First-time home buyers: how did you feel about getting a mortgage?

HubertManne, 1 month ago

Its generally a good move but people can oversell it. Taxes will go up even if the mortgage is fixed. You can't move easily if you need to go work someplace else or such. Upkeep is a thing and will cost. You can't easily drop your monthly nut if you lose your job or such. That being said my general rule of thumb is if you can afford a 20% down payment and 15 year fixed and its somewhere you would like to live you should do it. Get a 30 year but make payments like its a 15 year and if you get into a crunch make the normal payment. If all goes well you will be in good stead and if you have to sell you should come out ahead. If you can't do that much of a down payment then definitely think about it hard and I personally think if your doing a balloon or variable rate your asking for trouble.

partial_accumen, 1 month ago

but I look at a mortgage and think “that’s 15 years I’ll spend paying back, at absolute minimum. Probably more like 25 years”

Yes! Probably more like 25 (or even 30 years)…at the same glorious fixed payment for that entire time! How many dozen times has your prior housing payment, rent, gone up? Now, it doesn’t. The bank will never ask more from you on principal and interest in the future than it does on that very first mortgage statement.

When I bought my first house I was paying $800/month in rent at an apartment and the mortgage payment was $1000/month. I sold that house 17 years later with the last mortgage payment still being only $1000/month. I checked back on my old apartment to see what the rent was: $1400 for the same apartment I used to pay only $800/month for.

Also, you’re not forced to keep that house you’re buying for 25 or 30 years, but when you leave, its YOUR choice not the landlord’s. When I sold my house I pocketed over $135k in profit because the housing value had gone up in that 17 years.

Glorious I tell ya!

gramie, 1 month ago

Note that this is an American experience. In Canada, every time you renew your mortgage the interest rates are set at the current rate. So people renewing their mortgages now are paying around 7% interest, whereas 5 years ago they might have been paying 2%.

One of my co-workers had his mortgage payment jump from about $2,500 to $3,500/month a couple of years ago.

partial_accumen, 1 month ago

Note that this is an American experience. In Canada, every time you renew your mortgage the interest rates are set at the current rate.

Thats very true. Isn’t the longest mortgage rate in Canada something as short as 5 years or so? I have no idea how you guys can manage that. This is especially true with hot housing markets the Vancouver or the GTA where the price of homes already is insanely high.

brap, 1 month ago

This is the same in the UK too. Still cheaper than renting though.

Frog-Brawler, 1 month ago

If your mortgage is less than your rent, do it.

jordanlund, 1 month ago

Even if it’s more than your rent RIGHT NOW, do it.

Your mortgage will stay the same. The rent just goes up.

Frog-Brawler, 1 month ago

Well… mostly true. My mortgage has gone up because insurance costs are out of control and the incompetent party running the state refuses to do anything.

Jimmycakes, 1 month ago

Bought my house in 2008 so I didn’t think much my mortgage was low as fuck

protist, 1 month ago

I felt great about it, our monthly mortgage payment was a little less than we were paying in rent, and a portion of every payment was us building equity in our home rather than 100% going to a landlord. I feel even better now, as rents and home prices have skyrocketed where I live, and our monthly payment has only gone up about $300 over 9 years where renters are facing much steeper increases.

It all boils down to your monthly payment, and whether that price is right for you. You need a solid estimate on what your monthly payment will be, to include principal, interest, and escrow to cover taxes and insurance, and see how that amount feels to you moving forward, because it will stick with you.

scytale, 1 month ago

I have the same feeling as you and I’m going through my first home purchase right now. I can’t imagine myself paying something for 30 years, and I’m in my late 30s. What’s keeping me assured is:

• Rent will just keep rising, and having a fixed payment that doesn’t go up for decades guaranteed is reassuring.
• I got a reasonable rate on my mortgage, but if rates go down, I can always refinance.
• As someone who prefers to pay in full on most things, paying an interest sucks. However, I can always pay additional on the principal every month when I have extra money, and eventually pay off the loan earlier and save money.
• I’m building equity. Renting is basically paying your landlord’s mortgage. You’re throwing money into something that isn’t yours. At least with a home, you’re investing in your own property.
• Climate change can change it, but real estate is historically the one asset that is almost guaranteed to appreciate. If there’s any major change in my life (moving, sickness, can’t afford it anymore, etc.), I can always sell.

reversebananimals, 1 month ago

I bought 2.5 years ago so its still pretty fresh. It was very scary but I knew it was the right lifestyle choice for me. I had lived in my city for 5 years at the time and felt pretty confident (still do) that I want to stay local long term. Just like in all American cities, rents were rising fast.

