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  1. #281
    Quote Originally Posted by Spectral View Post
    While YMMV and obviously individual circumstances are individual, I would be disinclined to buy a home that I would not be able to pay for on long-term disability. For earners whose income is required for their family, I strongly recommend high-limit LTD as a risk mitigation strategy. While this would obviously be imperfect (it's still only 65% of your original pay), this should generally be sufficient to avoid foreclosure if someone has planned well and not stretched their finances to their limits.

    I feel bad for people that get unlucky and get hurt or become mentally ill, but there is still a straightforward path to risk mitigation. It's a real shame that we don't tell people how plan for this, but instead have a culture that encourages people to buy the biggest house they can get a loan for and spend 102% of their income on a year-to-year basis. If middle-class people live within their means, plan with insurance, savings, and investments, these sort of sad outcomes don't need to happen with any regularity.
    But your notions don't hold up to scrutiny. These figures existed before your point in time when "people stopped being responsible" trend started.

    During the housing bubble, the types of loans changed wildly. Those who were under old fashioned 20% down loans, with no PMI, got foreclosed upon in only slightly higher numbers than before. In fact the difference was so slight, one could argue those foreclosures were a result of the economy getting wrecked by the other loan foreclosures. Much of the housing bubble problems were due to exotic loans that had very high risk, and an insufficient interest rate to balance the risk.

  2. #282
    Quote Originally Posted by ctd123 View Post
    You obviously don't live in the real world.

    Usually there is a change in thier situation (laid off, sick, whatever) and thats why they can't keep up with the payments.
    While this is true for some people, it still shows a lack of proper planning in the first place (like a few people have mentioned, if you can't outright buy it, you can't actually afford it). I bought my home in 2003 for $252k and paid for it up front (most people thought I was nuts for dropping that much cash at once). Fast forward 14 years and I have had 3 major surgeries for a brain tumor. If I hadn't paid cash for the house, I would have lost everything at this point. After insurance, I owe $276k in medical bills (obviously bigger chunk of money then my home was worth). So I waited until I could afford my home, and now the medical stuff isn't nearly as devastating as it would have been else-wise.

    Not to mention how much money you are pissing away making someone else rich through interest on your loan etc...

    Using this http://www.bankrate.com/calculators/...alculator.aspx and inputting $252,000 at 4% for 30 years means I pay $433,000 for my home when all is said and done.

    Pissing away $181,000
    And the huge majority of Americans do this by getting a home loan. And then wonder why other people are rich. It's simple stupidity and impatience at work here.

  3. #283
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    Quote Originally Posted by Halicia View Post
    Why do banks issue loans/credit that can't be repaid is the larger issue.
    Yup. The only issue is banks handing out bad loans. It's bad finance, policy, and socialism all wrapped up in one shit-stinking package.

  4. #284
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    Quote Originally Posted by Fastlane_hellscream View Post
    While this is true for some people, it still shows a lack of proper planning in the first place (like a few people have mentioned, if you can't outright buy it, you can't actually afford it). I bought my home in 2003 for $252k and paid for it up front (most people thought I was nuts for dropping that much cash at once). Fast forward 14 years and I have had 3 major surgeries for a brain tumor. If I hadn't paid cash for the house, I would have lost everything at this point. After insurance, I owe $276k in medical bills (obviously bigger chunk of money then my home was worth). So I waited until I could afford my home, and now the medical stuff isn't nearly as devastating as it would have been else-wise.

    Not to mention how much money you are pissing away making someone else rich through interest on your loan etc...

    Using this http://www.bankrate.com/calculators/...alculator.aspx and inputting $252,000 at 4% for 30 years means I pay $433,000 for my home when all is said and done.

    Pissing away $181,000
    And the huge majority of Americans do this by getting a home loan. And then wonder why other people are rich. It's simple stupidity and impatience at work here.
    How long did it take you to save up for that house? $252k in 2017 money is $332.5k, which would take the average US worker (~$51k/y) roughly 7 years to save up... if they literally spent no money. Realistically, taking in the average cost of living, it'd take the average worker 14 years to save up that much money if they only ever bought exactly what the needed to survive.

  5. #285
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    Quote Originally Posted by Tennisace View Post
    If you think about it logically, you should only be taking out a loan if you can make the payments. If you are cutting it so close that if rates rise, you can't make payments, then don't take out a mortgage.

