Question for renters..Aren't you tired of paying someone's mortgage?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Also, when you say buy, what exactly do you mean? My husband and I live in a great apartment in Old Town now - no chance in hell we could afford to live here if we wanted to buy.

Let's leave aside the other reasons we wouldn't buy at the moment and only consider that: at least as far as we can see, we'd have to move either to a part of town where we don't want to live, or else to an apartment we wouldn't want to live in, if we were to buy.

What would you recommend we do?

This is the true crux of the issue. You believe you are entitled to a nice home in the right place, but you can't afford it. So you rent. It's just like leasing a car or buying shoes on credit. You want something you can't afford.

I did live in a part of town I didn't want to live in, in an apartment I didn't like for years - while I saved money for a downpayment. I could have rented a fabulous place for much more, but then I would still be renting.

If you are truly renting to save money and investing the rest (as PPs suggest), that's great. But I think many people are simply renting because it's a way to live beyond their means.

But you haven't yet convinced me why it is that we're supposed to live somewhere shitty for a number of years, so we can save up to afford another place that's going to be kind of shitty, when instead we can live really nicely as renters - and then later, when we move somewhere else, where housing prices are cheaper, buy a place. If that's what we want to do.

You are right, that at the end of it we don't own the place where we live. But not everyone wants to own a place badly enough to make the sacrifices to do it. Like us - we don't want to. I see how owners live here - the ones who didn't buy before prices skyrocketed. They are either rich, or they live somewhere shitty. We aren't rich and we don't want to live somewhere shitty. So we pay $2k per month to live in a spectacularly nice place. As someone who feels like there's value in living a pleasant life, this seems like a good use of money to me.

[Anonymous]

We actually own because it was way cheaper than rent in our area. We were able to put down 20% on the house due to sale of a previous home and the payment is quite a bit less than comparable rent. If we had rented - every month we would have had to dip into savings. In some ways I would've been happier renting because I'm still uncertain about the area we choose and the public school. But it is what it is at this point.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Desperately wish I could buy. But I have very little for a down payment and closing costs and I didn't come from an upper middle class family.

EVERY single one of my friends that have bought in the last three years have had downpayments paid by their parents. Hundreds of thousands of dollars. I'll never get there and I earn low 6 figures.

I'm the pp just after you. We were the same as you, and raided our retirement after working for about 5 years to make the purchase. We are still young enough that I think that's ok, but not ALL of us had parental help.

How did you raid your retirement savings? All my retirement savings are wrapped up in my Thrift (which has a good $60-70K in it) and I'd have massive penalties if I didn't pay it back within one year.
Or did you just take the penalty hit?

We took the penalty. That's one reason why the savings from buying are questionable. In the scenario we envision, we break even after 7 years. Hopefully following that, things continue to improve, but it's a gamble.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Also, when you say buy, what exactly do you mean? My husband and I live in a great apartment in Old Town now - no chance in hell we could afford to live here if we wanted to buy.

Let's leave aside the other reasons we wouldn't buy at the moment and only consider that: at least as far as we can see, we'd have to move either to a part of town where we don't want to live, or else to an apartment we wouldn't want to live in, if we were to buy.

What would you recommend we do?

This is the true crux of the issue. You believe you are entitled to a nice home in the right place, but you can't afford it. So you rent. It's just like leasing a car or buying shoes on credit. You want something you can't afford.

I did live in a part of town I didn't want to live in, in an apartment I didn't like for years - while I saved money for a downpayment. I could have rented a fabulous place for much more, but then I would still be renting.

If you are truly renting to save money and investing the rest (as PPs suggest), that's great. But I think many people are simply renting because it's a way to live beyond their means.

But you haven't yet convinced me why it is that we're supposed to live somewhere shitty for a number of years, so we can save up to afford another place that's going to be kind of shitty, when instead we can live really nicely as renters - and then later, when we move somewhere else, where housing prices are cheaper, buy a place. If that's what we want to do.

