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  #16 (permalink)  
Old 07-14-2009, 12:55 PM
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Default Yes, buying a home is more than just putting rent into mortgage

Buying a home is not as simple as putting the rent money into mortgage. Mortgage is definitely more than what we usually rent. As a home owner, you are responsible to pay property tax (which will go us as the house value goes up), any maintenance, HOA fees etc. There are other things (furniture, home decoration, landscaping etc.) that adds up too your monthly bill.
We bought our house just before the market fell and we did it while we are on our H1 visa. Now we have EADs, but not GC. We are glad that we have EADs in this recession. I got laid off in February, but was lucky to find a job in less than two months. I don't think I would have found one if not for EDA. Visa requirements was one of the interview questions. Even with both of us working full time, it is getting hard to save money for a rainy day. But at the same time we also have two kids going to day care and hence the additional expenses.
I agree that it is great time to buy a house. But don't buy a house thinking that you will be able to pay your mortgage with the money that you are paying rent. It is only be a small portion of it. However, it is a great feeling to own a house and make it your HOME. Good Luck!
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  #17 (permalink)  
Old 07-14-2009, 01:27 PM
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Default

I also bough a home. And even with Tax deductions in April I spend more money than if I was renting.
Take in consideration to have some money to pay mortgage if things go bad. Today If I loose my job and need to sell the house it will take me at least 6 months, and I will just breakeven.

It is a good idea depending on when you need to sell, and YES it is a great feeling to make it your HOME.
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  #18 (permalink)  
Old 07-14-2009, 03:47 PM
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Owning a house is better than renting even though the monthly payments can be higher than renting. But paying rent is actually "burning" the money as the OP said because that money is just going away whereas your mortgage is going towards the ownership of your house. Then there are the tax deductions.

Having said that, I agree that one must think hard before making that kind of financial commitment while on H1 especially in this economic climate. I myself waited till my GC got approved before I bought my house and yes it is a great feeling!!!
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  #19 (permalink)  
Old 07-14-2009, 04:19 PM
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Originally Posted by panini View Post
Owning a house is better than renting even though the monthly payments can be higher than renting. But paying rent is actually "burning" the money as the OP said because that money is just going away whereas your mortgage is going towards the ownership of your house. Then there are the tax deductions.

Having said that, I agree that one must think hard before making that kind of financial commitment while on H1 especially in this economic climate. I myself waited till my GC got approved before I bought my house and yes it is a great feeling!!!
Panini,
I respectfully disagree that renting is "burning" money. There are 4 major components in a mortgage PITI (Principal, interest, tax and insurance). When you said "mortgage is going towards the ownership of house" you're simply referring to the principal paydown. On a $300K 5% loan, your monthly mortgage is about $2100 out of which about $400 is going to the house equity. Assuming you "get" $300/mth back from tax deduction, guess what happens to the remaining $1400? Burn, nadda, gone forever to the bank, town and insurance company. The $1400 is an expense and you need to consider it when making apples-to-apples comparison of rent vs buy.

Fittan
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  #20 (permalink)  
Old 07-14-2009, 05:07 PM
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Originally Posted by vinki View Post
We got our loadn pre-approval, but heard some sad news of a colleague's friend whose 140 got 'rejected' and he had bought a home some months back - hence again have to reevaluate our decision.
Home prices have started becoming steady and actually going up a bit in our area (ventura,ca) and thats also frustrating. Wanted to save the burning of $1000 a month as rent and just wish things get better soon.

Appreciate all the responses and views !
You are not burning $1000!
You are getting a place to live in return.
And biggest of all 'PEACE OF MIND AND FLEXIBILITY' which come with renting.
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  #21 (permalink)  
Old 07-14-2009, 05:17 PM
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Originally Posted by fittan View Post
Panini,
I respectfully disagree that renting is "burning" money. There are 4 major components in a mortgage PITI (Principal, interest, tax and insurance). When you said "mortgage is going towards the ownership of house" you're simply referring to the principal paydown. On a $300K 5% loan, your monthly mortgage is about $2100 out of which about $400 is going to the house equity. Assuming you "get" $300/mth back from tax deduction, guess what happens to the remaining $1400? Burn, nadda, gone forever to the bank, town and insurance company. The $1400 is an expense and you need to consider it when making apples-to-apples comparison of rent vs buy.