    Whatever happened to restraint and living within your means?

    If you can't afford to purchase a home then rent or move elsewhere.
    It's probably due to optimism. Your job is stable, and maybe you'll get more pay soon. But things don't always work out as you plan and shit hits the fan. The bigger question is why do banks give out loans to people that can't pay? The reason is cause banks are trying to avoid devaluing homes. If you have more homes nobody can afford to buy, then logically you lower prices. But banks don't want to do that, so they sit on the homes and hope for a buyer. Problem is homes deteriorate very quickly when unoccupied, and usually end up devaluing the home anyway. So a good solution is to mortgage it out to people who can barely make payments. The bank still makes money, and the home doesn't deteriorate. They don't care if you're in permanent debt collection.

    This of course hasn't worked out well for banks. People end up leaving homes by ripping apart anything they can sell, including the copper piping. Houses devalue even more. I'd have no problem if nobody took a mortgage on homes, because houses will decrease in cost and that means people can pick them up at affordable prices. Don't blame the people for trying to own a home, blame the banks for ruining peoples lives.

  6. #286
    Quote Originally Posted by Fastlane_hellscream View Post
    While this is true for some people, it still shows a lack of proper planning in the first place (like a few people have mentioned, if you can't outright buy it, you can't actually afford it). I bought my home in 2003 for $252k and paid for it up front (most people thought I was nuts for dropping that much cash at once). Fast forward 14 years and I have had 3 major surgeries for a brain tumor. If I hadn't paid cash for the house, I would have lost everything at this point. After insurance, I owe $276k in medical bills (obviously bigger chunk of money then my home was worth). So I waited until I could afford my home, and now the medical stuff isn't nearly as devastating as it would have been else-wise.

    Not to mention how much money you are pissing away making someone else rich through interest on your loan etc...

    Using this http://www.bankrate.com/calculators/...alculator.aspx and inputting $252,000 at 4% for 30 years means I pay $433,000 for my home when all is said and done.

    Pissing away $181,000
    And the huge majority of Americans do this by getting a home loan. And then wonder why other people are rich. It's simple stupidity and impatience at work here.
    I sympathize with your medical conditions. However, the wasting money part is only true if you let the money that you save sit in the bank. You can put those extra money in 401k/IRA each year. By conservative estimate your retirement funds should grow at least 6% a year. Most are probably closer to 9 - 10%. Well over the 4% mortgage interest rate.

    With the right financing, instead of buying 1 house, you could have bought 3 houses with the 256k, and rent the other 2 out. We have several rental properties. The rent for the two which we bought in the last 4 years is around $1,000 over what we pay for mortgage, home insurance & warranty, earthquake insurance, and HOA.

  7. #287
    Quote Originally Posted by chazus View Post
    1)


    I guess if you add all that in, it would be about 700. My actual principle/interest is 480, HOA is 150, Sewer is 20, PMI is built into the loan, and I have a separate asset insurance for 30/mo.

    Outside that, actual repairs I've made on the place in four years has totaled about $400, so average to about $10 a month.

    It's not a HUGE house, but it's 3bd, 2.5ba, with a car port, a walled back patio, ~1400sq ft, for less than I was paying rent all said and done.
    3bd, 2.5 ba 1400sqft for 100k??? Damn you are lucky to live in an area that has houses that cheap.



    The median home value in Las Vegas is $207,800. Las Vegas home values have gone up 9.3% over the past year and Zillow predicts they will rise 5.6% within the next year. The median list price per square foot in Las Vegas is $130, which is lower than the Las Vegas Metro average of $131. The median price of homes currently listed in Las Vegas is $244,900. The median rent price in Las Vegas is $1,200, which is lower than the Las Vegas Metro median of $1,250.



    of course if you brought your house in 2011 when the median price dropped to a low of 110k.....

  8. #288
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    Quote Originally Posted by Zan15 View Post
    3bd, 2.5 ba 1400sqft for 100k??? Damn you are lucky to live in an area that has houses that cheap.
    Or not. There's a reason it's so cheap.
    It is by caffeine alone I set my mind in motion. It is by the beans of Java that thoughts acquire speed, the hands acquire shakes, the shakes become a warning.