You are right, that at the end of it we don't own the place where we live. But not everyone wants to own a place badly enough to make the sacrifices to do it. Like us - we don't want to. I see how owners live here - the ones who didn't buy before prices skyrocketed. They are either rich, or they live somewhere shitty. We aren't rich and we don't want to live somewhere shitty. So we pay $2k per month to live in a spectacularly nice place. As someone who feels like there's value in living a pleasant life, this seems like a good use of money to me.

me again, cause if you can't beat a dead horse who can you beat: we don't plan to be here long term. it's possible we will be. but it's not our plan. so buying a place - with the closing costs, and all the rest of it - even if we had the money for a downpayment, just doesn't seem like a great idea.

anyway - you asked how renters feel about paying someone else's mortgage. i feel like i wish i were wealthy enough to afford to buy a place i'd actually want to live in here. but i'm not. and i love our rental apartment. so mostly i feel lucky to have found it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Desperately wish I could buy. But I have very little for a down payment and closing costs and I didn't come from an upper middle class family.

EVERY single one of my friends that have bought in the last three years have had downpayments paid by their parents. Hundreds of thousands of dollars. I'll never get there and I earn low 6 figures.

I'm the pp just after you. We were the same as you, and raided our retirement after working for about 5 years to make the purchase. We are still young enough that I think that's ok, but not ALL of us had parental help.

How did you raid your retirement savings? All my retirement savings are wrapped up in my Thrift (which has a good $60-70K in it) and I'd have massive penalties if I didn't pay it back within one year.
Or did you just take the penalty hit?

We took the penalty. That's one reason why the savings from buying are questionable. In the scenario we envision, we break even after 7 years. Hopefully following that, things continue to improve, but it's a gamble.

Definitely a gamble. Good luck with everything!
How did the penalty work? Do they take it out when you withdrew the money?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Desperately wish I could buy. But I have very little for a down payment and closing costs and I didn't come from an upper middle class family.

EVERY single one of my friends that have bought in the last three years have had downpayments paid by their parents. Hundreds of thousands of dollars. I'll never get there and I earn low 6 figures.

I'm the pp just after you. We were the same as you, and raided our retirement after working for about 5 years to make the purchase. We are still young enough that I think that's ok, but not ALL of us had parental help.

How did you raid your retirement savings? All my retirement savings are wrapped up in my Thrift (which has a good $60-70K in it) and I'd have massive penalties if I didn't pay it back within one year.
Or did you just take the penalty hit?

We took the penalty. That's one reason why the savings from buying are questionable. In the scenario we envision, we break even after 7 years. Hopefully following that, things continue to improve, but it's a gamble.

Definitely a gamble. Good luck with everything!
How did the penalty work? Do they take it out when you withdrew the money?

Yes, it was extracted before the amount was deposited to our bank account. Then we had to double up on withholdings to cover the additional taxes; then we got hammered anyway by the AMT because we didn't realize the withdrawal would put us into that bracket. FML.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Desperately wish I could buy. But I have very little for a down payment and closing costs and I didn't come from an upper middle class family.

EVERY single one of my friends that have bought in the last three years have had downpayments paid by their parents. Hundreds of thousands of dollars. I'll never get there and I earn low 6 figures.

I'm the pp just after you. We were the same as you, and raided our retirement after working for about 5 years to make the purchase. We are still young enough that I think that's ok, but not ALL of us had parental help.

How did you raid your retirement savings? All my retirement savings are wrapped up in my Thrift (which has a good $60-70K in it) and I'd have massive penalties if I didn't pay it back within one year.
Or did you just take the penalty hit?

We took the penalty. That's one reason why the savings from buying are questionable. In the scenario we envision, we break even after 7 years. Hopefully following that, things continue to improve, but it's a gamble.

Definitely a gamble. Good luck with everything!
How did the penalty work? Do they take it out when you withdrew the money?

Yes, it was extracted before the amount was deposited to our bank account. Then we had to double up on withholdings to cover the additional taxes; then we got hammered anyway by the AMT because we didn't realize the withdrawal would put us into that bracket. FML.

Holy hell, that sounds awful. My condolences.
I think I will avoid taking that route....

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Desperately wish I could buy. But I have very little for a down payment and closing costs and I didn't come from an upper middle class family.

EVERY single one of my friends that have bought in the last three years have had downpayments paid by their parents. Hundreds of thousands of dollars. I'll never get there and I earn low 6 figures.

I'm the pp just after you. We were the same as you, and raided our retirement after working for about 5 years to make the purchase. We are still young enough that I think that's ok, but not ALL of us had parental help.

How did you raid your retirement savings? All my retirement savings are wrapped up in my Thrift (which has a good $60-70K in it) and I'd have massive penalties if I didn't pay it back within one year.
Or did you just take the penalty hit?

We took the penalty. That's one reason why the savings from buying are questionable. In the scenario we envision, we break even after 7 years. Hopefully following that, things continue to improve, but it's a gamble.