Fittan
The calculation is not that easy, it depends on the length of time you want to stay in the house as with time your principal goes up and the interest component comes down and at the same time your house value goes up (traditionally.. not recession)so you have more equity than the total of principal you paid. Also, let's say you plan to stay in the house for 10-15 years you will still be paying the same amount every month but rents in the area may shoot up.
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  #22 (permalink)  
Old 07-14-2009, 05:30 PM
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Quote:
Originally Posted by sk2006 View Post
You are not burning $1000!
You are getting a place to live in return.
And biggest of all 'PEACE OF MIND AND FLEXIBILITY' which come with renting.
I agree with the "burning" part but "'PEACE OF MIND AND FLEXIBILITY" is relative and based on individual's thinking. I am on H1B with Apr'09 as priority date (if my labor approves) and I bought a house last year and I am extremely happy and enjoying my house. This is my take on it, if I don't get GC and have to go back I will be losing huge amount as potential income if I would have stayed here then add 20-30K into it (if house doesn't sell and I have to foreclose), it won't mean much but the quality time (my perception, could be different for others) I will spend in next 2-3 years is worth it.
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  #23 (permalink)  
Old 07-14-2009, 05:58 PM
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Originally Posted by hsingh82 View Post
...with time your principal goes up and the interest component comes down and at the same time your house value goes up (traditionally.. not recession)so you have more equity than the total of principal you paid. Also, let's say you plan to stay in the house for 10-15 years you will still be paying the same amount every month but rents in the area may shoot up.
Same example, $300k, 30 yr fix 5%...Month 1, your principal increase is $360. Month 2 is $362...FAST FORWARD 10 YEARS LATER....month 120 is $592. Yup...after paying mortgage every month for 10 years, your equity build-up has increase by $232/month.

As I said before, I am not against home ownership, it is just that the OP made it sounds like the renting is pure expense while a home is not.
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  #24 (permalink)  
Old 07-14-2009, 06:19 PM
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Quote:
Originally Posted by fittan View Post
Same example, $300k, 30 yr fix 5%...Month 1, your principal increase is $360. Month 2 is $362...FAST FORWARD 10 YEARS LATER....month 120 is $592. Yup...after paying mortgage every month for 10 years, your equity build-up has increase by $232/month.

As I said before, I am not against home ownership, it is just that the OP made it sounds like the renting is pure expense while a home is not.
I don't think paying rent is "burning" money, its individual's choice. Now, you mentioned the 10 years equity build-up increases by $232/month but that's after 10 years and that $300K house could be $500K worth then your equity is more while apt rent could be $2500 instead of $1000.
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  #25 (permalink)  
Old 07-14-2009, 06:53 PM
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Quote:
Originally Posted by sk2006 View Post
You are not burning $1000!
You are getting a place to live in return.
And biggest of all 'PEACE OF MIND AND FLEXIBILITY' which come with renting.
And that is PRICELESS!
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  #26 (permalink)  
Old 07-14-2009, 07:09 PM
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Quote:
Originally Posted by fittan View Post
You're not really "burning" $1000/month because there is also a cost associated with buying a home. Assuming a $300k loan, 30 yr, 5% fixed, the interest alone would be $1250. Factor in property tax, insurance, condo fee (if applicable) you will easily be over $$1600 (this is the low end). If you then deduct interest and property tax, your net expense is ballpark $1300. My point is that in the "short term", buying a house actually increases your net expenses. I know because I just bought one 2 weeks ago

1) Take into consideration all fees, taxes and all other expenses you think you will incur owning a home, now add 15% to it and that's how much it will cost/month. Unplanned and unexpected expenses (Joy of home ownership!) do come up, so be prepared!