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  9. #289
    Quote Originally Posted by Ryk View Post
    Last year my stocks went up about 12%. My house mortgage is 3.5%. Let's see...do I want to make more money or do I want to give my money to someone else and let them make more, hmm....
    The median home value in the United States is $193,800. United States home values have gone up 6.8% over the past year


    So your 12% vs their 7%

    Most of that value increase for homes is tax free for up to 500k. You are charged up to 35%

    12% is a great year but far from the average of 5-8% you see in stock increases historically. There have been years and locations where home price increases have far exceeded 12% and exceeded the additional cost of a mortgage.


    of course this depends on where you live.


    I try to talk people out of buying homes for more then just mortgages, they are a money sink before you even put money into the mortgage :P

  10. #290
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    Quote Originally Posted by Zan15 View Post
    The median home value in the United States is $193,800. United States home values have gone up 6.8% over the past year


    So your 12% vs their 7%

    Most of that value increase for homes is tax free for up to 500k. You are charged up to 35%

    12% is a great year but far from the average of 5-8% you see in stock increases historically. There have been years and locations where home price increases have far exceeded 12% and exceeded the additional cost of a mortgage.


    of course this depends on where you live.


    I try to talk people out of buying homes for more then just mortgages, they are a money sink before you even put money into the mortgage :P
    Additional factors would be that property taxes, interest and mortgage insurance can be deductible. And as you said, it's where you live. Where I am the median home price is in the 700k range with an increase as much as 14% year to year. I was able to get a "fixer upper" at the bottom of the housing crash for ~400k @ 3.25% interest. More or less a no brainer.
    It is by caffeine alone I set my mind in motion. It is by the beans of Java that thoughts acquire speed, the hands acquire shakes, the shakes become a warning.

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  11. #291
    Quote Originally Posted by zenkai View Post
    She was never in the military, had bankruptcy on her record from 6 years ago. She did however pull in 45k a year.

    - - - Updated - - -



    http://www.bankrate.com/finance/mort...ey-down-1.aspx

    - - - Updated - - -



    Blindly believe? believing in adjustable rate mortgage is blindly believing, and since I spoke out against those pretty sure, I don't blindly believe. You sound rather young or bad at math if you don't think investing money into a home is usually better than renting.
    Did you really just link 4 programs, of which 3 are even more limited then VA loans? You said it was easy for anyone....giving the impression that a average person can easily get a 3% loan with a 650 credit rating


    1- No down payment: VA loan
    2- No down payment: Navy Federal

    we already covered how limited those are

    3-No down payment: USDA
    The (Department of Agriculture, or) USDA's Rural Development mortgage guarantee program is so popular that it has been known to run out of money before the end of the fiscal year.

    If you put little or no money down, you will have to pay a mortgage insurance premium, though.
    Direct loans: Issued by the USDA, these mortgages are for low- and very low-income applicants. Income thresholds vary by region. With subsidies, interest rates can be as low as 1%.
    https://www.nerdwallet.com/blog/mortgages/usda-loan/
    https://www.rd.usda.gov/programs-ser...d-loan-program

    USDA is limited in where, how much, how many, whom, can buy a house and 3/4 of where the population lives is disqualified because its not classified as rural.

    4-Low down payment: Mortgage insurance
    Qualified borrowers can make down payments as low as 3 percent with private mortgage insurance, or PMI

    Nope 3% with PMI

    5- Weird cause they said 4, but they list 5
    Low down payment: FHA
    With a minimum down payment of 3.5 percent, the Federal Housing Administration, or FHA, is the low-down-payment option that's available to people with imperfect credit histories.

    The FHA charges an upfront premium of 1.75 percent of the mortgage amount. On a 30-year loan with the minimum down payment, there's an annual premium of 0.8 percent of the mortgage amount, or $800 a year for each $100,000 borrowed -- $66.67 a month for a $100,000 loan.

    #5 is 3.5%, and they charge you additional 1.75 up front...


    so basically none of the programs you listed is easily available or meet the criteria

    Quote Originally Posted by zenkai View Post
    LOL this just shows you how clueless you are on the subject.

    I, as most people don't have an adjustable mortgage rate, my payment will be the same as it is 15 years from now, can you say the same about an apartment? If My friend can get a fixed rate home mortgage at 3.75% with a 650 credit score and 0 down, anyone can. If you can't get a fixed rate then you shouldn't buy a home, you should work on your credit and save for a down payment.