Definitely a gamble. Good luck with everything!
How did the penalty work? Do they take it out when you withdrew the money?

Yes, it was extracted before the amount was deposited to our bank account. Then we had to double up on withholdings to cover the additional taxes; then we got hammered anyway by the AMT because we didn't realize the withdrawal would put us into that bracket. FML.

Holy hell, that sounds awful. My condolences.
I think I will avoid taking that route....

Can't you just take a loan against your retirement or did the economics not work out on that (not making enough to repay the loan)?

[Anonymous]

Anonymous wrote:Just curious. Especially with the cost of rent in most DC rentals hovering around 3K a month, what is the motivation for not putting that same money into your own homeownership? I'm in my 40's, & bought my first property in my 20's when I started to feel like I was throwing money away, or putting it in someone else's pocket. I have had the same renters now for a number of years, & they are essentially paying my bills. This isnt meant to be snobbish or argumentative, but just curious, especially with such high rent these days.

MYOB, bitch.

[Anonymous]

I'm glad that more people are renting. Especially in a transient area like DC. People have learned that you can't count on appreciation to cover your transaction costs when you need to sell to either upgrade to a different place in this area or to move away. Those days are over. Yes, rent is getting pretty expensive around here and I wish every new building going up was not luxury, but renting is still a better deal especially for younger people who are not going to be in a house for more than 5 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Desperately wish I could buy. But I have very little for a down payment and closing costs and I didn't come from an upper middle class family.

EVERY single one of my friends that have bought in the last three years have had downpayments paid by their parents. Hundreds of thousands of dollars. I'll never get there and I earn low 6 figures.

I'm the pp just after you. We were the same as you, and raided our retirement after working for about 5 years to make the purchase. We are still young enough that I think that's ok, but not ALL of us had parental help.

How did you raid your retirement savings? All my retirement savings are wrapped up in my Thrift (which has a good $60-70K in it) and I'd have massive penalties if I didn't pay it back within one year.
Or did you just take the penalty hit?

We took the penalty. That's one reason why the savings from buying are questionable. In the scenario we envision, we break even after 7 years. Hopefully following that, things continue to improve, but it's a gamble.

Definitely a gamble. Good luck with everything!
How did the penalty work? Do they take it out when you withdrew the money?

Why didn't you just borrow from your plan or did u cash out rhe whole thing? It makes no sense.

[gent.in.nwdc]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Desperately wish I could buy. But I have very little for a down payment and closing costs and I didn't come from an upper middle class family.

EVERY single one of my friends that have bought in the last three years have had downpayments paid by their parents. Hundreds of thousands of dollars. I'll never get there and I earn low 6 figures.

I'm the pp just after you. We were the same as you, and raided our retirement after working for about 5 years to make the purchase. We are still young enough that I think that's ok, but not ALL of us had parental help.

How did you raid your retirement savings? All my retirement savings are wrapped up in my Thrift (which has a good $60-70K in it) and I'd have massive penalties if I didn't pay it back within one year.
Or did you just take the penalty hit?

We took the penalty. That's one reason why the savings from buying are questionable. In the scenario we envision, we break even after 7 years. Hopefully following that, things continue to improve, but it's a gamble.

Definitely a gamble. Good luck with everything!
How did the penalty work? Do they take it out when you withdrew the money?

Why didn't you just borrow from your plan or did u cash out rhe whole thing? It makes no sense.

I'm the renter who wishes he could buy and was asking the OP these questions.
If you borrow from your plan, don't you have to repay within one year to avoid the penalties? If that's the case, I imagine anyone who has to borrow from their plan in order to afford buying would have a pretty tough time paying back their downpayment or closing costs within the span of a year. Also, I'm pretty sure the OP said they cashed out nearly the whole thing since they are so young.

[Anonymous]

I don't think the OP is actually asking the question in good faith. I think s/he's just bragging in the guise of asking a question. The answers are far too obvious for this thread to be anything other than a forum for the OP to play dumb and be smug.

[Anonymous]

We took out from retirement as well a few years a go. Best decision ever we have more than doubled what we took out including the penalty and taxes.

[Anonymous]

Economically the comparison is the rent vs. the interest portion of the mortgage. Whether one pays for borrowed money or a borrowed house doesn't make a difference.

Now whether one wants to build equity through a home purchase or by acquiring financial assets is a matter of choice, and will depend one one's personal circumstances and preferences.