Re: eight dozen houses listed, ranging from $2-million to $6-million, went unsold for 2 to 3+ years in the McLean & Great Falls area... any idea why?
Date: June 08, 2007 06:44PM
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> I agree in principal, but in this day in age,
> there are less people who go long on real estate.
> That was the previous generation when housing made
> up a significant portion of one's net worth and
> people lived in the same place for 30+ years.
> You'll wind up ahead if you pay majority cash on a
> medium-term basis to reduce your interest load or
> to purchase a home using a 15-yr. product.
> Purchase during a cycle; sell during the next
> cycle.
Perhaps, again it depends on your tolerance for risk, stocks over the long term produce much greater returns than real estate.
The problem with a 15 year loan is obviousely the interest rate is lower, but not by a whole lot. Currently, 30 years is 6.19 versus 5.89 for 15 years. These numbers are on Bankrate.com but the actual numbers will be simmillar.
If you may not have the extra cash to go for a 15 year loan, or the consistant payment makes you uncomfortable, go with a 30 year loan - throw in a couple of hundred bucks extra a month and you got a 15-20 year loan.
I understand most people on FFXU have a significant down payment available, but some people may not. 20% used to be the standard, but any mortgage broker will tell you 6% or less is realisticly what a large percentage put down. And 20% down on a $500,000 loan is $100,000. And it may be a little steep for a first time home buyer.
I know there are exotic mortgages out their, but sooner or later you have to pay the piper.
If I were to buy a $500,000 house and my 4012(K) was fully funded and I had $500,000 in the bank, I would probably invest the majority and take out a 215 year or 30 year mortgage.
For long term, stocks and bonds beat out real estate every time. But you can live in a house. Balance your money wisely.
Purchase during a cycle, sell during a cycle. Good idea. Several people in my neighborhood sold during what they thought was the peak, only to see prices go up $100,00 in 7 months. No one can time the market consistently, but in the long run, you can beat it.
That being said, a 55 year old has much different needs than a 20 year old.I am talking first time home buyers in a normal situation. A 65 year old buying his dream house should may do the best by putting 50% down, interest only, with a 10 year ARM, reason being, at 75 years old, he will either be dead or ready to move anyway.
But I fear we have drifted off topic here.