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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: pgerassi who wrote (115158)	6/9/2000 12:04:00 PM
From: chic_hearne	Read Replies (1) \| Respond to of 1571408

OT Re: I assume you "forgot" to remove from your payments the amount you paid for Property taxes and "Usage" fees paid by the bank to the government (school, city, state, etc.) as it is usually setup by most people? This would be somewhere around 10% to 20% of your homes worth in 5 years. Please indicate if this was the case (and if you want to, the amounts paid). Pete, I think it's about $200 a month. Property taxes are about 1/4 of Wisconsin so my number might sound low. Regardless, it's all the same to me. If it's something you have to pay because you're a home owner, it's the same as the mortgage to me. I think the smart people are the ones who rent, and use the difference to gain equity through the financial system (stocks, bonds, and money markets). True, so very true. It's amazing more people can't come to grips with this. I can get into a detailed discussion with someone about why a home is not an investment pointing out all of the reasons, but can rarely convince anyone. I think our society has been classically conditioned into believing this. It's hard for many to "think outside the box". chic

To: pgerassi who wrote (115158)	6/9/2000 1:38:00 PM
From: Joe NYC	Read Replies (2) \| Respond to of 1571408

Pete, OT I think the smart people are the ones who rent, and use the difference to gain equity through the financial system (stocks, bonds, and money markets). Real estate is highly leveraged investment that on average works in your favor, but can have disastrous consequences for some poeple. (buy on high, sell low, pay broker, wipe out everything you put in and then some) Most banks routinely accept as little as 10% down. So if the real estate prices keep up with inflation, a 100,000 house will gain 3%, or $3,000. At the same time, you have to pay mortgage payments on $90,000 is $7,200 at 8% interest rate, or if you are in let's say 40% combined federal, state city marginal rate, $4,320 after tax consequences, plus some principal payments. So it looks like this cost (which excludes a lot of things like other taxes, principal, maintenance) is $1,320. But let's look at the next few years: In your 15th year, the house will be worth $151,000, and your gain from previous year will be $4,400 which is more that the interest cost (which of course would go down as the principal declines) On your 30th year, the house will be worth $235,000. Your gain over previous year will be $6,836 and assuming you had a 30 year loan, your interest and principal payments will be 0. On the other hand, your rent payments would keep going up with inflation. As far as school taxes are concerned, someone has to pay for these, and it is a coincidence that it is the homeowners who pay such a large portion. But the tax system (as far as how much tax revenue will come from which source) is not set in stone. Some states are shifting the burden to income tax. Anyway, your alternative, investing the down payment in financial markets has merit, but you can't overlook that whatever your return is, it will be taxed, while real estate gains escape from taxation. I was struggling with the same dilemma. What ended up being a decisive factor was not the advantage or disadvantage of one approach or another, but the fact that the market for rental apartments got so far out of this world in New York City, that buying ended up cheaper from all points of view. The total cost of mortgage, taxes, all the fees, maintenance ended up less than rent for comparable apartments, even before all the tax advantages. Joe