    So basically "anyone can" really means "if you qualify for a special program, which might be 5-10% of the population"

    and every program either requires you pay a "fee" of some kind, is really not considered 0 down. 3% fee of 200k is 6 grand. sure its better then 5-20% down but at least that 20% goes towards paying off the mortgage.

  12. #292
    Quote Originally Posted by Zan15 View Post
    Did you really just link 4 programs, of which 3 are even more limited then VA loans? You said it was easy for anyone....giving the impression that a average person can easily get a 3% loan with a 650 credit rating


    1- No down payment: VA loan
    2- No down payment: Navy Federal

    we already covered how limited those are

    3-No down payment: USDA
    The (Department of Agriculture, or) USDA's Rural Development mortgage guarantee program is so popular that it has been known to run out of money before the end of the fiscal year.

    If you put little or no money down, you will have to pay a mortgage insurance premium, though.
    Direct loans: Issued by the USDA, these mortgages are for low- and very low-income applicants. Income thresholds vary by region. With subsidies, interest rates can be as low as 1%.
    https://www.nerdwallet.com/blog/mortgages/usda-loan/
    https://www.rd.usda.gov/programs-ser...d-loan-program

    USDA is limited in where, how much, how many, whom, can buy a house and 3/4 of where the population lives is disqualified because its not classified as rural.

    4-Low down payment: Mortgage insurance
    Qualified borrowers can make down payments as low as 3 percent with private mortgage insurance, or PMI

    Nope 3% with PMI

    5- Weird cause they said 4, but they list 5
    Low down payment: FHA
    With a minimum down payment of 3.5 percent, the Federal Housing Administration, or FHA, is the low-down-payment option that's available to people with imperfect credit histories.

    The FHA charges an upfront premium of 1.75 percent of the mortgage amount. On a 30-year loan with the minimum down payment, there's an annual premium of 0.8 percent of the mortgage amount, or $800 a year for each $100,000 borrowed -- $66.67 a month for a $100,000 loan.

    #5 is 3.5%, and they charge you additional 1.75 up front...


    so basically none of the programs you listed is easily available or meet the criteria




    So basically "anyone can" really means "if you qualify for a special program, which might be 5-10% of the population"

    and every program either requires you pay a "fee" of some kind, is really not considered 0 down. 3% fee of 200k is 6 grand. sure its better then 5-20% down but at least that 20% goes towards paying off the mortgage.
    I won't deny over reaching when I said "anyone can" to make a point that getting a home loan isn't has hard as Tennisace made it out to be. But I stay true to the spirit that if you have a decent credit score, a down payment you can buy a home. You don't think it's easily to meet such criteria? Because I know a few people who don't make much money who are home owners, they're just hard working responsible adults. I also like how you make up statistics 5-10% Of the population lol, I can't take you serious if you're going to be pulling numbers out your ass. Then you go on a 200k number, if you can't afford 6 grand, you shouldn't be buying a 200k home, I know this all depends on the area you live in but there are homes that are even under 100k *gasp*

    I will say, if you can't save money for at least a partial down payment or budget yourself, or you work at McDonald's, then yeah, home ownership isn't for you.

    As far as me saying 4 instead of 5, the link says 4 so I changed the number from 5 to 4 thinking I "miss remembered" - Brian Williams.
    Last edited by zenkai; 2017-02-21 at 07:38 PM.

  13. #293
    Quote Originally Posted by Kujako View Post
    Because before (and now after) it was made illegal to do so, banks would (and now once again are) pressuring people into signing, often by misleading them or in some cases outright lying.

    I recommend the book (or movie) The Big Short to explain in detail. And keep in mind that all those things the banks did, were made illegal by Obama and now legal again by Trump.
    LOL Trump hasn't even touched banking yet you idiot.

  14. #294
    @Tennisace As a professional in the US banking/mortgage industry with experience in both underwriting loans and developing mortgage products there's a lot that goes into this.

    Before I can even really get into it, it would help me if you could define what "they can't afford" represents. Is it strictly people facing foreclosures? Is it people getting approved with high DTI's? Is it the use of Alt A financing (mitigating factors)? Is it being unable to qualify unless you have higher than guideline reserves (basically liquid assets available to pay mortgage payments in times of hardship)?

