jts1207

What would you do with it? Best place to make money.

dfreder371

Not enough paramaters. 1 year? 5 years? 20 years? Or, stated another way, what percent gain would be enough for you?

Are you a homeowner? If not, that is absolutely the best place for that 20K. Down payment.

jts1207

I am not a homeowner but Down Payment is what I am thinking

PillsburyChoboy

Put it in a Vanguard mutual fund or something. Or buy cocaine at wholesale prices in Miami and make a healthy profit distributing it.

Dom418

It also depends what your risk tolerance is... is that "your life savings" or "play money."

If you give some more details, I'd be happy to offer some advice.

phil2

I totally disagree!!!

Plunking 20000 down on a house is stupid here is why...

in a typical housing market, meaning a 5% increase over 10yrs to be conservative you obviously are going to make money, but why not finance the full price of the house and keep your 20k. If you consider the fact that if you needed that 20k down the road you will have to borrow against the house anyways to get "that" 20k back basically infringing on any gains you would see because youll have to pay interest on your own 20k!!

Do something else man.....shit even a passbook savings account is going to make you more money than bricks and mortor

Dom418

:sqnteek: :sqnteek: :sqnteek: :sqnteek:

I think your may want to rethink some of this....

First off, if you house only returns 5% over 10 years, it must be in the middle of a ghetto somewhere... that's only 1/2 of a percent a year. It should be more like 5% per year, and that's being conservative.

Also, by putting a larger down payment on a home, you save TONS of money in interest over the life of the mortgage, especially in the early years. Also, by hitting the magicial 20% down, you can save yourself from having to pay Mortgage Insurance.

So, by putting the extra money down, you would BE SO FAR AHEAD of the game you wouldn't believe it. I'd be happy to explain further if there are additional questions....

phil2

Im sorry but i disagree again

If you take that 20k and consider that it will cost at 5.5% interest on a 30 yr loan = 113 a month more in payment.

And if he is buying a 100000 house and puts the 20k down he would still have pmi considering the banks closing costs are around 6%

Dom418

Actually, that's not how mortgages work at all.... Interest isn't calculated in that manner.

Apparently you don't have a mortgage, or just don't understand how your's works.

phil2

EXCUSE me?

I am a mortgage broker and yes that is how it works here in NY state your are obviously confused

Dom418

OK.

phil2

Oh and BTW the Software I use as a Mortgage Broker to arrive at the 113 a month is caylx point, you might want to pick yourself up a copy

www.calyxsoftware.com

Dom418

OK.. but I still know that saying interest is the same for every month of the 30 yr life of a mortgage is dead wrong.

I'm not trying to argue.

phil2

paymentwise as far as borrower is concerned the 20k is 113 a month for the life of the loan and will not change

Scrib

If I'm reading this correctly, all Phil is saying is the 20K equates to $113 more a month for a 30 year mortgage. How it breaks down between principle and interest was never brought into question.

It's $113 more a month... Regardless of where the money goes. And to his point... If $113 is gonna kill you for buying a house, you shouldn't be buying.

Dom418

That's very true.. Phil is saying that, which is correct.

But what I'm saying is, by paying that $20,000 up front, you save over $40,000 over the life of the mortgage ($113*360 months), so my point is that you would save a good deal over the life of the mortgage, more than half of which would be saved in the first 10 yrs of the mortgage, since the amortization of the interst is so front loaded.

Dom418

One more point... as far as putting that money somewhere else, you'd have to find an alternate investment that would double your money in the same amount of time. This can certainly be done; it would take about a 3.7% annual return to double your money over 30 years (after taxes).

phil2

I will definately agree with you on that Dom but the typical life of a loan is like 7 yrs before people refi so it really doesnt matter.

I would just invest the 20k in something else is all i was saying!


Hell you could even get some biz outta this

kevin79925

best place to put that money is in my pocket!!!

Dom418

The 7 yr life supports my point even more...

Over the first 7 yrs of a mortgage at 5.5%, you pay $6,173.97 in INTEREST on the $20,000. That's a 31% rate of interest over 3 years!!!!!

This just confirms that it would be difficult to find a better place to put the money, because it's hard to find an investment that would guarntee that kind of return (31%) over 3 years!!!

phil2

Dom

You seem not to like people investing their money with you or other firms, I really dont get why you are in the business you are in if you dont understand what i was getting! all i was trying to say is why put your money in bricks and morter (ie house) when you can have the freedom to invest it in other areas and move it around or even spend it, without having to borrow agains the house to do so.

phil2

also dom there is no gaurantee with realestate a market can turn for the worse inside of a year.....case in point schenectady where i currently live and moving out of!

