at the same torrid pace of the past few years. "My home is my retirement" is all too common. Quote Link to comment Share on other sites More sharing options...
garymd Posted August 26, 2004 Share Posted August 26, 2004 I have less than 5 years left on my 15 year fixed rate loan at just over 4%. We are originating SOOOOOOOO many 1 month LIBOR ARMs it's mindboggling. People pay less than 2% the first month and just about anyone qualifies. Until the latest rate increases, folks have been paying 3 to 4% on their loans over the past year or two. There's a significant prepayment penalty too. When rates go up like Gullah said, watch out!!! Definitely go with a fixed rate loan and go 15 years if you can swing it. Quote Link to comment Share on other sites More sharing options...
neomartic Posted August 26, 2004 Share Posted August 26, 2004 That's why I'm turning 21 in 7 weeks and starting a Roth IRA on my birthday. Quote Link to comment Share on other sites More sharing options...
Royster Posted August 26, 2004 Share Posted August 26, 2004 I have 2 comments/advise. Both learned from my father (even though when he told me these things, I was 18 and knew everything ). Both are so true even though so SIMPLE. (1). There is NO instructions on a dollar bill. (2). There NO advantage to debt. Now I see the wisdon that comes with age. Kind of like that old bull, young bull story. Quote Link to comment Share on other sites More sharing options...
neomartic Posted August 26, 2004 Share Posted August 26, 2004 I can think of an advantage to having debt. For instance, if you have the cash to buy a car, instead of paying for it in cash right then, why not pay over 4 years. If you have good credit and get a decent interest rate, lets just say 6% for example, then it would be wiser to take the loan and put your money in an investment earning above 6%, this would mean that you would be paying less for the car. Obviously this all depends on how much cash you have on hand and what investments are available to you at the time as well as your actual quoted interest rate. Any how, see my point? Quote Link to comment Share on other sites More sharing options...
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