I have a down payment for a house but seeing $100 of interest income a month is giving me second thoughts

Never view the house as an investment. View it as a place to live.

How much do you pay right now in rent? How much would your mortgage be?

The market may be overvalued where you live, but trying to time the housing market isn't easy, either. Imagine a scenario where you pay $1k in rent instead of buying a $150k home hoping for the market to slow down.

In two years you've spent $24k on rent that you will never get back. The housing market slows and you get the house for $130k instead. Have you actually saved anything by paying out $24k in rent to save $20k on housing price instead of paying $150k and putting the $24k into the mortgage over two years?

Get the home, you won't regret it. Renting is throwing your money down the crapper to live with shared walls next to someone. Sure you make $100/month in interest, but I'm sure your rent is more than that. Take this for example:

Purchase house at $225k

Mortgage broken into roughly (monthly):

$970 principal payment (this is the good part)

$70 PMI (dependent on % you put down and will disappear eventually)

$300 for insurance and interest

Renting apartment:

$1000-$1200 straight into crapper

Learn to upkeep your home yourself and you will always come out ahead. I hate when people use the 'bUt MY aPArTment HAS mAiNTenaNce' excuse. Get off your sorry ass and watch a YouTube video on how to replace a light bulb idiot.

We made well over $100/month in interest and would absolutely never look back on buying our home. Home value has already increased $30k over 2.5 years.

You obviously don't understand simple math. If you have money in the bank earning 1% and you are going to borrow money from the bank and you are paying 4%, you can view it as you borrowing your own money that you are paying the bank 3% for. there is no way that you are earning a higher interest rate than what you can borrow at.

Wait until after housing sales report comes out on Dec 27. New home sales were down 9% in October and November's numbers aren't going to be good. That, combined with the rate hike the Fed will hopefully do next week will cause prices to crater once lenders realize no one wants to buy a house anymore. House flippers will be the first to get slaughtered (rightfully so as they're the worst people on Earth) so you should be able to get a good deal by around March or so.

dude is this a joke? an extra $100 a month? $1,200 a year? Just buy the house. Like a previous poster said, your primary residence is not an investment. You will derive value from living in a place that you like. There's not many things worth spending on in life that will provide more value than where you live.

Racket wrote:

Wait until after housing sales report comes out on Dec 27. New home sales were down 9% in October and November's numbers aren't going to be good. That, combined with the rate hike the Fed will hopefully do next week will cause prices to crater once lenders realize no one wants to buy a house anymore. House flippers will be the first to get slaughtered (rightfully so as they're the worst people on Earth) so you should be able to get a good deal by around March or so.

You clearly don't understand how economics / the housing market work with the amount of errors in your analysis.

In addition to the financial aspects that have been discussed, there's also the lifestyle issue that varies from person to person.

I'm a single guy and I rent for the following reasons:

1. I'm rarely at home. I leave for work at 6 am and don't get back until 8 pm most days. I just go there to sleep. Why break the bank for a place I rarely see?

2. The rent is cheap. I'm saving a ton for when my job slows down and I can actually have some time to enjoy the place.

3. I can rent closer to work. Obviously a short commute matters when you spend as much time at work as I do.

4. My industry is dynamic and work locations change frequently, so I need the flexibility to move quickly.

5. I don't have time for maintenance.

Don't listen to this wrote:

Racket wrote:

Wait until after housing sales report comes out on Dec 27. New home sales were down 9% in October and November's numbers aren't going to be good. That, combined with the rate hike the Fed will hopefully do next week will cause prices to crater once lenders realize no one wants to buy a house anymore. House flippers will be the first to get slaughtered (rightfully so as they're the worst people on Earth) so you should be able to get a good deal by around March or so.

You clearly don't understand how economics / the housing market work with the amount of errors in your analysis.

Stay in high school buddy

Where do you turds live where a home is only $150,000??!!

Let's say you are earning $1000/yr on $50,000 (2%). Instead you use the money to buy a $250,000 house. The house appreciates at 1%/year on average over 10 years. Assume your rent and mortgage payments (+taxes) are equal. Here's what happens:

-11,000 in lost interest

+43,000 in additional home equity from mortgage payments

+26,000 in increased value of the home

Needledik wrote:

Where do you turds live where a home is only $150,000??!!

