glomag

I’m sorry to be pedantic but this is a pet peeve of mine. If you bought a house you would not have any mortgage payment. You (and everyone else usually) are talking about financing a house.

Maybe I’m the crazy one but when I buy something I like to look at the total amount that I’m paying for it.
If I wanted a house listed for $300,000 5-years ago and I wanted to finance it, the rate might have been 3% so the total amount I would be paying would be $455,332.36 over 30yrs. Therefore I would only finance if I thought ~$450,000 was a fair price. If I thought the house was only worth $300,000 then I would need to pay in cash.

Today rates are at 7% so a house listed at $300,000 actually costs $718,526.69 when financed. Do I think the houses I see listed for $300,000 are worth over $700,000? No. Do I have more than $300,000 needed to afford to pay in cash? Also no. Therefore, I’m not buying.
*These calculations are ignoring the down payment but the principle is still valid.

Yes it sounds like everything worked out great for you. Good job on timing your investment! But this is a perfect example of the type of financialization of the housing market that I’m against. You used leverage to buy an expensive, risky asset and sold it for a profit just a few years later. This doesn’t always work out so well (ask anyone who bought a house in 2007) and I don’t want to put essentially all my savings into a wallstreetbets style gamble just so I can have somewhere to sleep at night.

I’m not saying mortgages should completely go away. I’m sure a mortgage is the right decision for many people’s situations. It’s just the way that people talk about buying a house, a mortgage seems to be assumed. If it wasn’t just assumed then maybe people would put more thought into whether they want to save for a larger down payment (or the full price) or whether they want to pay $750,000 for a $400,000 house.
I don’t know, maybe people see these numbers and think its a great deal. All I see is a bank making a huge amount of money from me that I would rather keep for myself. Also, if people stopped stretching their budget to the absolute limit with financing nonsense (3% down, variable rate loans, rate buydowns), in aggregate there would be less demand for houses at these high prices and sellers would have to start accepting lower offers.

Your partner wants to finance a house someday. I know I’m on the losing side of this battle but I really wish people would stop associating BUYING a house with taking out a LOAN from a bank.

It just feels like people are only deceiving themselves by saying “I need good credit to buy a house” when what they really mean is “I need good credit so I can take on a lot of debt and pay out hundreds of thousands of dollars in interest over the next 30 years.”

I don’t have any evidence for this but it seems like the vaccine pushback is at least partially a desire to avoid responsibility. If they choose to vaccinate and their kid is in the 0.000001% who experience adverse effects then it would be their fault the kid was hurt but if they don’t vaccinate and their kid just happens to die of measles or whatever then it was all part of god’s plan and they didn’t do anything wrong.

Yes a mortgage is an investment (which can make a profit or loss just like other investments) but it is also an obligation. With a mortgage losing your job could potentially leave you homeless. That is not what I consider “financially free”. If you have a lot of cash up front you could potentially put it into higher yielding investments and make a profit on the difference between yield and mortgage rate at the end of 30 years but that takes some amount of luck and skill with investing. Especially now that mortgage rate are 7%. If you don’t have all the cash up front then taking out a 30yr 7% loan for 300k will mean you’re paying over 700k for the house with interest included.

Personally, to be “financially free” I would need enough investment income to cover all my expenses without making any sales/withdraws. Ideally this would include owning my home outright. So probably in the neighborhood of one million. I doubt I will ever get there.

As someone who lives in Florida I’ve got to ask, how? When thinking about finances and investments I often feel like I’m in my own bubble and I don’t understand other peoples’ situations, motivations, etc. So I’m genuinely curious. 4-bedroom houses near Orlando can be found in the mid 300s. With your income you should be able to pay in cash after saving for just one or two years (depending on how much savings you’re starting out with). Even if you wanted something more expensive, are mortgages that difficult to get approved even for someone with such a high income?