Your investment is the sum of your buying price plus the interest you've paid on the loan at the time of the sale.
Your remaining debt is the amount of the loan still owed to the lender.
When you sell, there are four possible outcomes:
1) The selling price is greater than your investment and greater than your remaining debt. You've made money.
2) The selling price is less than your investment and greater than your remaining debt, and:
(a) the difference is less than the cost of renting for the same period, so you are still ahead versus renting
(b) the difference is more than the cost of renting for the same period, so you effectively paid higher rent in exchange for it being Yours
3) The selling price is less than your investment and less than the remaining debt, so you are paying to be rid of the place.
That's the straight financial end, the part that I think people don't accurately calculate. Common wisdom certainly defies it. I admit that there's no accounting for the intangibles, to which everyone assigns a different monetary value. (You may end up saying, well, it's expensive, but it's worth it. That's fine.) But without truly considering the situation, how can anybody make an informed decision?
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Yes, but the real estate agent will tell you what you want to hear since in the end he/she is a salesperson. You aren't likely to hear about the negative outcomes. If the banker plans to sell your loan to someone else as a security, then he will care less about the risk of you defaulting on a mortgage loan because he's washed his hands of it and made a tidy profit. That leaves the government looking out for you and they have been lax in enforcing current laws, or clueless during 1987, 2001, and now. Everyone knew there was a speculative bubble in housing, it's just no one thought bankers would throw common sense to the wind when approving subprime loans. The bankers made two mistakes - they guaranteed those securities based on subprime loans and they didn't follow their standard procedures for loan approvals.So, the banks hurt themselves and they hurt the little people. Any one with sense would not buy a house they couldn't afford in the first place, so in the end the buyers have to share some of the blame. Unfortunately, we all may be paying for this mess in the end if the world can't loan us any more money if the other economic bloggers are right (see robertreich.blogspot.com).
True, John, and so it goes. I guess the bankers got so caught up in the story that they ended up believing it themselves.
The cynic in me blames the buyers for believing the bankers. The idealist in me blames the bankers for being unethical.
Terry Pratchett said in "Making Money", that some people are so good at selling dreams that the people who buy into them don't dare wake up." Unfortunately, reality has a tendency to wake you up sooner or later regardless.
You could always become a Realtor if the architect thingy doesn't work out.
:)
Capitalizing realtor? Proper-nouning a regular noun? You, Andrew??
Real estate agents are having a very hard time right now; the market has slowed drastically. But there's still a lot of potential for 'project houses' in many parts of the city, so rehabbing may be more lucrative, maybe more fun too.
You're supposed to capitalize Realtor; see Merriam-Webster's 14th Collegiate (www.m-w.com):
Realtor: collective mark; used for a real estate agent who is a member of the National Association of Realtors.
I think it's creepy, personally, injecting brand-name words into the lexicon. But there it is.
You may have proved me wrong, but I refuse to accept that it should be "Realtor". That's just ridiculous.
Worse yet: according to the association, it apparently should be all caps and with the restricted symbol following it.
Realty is real estate.
And it's as real as money.
Beauty is currency.
;>)
Just because a word is included in a dictionary doesn't make it a standard of the language. It's the common usage by the masses that make a word a standard of the language. It's quite possible that some real estate association or group paid Merriam Webster to put that word into their dictionary for some legal or ulterior reason. Perhaps it's another sign of cynical, amoral hypercaptialism. It looks like a corruption of ethical editorial standards for Merriam Webster to me, but at the end of the day, they are still a business.
Siegfried, I'll consider it. :)
Meanwhile, I'm torn between taking cover and finding a comfy chair and some popcorn.
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