Obviously no where near a major metro area with a good job market.

Racket wrote:

Wait until after housing sales report comes out on Dec 27. New home sales were down 9% in October and November's numbers aren't going to be good. That, combined with the rate hike the Fed will hopefully do next week will cause prices to crater once lenders realize no one wants to buy a house anymore. House flippers will be the first to get slaughtered (rightfully so as they're the worst people on Earth) so you should be able to get a good deal by around March or so.

I would generally say just buy don’t try to time the market, but the chance of entering into a bear market right now is quite high.

I would hold until either the market crashes or at least steadies itself more

All these idiots with no money, no savings, loads of car debt, student loan debt, bitcoin speculating debt, etc. are saying a housing crash is coming, housing is super “over-valued,” I’ll try to time the market and then I’ll buy. PROblem is- it’s not coming. Yes Maybe homes go down 10-15% in value if you are lucky enough to time it right but not 50%. That was likely a one time occurrence in American history. Plus if the idiots and cynics without any money jump in next year with a slightly drop, that just ups the demand which makes it even less likely they’ll be significant price declines.

These cynics tend to be the same idiots who say put all your money in precious metals and bitcoin, because the US dollar won’t be worth anything and the world is coming to an end...build a dungeon under your home, buy some guns and food reserves

Honestly 2009-2013 will probably go down as the best chance in usa history to have bought property/properties in our lifetimes. The next economic “crash”/“Recession” will likely be based on something else like corporate debt, auto loans and student loans etc, but not housing.

Take the money out of the savings account and put it into a 1 year CD. Savings accounts basically lose money because the interest rates are pathetic. Watch the economy and housing market like a hawk for the next year. A lot of signs point to a recession or worse. If that happens, you will save a lot of money when interest rates come back down and people are dropping prices in a seller's market. If things hold up and interest rates flatten out, you will have earned some decent interest and can make the plunge.

Syracuse $128k

Buffalo $129k

Tucson $192k

El Paso $149k

Atlanta $192k

St. Louis $170k

Champaign $145k

Cleveland $138k

Green Bay $149k

Mobile $133k

Kansas City $188k

Dbndndndnend wrote:

Honestly 2009-2013 will probably go down as the best chance in usa history to have bought property/properties in our lifetimes. The next economic “crash”/“Recession” will likely be based on something else like corporate debt, auto loans and student loans etc, but not housing.

No one said a "crash" is going to happen , especially not from a contraction in housing prices so that's your first retarded strike against you.

The second one is that you think student loan debt will cause a crash, and the third is that you think auto loans will cause a crash.

I think the break even point is about 3 years in hot markets. In most markets it’s like 5-7 years. Consider opportunity cost of downpayment. Likely coming to the end of economic cycle. If only staying for shorter time period probably makes more sense to rent

Precious Roy wrote:

Take the money out of the savings account and put it into a 1 year CD. Savings accounts basically lose money because the interest rates are pathetic. Watch the economy and housing market like a hawk for the next year. A lot of signs point to a recession or worse. If that happens, you will save a lot of money when interest rates come back down and people are dropping prices in a seller's market. If things hold up and interest rates flatten out, you will have earned some decent interest and can make the plunge.

What's the current interest rate on CDs? 2.25%? You're better off in bonds if you're gonna do something as boring as that.

Try This wrote:

Mortgage broken into roughly (monthly):

$970 principal payment (this is the good part)

$70 PMI (dependent on % you put down and will disappear eventually)

$300 for insurance and interest

webby wrote:

Let's say you are earning $1000/yr on $50,000 (2%). Instead you use the money to buy a $250,000 house. The house appreciates at 1%/year on average over 10 years. Assume your rent and mortgage payments (+taxes) are equal. Here's what happens:

-11,000 in lost interest

+43,000 in additional home equity from mortgage payments

+26,000 in increased value of the home

What sort of amortization schedule are you guys on? If you put 20% down you will be paying more on the interest than principal for well over the first 10 years.

As has been said quite a bit on other posts, it completely depends on where you live, i.e. local rent vs. purchase price.