GE in the early 90's pulled all there executives out of there plant in schenectady killing the the realestate market as well as the job market.....it took a good 7 years for realestate to turn around here so no gaurantees my friend!!!

CL Hype

you def know what you're talking about.

putting money into buying a property or land...if u can make the payments...is the way to go. They are not building more land and houses are always in demand, especially here in Cali. Putting money into the stock market or gambling it elsewhere is too risky...putting it in a bank is going to give you minimal returns. At least you know with a house you will see guaranteed results down the road.

phil2

also clhype there is no gaurantee with realestate a market can turn for the worse inside of a year.....case in point schenectady where i currently live and moving out of!

GE in the early 90's pulled all there executives out of there plant in schenectady killing the the realestate market as well as the job market.....it took a good 7 years for realestate to turn around here so no gaurantees my friend!!!

CL Hype

Dude whats up with the rolling eyes

Im talking about here in Cali...the market has been hot for a while, even during this reccesionary period. Investing in properties is the way to go here, if you can make the payments. Im not talking about a small little town where half the city is employed by one company..of course the real estate market will turn bad instantly when they are laid off. Thats an exception.....By the way there is no guarantee when you are investing money. IMO, real estate is the best way to ensure you will actually make money. I have seen it happen first hand. Compared to the alternatives, if i had 20k i would help put it on a down payment. But everybodys situation will be different and I woildnt be able to tell someone what they should do with their own hard earned money.

Red-CL

In my account.

Dom418

You're missing the point.. the real estate market could be down 20% and you'd still be ahead, the savings come from what you are NOT paying in interest, which is locked in regardless of what the price of the property does.

dfreder371

Phil: I hate to disagree, but here in Chicago, the average gain on homeownership is between 15 to 25% per year due to appreciation.

My place, recentlly appraised at $175,000, means I gain at a minimum $26,000 per year, and at the top rate, $44,000 per year.

For what? Sleeping in my own bed, knowing I "own" my own home (not yet, but close), for an expense that is about $11,000 per year?

Sorry, I disagree with Phil (unless you live in some screwed up area in california, where mortgage values vary wildly.)

LegendC

Also consider the tax benefits that come with home ownership. You can invest your return every year and easily make back up that 20K.

Legend2Die4

back to the orig. topic...

if u want the money to stay liquid, drop it in the highest money market acnt u can find. youre not gonna earn a ton of money on it just yet, but its liquid, u find somethin better, u can move it, (generally) no penalty, etc! wait till market "heals" and then drop it into a mutual fund, or a decent CD if u want a secured investment and u dont wanna touch it.

just my 2cents

-bryan

Scrib

Oh come on...

Dave, at that rate, your condo will be valued at over 500K in just a few years. Do you really think the housing market is going to support wildly inflated numbers like this long term? Hell no.


Just wait until interest rates jump up a couple of points.

phil2

i live in upstate NY and I am also a realtor and your numbers are absolutely overinflated and unrealistic!

But what i want to know is WHAT THE HELL IS A MORTGAGE VALUE? Think before you speak next time

phil2

I mean really man think about what your saying...........


If homes in your LA-LA land are increasing 20% per year a 200k house will increase in value 3333.00 a month, at these rates why even work i mean from what your saying if you own 2 200k houses in your LA-LA land youll make 6666.00 a month.

You my friend are insane

Dom418

At 15%-25% per year, the value of your place would DOUBLE EVERY 3.5 YEARS.

That, is not realistically possible.

phil2

It is in LA-LA land

CrockPot

housing has appreciated on an average of 18-20% from the previous year for the past few years here in SoCal. they expect a similar rise in median home pricing for 2004. it is indeed crazy times out here.

CrockPot

Quote from LA Times:

"A recent report by DataQuick Information Systems, which tracked median home prices for all of Los Angeles County, showed an increase of 20.9% countywide, to $330,000, in 2003 from the year before."

Other southland counties such as OC and Ventura have reported 26%+ gains over last year....


http://www.latimes.com/news/local/la...,1109552.story

please, all you out-of-staters...stop moving into california, i have plans to upgrade to a larger house in the coming years. i don't need anymore demand added to our already short housing supply.

CrockPot

looks like you need to be registered in order to view that link...here is the copy/paste:

Local Home Prices Up Sharply

*The median in Ventura County jumps nearly 27% in January to $430,000, a growth rate that outpaces the rest of the Southland.

By Gregory W. Griggs, Times Staff Writer

The growth in Ventura County's median home price in January outpaced price increases in the rest of Southern California, jumping nearly 27% over last January to a record $430,000.