    You can get approved via a few different methods. The main 3 pieces a lender is going to review is your income, asset, and credit profiles. You can get a mortgage almost assuredly as long as you have one of these in very good standing. I.e. Very wealthy people often have significant income or assets, but have some of the worst credit scores you've seen (usually due to be very leveraged via multiple investment properties). You can barely make a payment (i.e. 45% back ratio, that represents the qualified mortgage payment (P&I, Taxes, & Insurance/etc.)), but if you have significant assets to put down you can be approved.

    @Zan15 Also for those wondering institutions do often offer low down payment products that don't require PMI. These products often have other limitations (LMI census tract/Income limits, etc.), but they do exist. Typically Banks/CU will offer it as part of the CRA since they'll put the mortgage in their own portfolio rather than sell it to a GSE.

    @Fastlane_hellscream Regarding the cost of interest: In your example where you saved up 250k to buy the house cash. Over the course of accruing the cash necessary to make your purchase you were paying what I assume was rent. In this situation (assuming you were previously living in a 150k appraised house, since most people move up, not down) you'd most likely be paying ~1,600 for rent, whereas the owner of the property was likely paying ~ 1,100 for his mortgage on the property. So while you were spending 1,600 a month to gain nothing, you could have purchased a house for the same price you are paying rent for, and then paid down the principal very rapidly significantly reducing the interest cost over life of loan while raking in the few tax benefits of owning a home to even further mitigate the cost. You're inevitably still going to come out worse (say 290k instead of 250k overall), but the cost of living in the home you want 5-7 years sooner might have been worth it. YMMV. Also note: Most wealthy people own significant investment grade real estate. To do this they may own 4-5 mortgages on those properties. They may pay 4% interest, but they're getting a huge ROI on the difference. Cost of debt is very low compared to the cost of capital.

    This is without even taking into consideration the ability to invest that excess money you'd have and earn even more.

    The assumptions are there to paint the picture based on general things seen in the industry and to portray very non-scientific math. Without knowing your financial picture back then intimately I can't provide more precise numbers (not asking for the info, just giving clarity into the context).

    @zenkai I'm a little curious about your friends mortgage. 650 credit score means you're not getting approved for a standard conventional product with a 45k income (assuming her home isn't a 70k property). VA is out, FHA is out with 0 down, it's been a while since I underwrote FHA/VA loans, but last I recall was 96.5 (which meant 3.5% down was minimum, not 0). You could go USDA, but they do actually charge a fee as a down payment alternative (usually rolled into loan amount), and you're subjected to the guarantee fee (which is also usually rolled into your mortgage payment monthly (basically a form of PMI).
    Last edited by Wrecktangle; 2017-02-21 at 08:51 PM.

  15. #295
    Quote Originally Posted by zenkai View Post
    I won't deny over reaching when I said "anyone can" to make a point that getting a home loan isn't has hard as Tennisace made it out to be. But I stay true to the spirit that if you have a decent credit score, a down payment you can buy a home. You don't think it's easily to meet such criteria? Because I know a few people who don't make much money who are home owners, they're just hard working responsible adults. I also like how you make up statistics 5-10% Of the population lol, I can't take you serious if you're going to be pulling numbers out your ass. Then you go on a 200k number, if you can't afford 6 grand, you shouldn't be buying a 200k home, I know this all depends on the area you live in but there are homes that are even under 100k *gasp*

    I will say, if you can't save money for at least a partial down payment or budget yourself, or you work at McDonald's, then yeah, home ownership isn't for you.

    As far as me saying 4 instead of 5, the link says 4 so I changed the number from 5 to 4 thinking I "miss remembered" - Brian Williams.


    1.4 active military.
    21.8 million vets


    23.2m

    Following average homeowner rates of 64% in the united states already.
    so that leaves 36%. 8.3m

    population of the US 318 million

    318/8.3m = 2.6%

    now lets take out kids in the population since they are not filing for mortgages.


    Persons under 18 years, percent, July 1, 2015, (V2015) 22.9% 72m

    318-72 = 246m / 8.3m = 3.4%


    Now the other programs
    The USDA home keeps gaining steam. Nationwide, home buyers used the USDA home loan nearly 130,000 times in 2013 according to the CFPB

    So lets assume 160k for 2016 shall we.