It felt like I was overpaying at the time because of how much housing prices had risen the 5 years before, but a few months after closing I felt relieved and validated when interest rates jumped to 6%.

can I possibly plan that far in advance?

The good news is you don’t need to. You can do the math to discover how many years you need to own a property in your local area to break even against renting: www.nerdwallet.com/…/rent-vs-buy-calculator

You can always sell a house you still have a mortgage on and use your equity to buy something else: zillow.com/…/what-happens-when-you-sell-a-house-w… The downside to selling a house isn’t the mortgage paperwork, its paying all the fees to brokers and banks to market the property and process the sale.

Delphia, 1 month ago

And finding somewhere to live in the inbetween if the times dont line up can be costly.

Kongar, 1 month ago

It’s hard when you’re starting out, but think about it this way:

1. you have to live somewhere-that means rent or a mortgage.
2. rent goes to “the man”. So does most of your mortgage payment but you DO pay some of that to yourself. So when comparing the two you have to subtract that out.
3. you get a tax break on mortgage interest - so you have to take that out
4. the house is likely to appreciate in value - so any equity you build has to be taken out
5. this means that a substantially larger monthly mortgage payment might actually be equal to or even less than paying monthly rent.
6. rent goes up, nobody talks about this. Mortgages are fixed.
7. renting is forever. Eventually (if you’re not stupid with refinances) you’ll own your home and have zero payments.
8. in favor of renting - if something breaks in a house, you have to fix it. Renters just yell at their landlord.
9. even if you have a crappy interest rate now, you can always refinance in the future if and when rates come down.

Paying for your first mortgage can be daunting when just starting out, but it’s often cheaper than renting when considering the above points, the one exception being how much money you sink into repairs. (Don’t buy a money trap of a house, stay away from major fixer uppers). Eventually your salary will go up and your mortgage payment will be less and less of a burden.

Being in debt sucks, but I’ve felt paying rent sucks even more. So a mortgage ain’t so bad. That’s the way I see things - ymmv

Delphia, 1 month ago

Property generally increases in value while you pay it down.

My wife and I bought a $400k 3 bedroom flat near the university 8 years ago and we were both scared as fuck. paid $100k off it and just sold it for $600k

That $300k cheque we just used for the downpayment on building a “how do people afford these houses!?!” Thats going to cost $800k. But really our mortgage is only going to go up 20%

MNByChoice, 1 month ago

It was terrifying. So much more so than buying a car.

I thought of it as “locking in my rent”. For me that helped as my rent kept going up.

dingus, 1 month ago

Yeah I thought of it as locking in my rent too! But then I found out that my housing payments have gone up each year like rent has. And it’s basically the same cost as renting. Oh well.

ShepherdPie, 1 month ago

Taxes and insurance increase but you have to consider that taxes and insurance is increasing at the same rate for the individuals who own rental properties, which then get passed on to the renters.

CMLVI, 1 month ago

Additionally, if you eventually want to move, you’ll usually come out ahead a little bit. I was in a popular market, but I think we bought at 220k and sold at 320k. After all was said and done, I think we had a nice 60k profit, and we did not take the highest offer, we took one from a buyer that we knew was a family that would move in. Not a bad consolation prize for a break up, and I think we were only in it for…3 years?

Selling is stressful, but not nearly as much as buying.

Rozz, 1 month ago

There isn’t really much choice and people have been doing it for a long time including my parents so I just have to assume it’s part of adulthood and accept it and try not to let it hang over my head.

Unless you make a lot of money or have help, you will probably have a mortgage if you want a house.

MajorHavoc, 1 month ago

It’s daunting, and it should be. A person can lose a lot of money and time by buying a lemon of a house.

That said, most people don’t pay off their first house, because they move before the 15 or 30 years is up. And that’s okay.

As Dave Ramsey says, “It’s a house, not a marriage.” Meaning, if it turns out a house doesn’t suit you, sell it. You can’t hurt it’s feelings.

Before my first house, I didn’t realize how much I would appreciate not having to get permission to fix / paint / change my own wall / door / shelf / window blinds.

I also didn’t realize how much I would grow to despise having a Homeowners Association (HOA) up in my business.

shortwavesurfer, 1 month ago

Oh dear God, I specifically mandated that I would absolutely not live in an HOA for this exact reason. And boy am I glad I did it. I’m an American damnit. If I want to have two broken down cars on blocks in my yard, then damnit I can. LOL. No, I wouldn’t do that. But it’s better than an HOA.