Comments on: Buy or Rent? Part I: Higher Net Worth http://blog.potterzot.com/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/ Economics. Data. Software. Fri, 15 Oct 2010 05:46:19 +0000 hourly 1 http://wordpress.org/?v=3.1.2 By: zot http://blog.potterzot.com/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/comment-page-1/#comment-116 zot Sun, 21 Oct 2007 19:20:33 +0000 http://www.potterzot.com/blog/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/#comment-116 @Cassandra: I think you are right. If it's under 20% there is the mortgage insurance. Thanks, I'll have to update the spreadsheets. -zot @Cassandra: I think you are right. If it’s under 20% there is the mortgage insurance. Thanks, I’ll have to update the spreadsheets.

-zot

]]> By: Cassandra http://blog.potterzot.com/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/comment-page-1/#comment-115 Cassandra Sun, 21 Oct 2007 15:35:42 +0000 http://www.potterzot.com/blog/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/#comment-115 One thing that I'm not sure you factored in is PMI. In the market that I live, no bank will write a mortgage for under 20% down payment. In other markets, I'm sure that you can write a mortgage for under 20%, but you'll get hit with PMI -- which if your house either appreciates quickly enough or you pay down your principal, you can get it removed after a year. However, it's still an expense to be calculated in. One thing that I’m not sure you factored in is PMI. In the market that I live, no bank will write a mortgage for under 20% down payment. In other markets, I’m sure that you can write a mortgage for under 20%, but you’ll get hit with PMI — which if your house either appreciates quickly enough or you pay down your principal, you can get it removed after a year. However, it’s still an expense to be calculated in.

]]> By: zot http://blog.potterzot.com/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/comment-page-1/#comment-48 zot Fri, 07 Sep 2007 15:14:10 +0000 http://www.potterzot.com/blog/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/#comment-48 Hi Jon, I played with that calculator. It looks pretty similar, and if you adjust the parameters the results are close to what mine says. Gives me faith! Anyway, thanks for posting that link. Hi Jon,

I played with that calculator. It looks pretty similar, and if you adjust the parameters the results are close to what mine says. Gives me faith! Anyway, thanks for posting that link.

]]> By: Jon Daley http://blog.potterzot.com/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/comment-page-1/#comment-47 Jon Daley Thu, 06 Sep 2007 14:21:31 +0000 http://www.potterzot.com/blog/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/#comment-47 A friend pointed me to <a href="http://www.fcbanking.com/Calculators/calculators.html?CALCULATORID=HF05&TEMPLATE_ID=www.fcbanking.com_1" rel="nofollow">this calculator</a>. They are trying to prove that mortgages are good, and you should ask them for a mortgage, but if you edit the assumptions to be better it looks alright. (Though I didn't spend very much time on it - and since they didn't provide their calculations, one can't check to see if they are correct) A friend pointed me to this calculator.
They are trying to prove that mortgages are good, and you should ask them for a mortgage, but if you edit the assumptions to be better it looks alright. (Though I didn’t spend very much time on it – and since they didn’t provide their calculations, one can’t check to see if they are correct)

]]> By: zot http://blog.potterzot.com/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/comment-page-1/#comment-42 zot Wed, 05 Sep 2007 14:28:22 +0000 http://www.potterzot.com/blog/2007/08/11/should-i-buy-a-house-or-rent-part-i-financial-aspects/#comment-42 <p>Jon: Thanks for your comments. I'll have a look at the sheet and see what's going on. It is a little too aggregated...needs to be broken out more.</p> <p>Scott: Interesting, I don't think I factored in tax costs on gains from selling the house.</p> <p>You are both right that living in Albuquerque I have a very low rent. In bigger cities it be a lot more costly to rent.</p> edit: I've updated the spreadsheets. Whether or not you have gains in the first few years depends on how quickly your house is appreciating at. I had the rate at 8%, probably not realistic for many places in America right now. With a 4% appreciation rate you have a negative change in net worth for one year. Thanks again for pointing out the errors. Jon: Thanks for your comments. I’ll have a look at the sheet and see what’s going on. It is a little too aggregated…needs to be broken out more.

Scott: Interesting, I don’t think I factored in tax costs on gains from selling the house.

You are both right that living in Albuquerque I have a very low rent. In bigger cities it be a lot more costly to rent.

edit: I’ve updated the spreadsheets. Whether or not you have gains in the first few years depends on how quickly your house is appreciating at. I had the rate at 8%, probably not realistic for many places in America right now. With a 4% appreciation rate you have a negative change in net worth for one year. Thanks again for pointing out the errors.

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