2) Consider the initial expenses...closing cost, appliances, furniture’s etc.

3) Most of the time if you plan to live in the house for < 3 years, it does not make financial sense to buy.

4) You have to pay 6% commission when you sell your house.
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Last edited by Winner; 07-14-2009 at 07:14 PM.
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  #27 (permalink)  
Old 07-14-2009, 07:17 PM
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Quote:
Originally Posted by hsingh82 View Post
I don't think paying rent is "burning" money, its individual's choice. Now, you mentioned the 10 years equity build-up increases by $232/month but that's after 10 years and that $300K house could be $500K worth then your equity is more while apt rent could be $2500 instead of $1000.
Ahh...but you forgot to mention about the "extra" money the renter keeps in his pocket/mth compounded over 10 years (say in a ultra save CD or bond fund earning 3%).

For example, home owner pays $2200/mth (let's ignore pmi, utilities, maintenance, repairs, etc). If you deduct the principal reduction (goes back into your pocket anyways) say $500 (average over 10 years) and "return" from tax deduction say $300/mth. The renter paying $1k would have an extra $400/mth in his/her pocket. Need to compare apples-to-apples.

Yes...equity will increase due to paydown but home appreciation is no guarantee. I remember how "12% increase" is norm for mutual funds before the dot.com bust and "8%" for RE in recent years.
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  #28 (permalink)  
Old 07-15-2009, 12:52 AM
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Quote:
Originally Posted by hsingh82 View Post
I agree with the "burning" part but "'PEACE OF MIND AND FLEXIBILITY" is relative and based on individual's thinking. I am on H1B with Apr'09 as priority date (if my labor approves) and I bought a house last year and I am extremely happy and enjoying my house. This is my take on it, if I don't get GC and have to go back I will be losing huge amount as potential income if I would have stayed here then add 20-30K into it (if house doesn't sell and I have to foreclose), it won't mean much but the quality time (my perception, could be different for others) I will spend in next 2-3 years is worth it.
You (or anyone) can rent similar house and enjoy the same quality time there. Why do we have to Co-own the house with the Bank to enjoy the "quality time"? When I say renting, that does not have to mean 1 bedroom apartment.

I myself would not be enjoying if I have to worry about calling the handy man to fix small problems, paying for insurance, paying the property taxes, paying a huge part of my paycheck in mortgage etc etc. I am renting a house and I am happy writing the rent check and not having to worry about all other stuff. If I have to change the job, I give 1 month notice and find another place near my office.

I would however again say that buying makes sense if:
1. Income flow/job is stable and you think you would not need to move.
2. You think you will get GC soon.
3. Mortgage+all expenses are LESS than rent.

Last edited by sk2006; 07-15-2009 at 12:58 AM.
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  #29 (permalink)  
Old 07-15-2009, 12:03 PM
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Fittan,
But doesn't the interest portion of the payment go down and the principle goes up over the years and towards the end of the term you are paying almost nothing but the principle?
And in a normal economic climate the house value goes up?


Quote:
Originally Posted by fittan View Post
Panini,
I respectfully disagree that renting is "burning" money. There are 4 major components in a mortgage PITI (Principal, interest, tax and insurance). When you said "mortgage is going towards the ownership of house" you're simply referring to the principal paydown. On a $300K 5% loan, your monthly mortgage is about $2100 out of which about $400 is going to the house equity. Assuming you "get" $300/mth back from tax deduction, guess what happens to the remaining $1400? Burn, nadda, gone forever to the bank, town and insurance company. The $1400 is an expense and you need to consider it when making apples-to-apples comparison of rent vs buy.

Fittan
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  #30 (permalink)  
Old 08-14-2009, 07:19 PM
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Did anybody get Home Loan with AOS/EAD status only no H1b please?
If so what is the Bank or Lender please?
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