    246m / 160k = 7/10ths of a %.


    so with the two programs we are at 3.5%

    so then lets double that number just for ha-ha's 7%....


    i could add more but the other programs don't meet your original requirements



    The 200k is the average home price in the united states, some places its 100k, some places 75k, some places 750k......you pick a number.

  16. #296
    Quote Originally Posted by Wrecktangle View Post
    In your example where you saved up 250k to buy the house cash. Over the course of accruing the cash necessary to make your purchase you were paying what I assume was rent
    While a fair assumption to make I guess, that's incorrect. I was in the Marine Corps at the time and obviously didn't have to pay rent for housing. That's kind of the trade off...put your life at risk, don't pay for basic housing, electricity, water, things like that. That isn't to say everyone should approach house buying by joining the military. But the same principle applies. Buy what you can afford and you save in the long run by not giving away money. I get the point you are trying to make, and I agree it can be valid. Just sharing my view is all.

    - - - Updated - - -

    Quote Originally Posted by Annoying View Post
    How long did it take you to save up for that house? $252k in 2017 money is $332.5k, which would take the average US worker (~$51k/y) roughly 7 years to save up... if they literally spent no money. Realistically, taking in the average cost of living, it'd take the average worker 14 years to save up that much money if they only ever bought exactly what the needed to survive.
    As I mentioned above, my situation was different then some. Took 12 years in the Marine Corps at that time. I was almost always deployed and making base, as well as combat, pay for that time period. Had no time to spend money anyway. Wouldn't call it lucky since deployment isn't fun, but a unique opportunity none the less. Worked out in the long run. Until cancer obviously lol.

  17. #297
    Quote Originally Posted by Fastlane_hellscream View Post
    While a fair assumption to make I guess, that's incorrect. I was in the Marine Corps at the time and obviously didn't have to pay rent for housing. That's kind of the trade off...put your life at risk, don't pay for basic housing, electricity, water, things like that. That isn't to say everyone should approach house buying by joining the military. But the same principle applies. Buy what you can afford and you save in the long run by not giving away money. I get the point you are trying to make, and I agree it can be valid. Just sharing my view is all.
    Thank you very much for your service. That does change a lot though. I appreciate the insight into your situation.

  18. #298
    Quote Originally Posted by Fastlane_hellscream View Post
    Buy what you can afford
    It's always a risk to buy something you can't pay for right now. In that context, no one who can pay in full for a house can afford it.

  19. #299
    Quote Originally Posted by Butthurt Beluga View Post
    Why do people use credit cards and not pay the entire thing off at the end of the month?
    Why do people take out a loan/finance a car when they don't have the money to just buy a vehicle? (Hint: having to finance a car means you can't afford it.)
    Why do people do a lot of shit that's really inefficient and illogical? Because the vast majority of people are really stupid.
    It's not about being stupid, it's about being practical.

    The vast majority of people can't just plop down $20k on a car. They can however afford a 60 month fixed rate loan of 3.41%, which is $345 a month.

    Likewise, a 4.125%, 30 year fixed rate home loan for a $200,000 house only comes out to ~$600 a month. Again, next to no one is able to plop down $200,000 cash.

    The reason people take out loans they can't afford? Not a simple answer. They could be pressured by the bank, they could think the loan is fixed rate when it's not, they could have been able to afford it but something big in life happened and now they can't. Really, it's too complicated for a simple answer.

  20. #300
    Quote Originally Posted by Rasulis View Post
    I sympathize with your medical conditions. However, the wasting money part is only true if you let the money that you save sit in the bank. You can put those extra money in 401k/IRA each year. By conservative estimate your retirement funds should grow at least 6% a year. Most are probably closer to 9 - 10%. Well over the 4% mortgage interest rate.

    With the right financing, instead of buying 1 house, you could have bought 3 houses with the 256k, and rent the other 2 out. We have several rental properties. The rent for the two which we bought in the last 4 years is around $1,000 over what we pay for mortgage, home insurance & warranty, earthquake insurance, and HOA.
    All true. I came from a very poor upbringing (hence joining the military to at least have some way of improving my chances in life). I am the first person in my rather small family to ever go to college, ever serve, ever own a home. I definitely wish I had the wisdom at the time to do the things you mention. Just wasn't their yet lol.

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