Sorry bud. I normally agree with you, but on this one I totally don't. That person is no financial "expert" giving out advice like that.Originally Posted by civic95
Mr. Stamos may not be the most eloquent poster, but his info is accurate.
The article is very one sided.
Most people don't have that kind of money to put down on their first property. There are loan programs and strategies that we can do to get you into the property, with little to no money down, AND avoid the dreaded MI. So her example is far from an accurate portrayal of REAL life RE transactions. If someone has $20k in their pocket to buy their FIRST house, I certainly would NOT put them into a loan where they have to use ALL of that $20K in the first place. What for? The difference between putting down $10k and $20k on the monthly payment is marginal at best. I'd advice them to keep that money and invest it elsewhere. If that home were in a good area, it will probably APPRECIATE that much if not more in a year or two. So why not have both, the money in your pocket AND the equity on the house????
Something else that article isn't accurate about is maintainance costs. I've owned my own home since I was 21 yrs old. I've bought both distressed properties and brand new homes. My first home was actually a previously foreclosed property that required a good bit of work BEFORE I could even move in. And you know what??? I've never had $1200/yr worth of "repairs" in any of them AFTER I moved in. Yes, you do have to pay for your own repairs when they come up, but: #1- as Alex mentioned, there are very inexpensive insurance policies you can get at closing that can cover those for very little deductibles; and #2- it's not like it happens everyday nor every month. Unless you are buying a home built shack by a builder named Dufus, major maintainance issues don't occur everyday as the article would have you believe.
Another issue I have with the article is that it glosses over EQUITY. Equity is one of the biggest pros of purchasing vs renting. Renting you never OWN anything of value. You can't take a loan against it. You can't refinance it. You can't even make too many changes to it. When you OWN, you call most of the shots. You have something financially tangible that you can borrow against, gain equity on, and make changes to as you see fit. How many renter's monthly payments stay the same? NONE. Rental payments ALWAYS INCREASE. It may be at the end of the term of the lease or it may be month-to-month, or it may even be every year, BUT one thing is for sure....it will go UP if you stay there. So in essence, renters always have a variable "intereste rate" if you will, yet gain ZERO equity at all. How's that a bargain? You could be renting for 10 yrs. EVERY DIME of that rent goes to build someone ELSE equity, not you. Had you been paying on a mortgage instead, you'd have some equity at least. What do you have when your lease is up to show for your rental payments???? Nothing. Sure, you don't have to deal with the rigors of selling the house before moving either, but personally I'd rather deal with that AND pocket a few grand than not.
Mortgage loans are confusing for most people. There is more MISinformation out there than accurate unfortunately, and that is where WE get the raw end of the deal. Some of my fellow competitors are to blame for this, with their misleading ads. But mostly it is misinformed people, such as the author of that article, that perpetuate the never ending cycle. If you read that and didn't have anyone's rebuttal to it, you'd likely think she knows what she's talking about. Unfortunately, she doesn't. How can she when even by her own admission RE is the "BEST" investment out there, yet she is knocking it the whole time????? How's that work then?
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