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Old 10-02-2009, 01:17 PM   #38
rolnslo
Rolling along...
 
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Drives: 2011 2SS/RS SGM
Join Date: Mar 2008
Location: Houston, TX
Posts: 4,366
So, I'll throw out a few things for you to consider...

1. Property taxes in Texas suck! Depending on where you buy, expect to pay between 2% and 4% of the value of the house every year in taxes. Buying new? Expect to be closer to the middle to upper end of that spectrum. I live near Houston but in a rural area outside of a subdivision. My tax rate is 2.14% or just over $2400 a year ($200/mo) and I live in a modest $115k house on 1.25 acres.

2. Depending on your income level and the amount you finance to buy a house, the income tax advantages of being able to write off mortgage interest are questionable, at best. I'm married and for the last 2 years, I've barely cleared (less than $500 difference) the standard income tax deduction by itemizing my tax return to be able to count the amount of money I spent on mortgage interest and property taxes. I could rent and pay no mortgage interest and come out about the same when paying income taxes.

3. Housing prices in Texas will never reach the levels seen in the rest of the country. San Antonio and Houston are prime examples of urban sprawl. Rather the containing growth, they'll just build more roads that go farther out from the center of town and then fill in the empty space with more subdivisions filled with affordable new homes (built by inexpensive sub-contractors). All those new homes keep existing home prices down. Don't let people try to scare you into buying now because prices are down. Hell, in Texas, they're always down...It's part of why I left the housing bubble in Seattle a little over 4 years ago. I bought nearly the same thing (age, size, land, build quality) my sister did up there but down here in Texas, I paid less than half of what she did.

4. It's a lot easier to sell your car and break an apartment lease if you get into financial trouble (i.e., lose your job) than it is to sell your house. Sure, your car is a depreciating monster but there is always someone (Carmax) that will buy it from you on short notice. Try that with a house and you'll find it difficult to do. To be able to sell your house, you either have to have enough cash or equity to pay off the mortgage plus pay all the closing costs and realtor fees. If you only pay the scheduled mortgage payment, it takes years to build up enough equity to do that. For example, my affordable $115k house that I bought over 3 and 1/2 years ago has only been paid down $4k on the original loan balance despite monthly payments in the range of $1100-$1200.


Just thought I'd throw that out there for something to think about. If you can get an apartment with a garage, you've got 80% of what you'd have in a house. The only thing missing is long term equity building but you could also do that with a savings or investment account instead.
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