I purchased a home today.

I purchased a home today. It's a little scary and a very large commitment. But between my salary and the large dip in home prices it's a good time for me to buy. I don't take joy in any one's problems but I guess one mans bad economy is another's good economy. Now I need to start making some real money so I can get it paid off in a few years.

It's a great neighborhood.

Scott S.
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Amazing, we closed on our house today! It seems like a good time to buy-
if you have enough in the bank for emergencies et al.

A small rural farm town of about 1100 folks, the next door neighbor gave me
a nice looking lawn mower when he heard I was looking for one, all within about an hour of starting to move in!

Life is good...

MikeSunWest

GJA - plenty of room for my ham tower...

Lol, I have an older DX-200 receiver I purchased on ebay about a year ago. I have been waiting to be able to put up an antenna for it. Now I can put one up. It's a small world. The town is a little larger than 1100, about 160,000. It was named Money magazine's Best Place to Live 2006.

Scott S.
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Scott,

Thanks for sharing your home purchase.

Is this for Investment or for Living In?

Is Infrastructure coming/planned/in-progress?

Let me also ask... Why do you want to pay it off?

Michael Ross

Michael,
This will be my main residence. I am out of city limits but all the infrastructure is there. It will be annexed into the city in a few years. It is bordered on the south by a new high-end subdivision, on the west by a nice retirement hospital, on the north by open land, and to the east is the city of Fort Collins, CO. I have a 10 minute commute into Fort Collins (160,000) or a 10minute commute into Loveland (40,000). Also about 30 miles from Rocky Mountain National Park

My parents never owned there own home. My father usually had a house as part of his salary so we moved a lot. Owning my own home is very important to me. There are a couple reasons why I would like it paid off.

1. It's a very large monthly debt and not having that payment would make life a lot easier.
2. With my 401K, social security and a reverse mortgage I shouldn't have any financial worries after retirement. I won't be rich but I won't be poor either.

Thanks for asking,
Scott S.

Scott,

Thanks for elaborating.

The Idea of Owning your home is usually riddled with Emotion and can be a delicate subject to talk about. Which is why I asked about your Reasoning first.

There are basically three schools of thought...

School of Thought # 1: Rent instead of own - let someone else subsidize your living and Invest the difference. A place with monthly repayments of $2k might only cost $1.5k to rent. Let the landlord subsidize the $500 a month plus maintenance while you Invest the $500 a month into something else.

School of Thought # 2: Pay off your home. Once the major home payment is gone, it is actually quite cheap to live and you need far less income to enjoy the same lifestyle.

School of Thought # 3: Pay Interest Only. The logic behind this one is... a P&I loan has greater repayments than an IO loan. Invest the difference. Plus, why put money In to paying off the Principle when it will only be borrowed back out again at interest for other investing?

A follow on from School of Thought # 3 goes... IF you do want to pay off your home, then don't do it with Today's Dollars, do it with Tomorrows Dollars because they are Cheaper.

Today, a Dollar is a Dollar. But tomorrow, that Dollar may only be worth 80% of its value and as a compensation you will earn more. The loan stays the same, so takes Less of your income to pay off.

A $100k loan is still $100k in five years. BUT, your income should be more. Meaning, in five years it is Financially Easier to pay off your $100k loan than it is today. Because in five years you will be earning more.

Of course, which School of Thought you put yourself into depends on your own circumstances and Financial Targets. If investing is of no interest, then long term paying off the home will be better than renting and give you more piece of mind. If additional investing is of high interest, then there are alternatives to paying off the home so you still have as much Spare money to invest with as possible.

Michael Ross