The higher median price, reflecting a 26.8% increase, came as the number of residences sold declined, mainly because of limited supply. In January, 1,014 homes were sold locally, down 14.1% from 1,181 sold in the first month of 2003.
Los Angeles County saw its median home price — the point at which half the homes sold for less and half for more — increase 26.6% to $352,000. Orange County retained the region's most expensive median at $450,000, an increase of 22%.

Overall, the median price in six Southland counties increased 21.2% to $343,000, according to statistics released this week by DataQuick Information Systems.

"Prices are clearly on the upswing, there's no doubt about that," said John Karevoll, an analyst with DataQuick, which collects information on sales of new and previously occupied homes and condominiums.

Karevoll points out that Ventura County, the least populated of the counties surveyed with 799,000 residents, tends to have more volatile monthly price swings than neighboring counties.

For example, the 1,014 homes sold in the county last month were a fraction of the 8,030 that changed hands in Los Angeles County and totaled less than half the number of homes sold in the next smallest county, San Bernardino, at 2,914. Sales in Riverside and San Diego counties were also tallied.

"The way these numbers work, next month we could be back to $420,000," Karevoll said. "When you have such light activity, prices tend to jump around a lot more."

Debbie Rodgers, president of the Conejo Valley Assn. of Realtors, said a glimpse at her area's inventory showed how scarce homes on the market were becoming. This week there are about 275 homes listed, compared with some 600 on a typical day in 2001. The seasonal nature of real estate sales, however, also explains last month's lower numbers, she said.

"January's numbers are always going to be lower, because you're coming off the holidays," Rodgers said. "When you will see more inventory is from March until June, when people want to move around the end of the school year."

The limited supply appears to cause the greatest pinch in the lower price ranges, which historically attract most first-time buyers, said the Westlake Realtor.

"And entry-level homes — a townhome, not a house — are going for $350,000 to $425,000. Anything under $400,000 is barely available," said Rodgers, adding that multiple offers are still the norm.

Ojai Realtor Don Edwards, president of the west county's Coastal Assn. of Realtors, said his city was experiencing similar supply problems. This week there are 57 single-family detached homes listed in the Ojai area, down from 78 in mid-February 2003.

With fewer rivals out there, some sellers have priced their homes as much as 15% or 20% above current market rates, waiting for appreciation to catch up to their asking price. The result, Edwards said, is a hike in the value of nearby homes.

Such price escalation causes buyers to consider neighborhoods in Santa Paula, Fillmore and Oxnard rather than more expensive ones in Ojai, Ventura and Camarillo, he said.

"As long as you have people needing housing, you're going to have continued demand in Ventura County," said Mark Schniepp, director of California Economic Forecast.

He expects the local median price from the California Assn. of Realtors, which only tracks existing single-family, detached homes sold by professionals, to exceed $500,000 when released later this month.

The hot housing market prompted local builders to begin construction on nearly 3,600 dwellings in 2003, the highest total in three years.

A closer look at DataQuick's January figures shows the median price for new homes rising 22.2% to $595,000, with the median for existing homes climbing 30.7% to $456,000.

Ventura County had a median price of $389,000 for all of 2003, according to DataQuick. Karevoll said that if mortgage interest rates remained below 6%, he would not be surprised if the annual figure rose to $460,000 in 2004.

Economists at UC Santa Barbara Economic Forecast expect median home prices to grow more slowly this year, to a 12-month average of $424,700. This would be followed by an annual median of $460,200 next year, according to the university's annual forecast presented Thursday morning at a conference in Oxnard.

Dom418

That says the MEDIAN housing price increased by 20+%. that could be achieved by the building of larger, more expensive houses, not neccesarily by the value of the existing houses increasing in value.

Also, if old homes are being torn down and replaced with more expensive houses, that will cause the MEDAIN value to increase as well.

That article isn't talking about the exact same thing we are.

CrockPot

first of all, show me exactly where the debate is about NEW houses rather than housing prices in general.

secondly, being that you're in chicago, and i'm down here in the trenches constantly looking at rental property for new and previously owned housing, i stand confident in knowing more about conditions here than you.

the plain and simple fact is that housing is in short supply in SoCal, prices are rising regardless of whether they are brand spanking new, or if they are older. my current house closed escrow back in 2002 for a shade over 200K, after refinancing/running appraisals once in 2003, and just recently in 2004, it has appreciated to 260K and 300K respectively. market conditions here have dictated that sellers price tend to ask for 10-15% above market value. and, this is an older house built in 1947. you tell me if this hasn't beat the MEDIAN price increase.