33 Comments

I appreciate your transparency and willingness to share on this topic!

In my late 20's my husband and I bought a "fixer-upper" in 1999 which was also facing a possible foreclosure so the owners needed to sell quickly, and we were able to meet their timeline. I think it was around 99k and we put down only 5% in down payment. Some of this money came from family, and some from savings.

Then in 2003 we sold that house, partly due to our debt situation (ex-husband's job challenges and our schooling were putting pressure on us). In those days, homes were "hot" in terms of appreciation, so I think the sale price was 140k. Fortunately the proceeds were enough to cover our debts before we divorced, so it reduced the stress of that process.

In 2004, I rushed into buying a condo on my own because I was worried that my savings would be frittered away after divorcing. Later, I realized that wasn't wise. When I struggled due to an unstable job market in 2006 as I was finishing my grad degree, I wished I'd kept the savings rather than rushing into buying again. In 2007 I struggled to sell it, but fortunately did so with a short sale just before the markets started collapsing in 2008. Though my mortgage company negotiated me for different payment terms, that process did a number on my credit, and took about 7 years to recover after that.

Very few people talk about closing costs! There are many fees like appraisals, inspections, title costs, mortgage origination fees, etc. This typically adds another 5-8% in costs relative to the purchase price for a home buyer. This is one reason why, unless you intend to stay in a place for at least 8-10 years, it might not always be a wise investment, and you may not recover your initial investment. There's also some complexity to the buying process, so I suggest working with a realtor and a mortgage officer who you trust, perhaps recommended by a friend in your local area.

Thanks for opening up the discussion on this. We definitely don't talk about this process nearly enough to help people weigh their options.

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Thank you for sharing your story, Cristy! Especially for sharing all of the non-financial factors that impacted your home-buying decisions and credit situation. Sharing these stories really helps us understand the nuances in this experience and why we can't ever fairly compare our experience to someone else's.

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May 20Liked by Dana Miranda

On renting versus buying…over the last 14 years we have done in basic maintenance:

Resided: $27k

A/C replacement: $5k

Chimney cleaning/inspections: $1k

Electric work: $2k

Replaced rotting bathroom floor: $1k in materials and hours of our own labor

Roof: $12k

Hot water heater: $2k

We’ve spent hundreds of hours staining the deck, trimming trees, fixing the fence, painting the garage door, fixing the sprinkler system and blowing it out each year.

And even more on cosmetic work like adding a patio, gardens, replacing lights, painting the inside, etc.

The only reason we come out “ahead” is due to the obscene market that we were very privileged to be able to buy in 14 years ago.

I tell my sister she should stay renting as a single person. She has a LOT more time and money for non house related hobbies, can travel easier, etc, with renting a nice townhouse.

(Comment below with house buying story)

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Thanks for sharing this! As a single person, even if I could afford to buy, I wouldn't right now, because the cost and work of owning a home isn't something I want to take on alone. I feel like I'm starting to hear more people say things like this (being more open about what homeownership really entails and that it might not for everyone all of the time) but in a culture that places so much emphasis on owning, it's important for people to talk about it realistically like this!

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May 20Liked by Dana Miranda

We own a house at 45 as a teacher and a nonprofit worker because:

In 2004, in our early 20s, we were given $10k as a wedding present from his parents. He got a professional job right out of college. His mom was willing to co-sign the mortgage with me and her on it (professional job didn’t start until months later) saving us from a subprime loan. I had good credit as I went to a very cheap state college, and my parents paid tuition.

We bought a $136k basic old house, and poured hundreds of hours of sweat labor and about $5k into it using skills learned growing up and taught to us by family as we needed them.

When the market crashed in 2010, we weee able to sell the house for that same $136k due to the massive upgrades and buy a fixer upper foreclosure in a small bedroom community where we work for the exact same price.

We were able to borrow $6k from his parents to fix the items the lender insisted we fix but held our cash in escrow while we fixed them so we could do most of them ourselves instead of using a contractor that would cost more.

Having family who was in a place financially to offer a substantial gift, a loan, and pay most college expenses plus getting jobs out of college that were stable were the big keys.

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Thank you for this story and for the details of what you've put into the house as an owner. I agree with Jamie that homeowners need to talk more about what goes into maintaining a home, especially the time! The personal finance space gives some attention to the financial requirements, but that's still treating a home as primarily an investment. It's important to understand the time and energy and psychological commitment a home can require, too — the biggest reason I waited so long to buy and why I thought I'd be a lifelong renter.

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Although I'm hearing more people talk about how buying isn't necessarily the unvarnished benefit we've been told it is, and that renting actually has some benefits, I do still hear "but equity!" a lot. I'm not a financial expert, but surely you really only benefit from equity in certain circumstances - where you buy, when you buy (market fluctuations), if you can afford improvements, etc., right? I know you said you can't even with equity, haha, but that's something I think would be helpful to hear more about, because it does seem to be a pretty universal assumption that that's a good enough reason to buy.

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This is all great stuff to think about! I "can't even" with the *argument* about equity, because it's so complicated, as you're pointing out. And because it turns our living spaces into personal investments 😝

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May 20Liked by Dana Miranda

Plus, equity is the reason housing is such a mess. The whole framing of housing as an investment instead of a human right is not good in my opinion. Says the person owning a house- it's "easy" for me to say that since I have no intention of moving ever.

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Yes! It's completely ruined our access to housing. And when individuals learn to see their homes this way, it makes people constantly think about the monetary value of their space, rather than the use value. So everyone ends up living in beige homes with curb appeal and kitchens full of appliances their family (maybe) doesn't use.

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Absolutely. The whole idea that housing is something to make money off of, not a human right, is deeply problematic. We see that as investors buy up housing stock to flip it (making it unaffordable for first time and/or low income buyers) and in the whole concept of landlords who own housing that we have to pay them for.

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I own my home and I don’t even understand what equity is, despite it being explained to me more than once.

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May 20Liked by Dana Miranda

Thanks for sharing! I worked through a lot of anger when I was a young adult and realized just how much help other people were getting from parents, etc. It’s hard not to feel behind. But I’m happy with renting and I’m glad you’re putting out the message that it isn’t inherently worse than buying. A fixed expense (rent) has its own benefits.

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So many benefits!

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May 20Liked by Dana Miranda

Purchased our first home in 2020 (2,700 sq ft for 2 kids, 2 adults, I believe a 3.5% interest rate), moving from NYC (Queens) to PA (after a decade of renting a 750 sq ft apt for the 4 of us) where my partner has family. I grew up as a renter in Detroit and never felt home ownership was in reach nor was I sure I wanted the burden or fear of being stuck in place. The pandemic changed that, I suppose. With no savings due to the high COL in NY, we used a HELOC for the down payment from my partner’s first home purchased before we met (partner lived at home with parents after graduating college and working as an engineer, his parents also took out parent loans for his college). We removed me from the mortgage since my credit score was lower and apparently causing a higher interest rate, yet I am listed on the home as co-owner, which pissed me off, since both of our credit was fairly similar / consistent full-time work histories. I felt the process was so invasive and felt shame at not having savings and loads of student loans. Once we moved in we planned to use some of the HELOC to cover furniture and unexpectedly had to install a water filtration system. We chose a new construction townhome with a low HOA fee, hate the HOA and will never again go that route due to the petty restrictions and neighbors who report you for “violations” without the courtesy of speaking. After a lifetime of renting old homes and apartments and knowing we lacked time and energy for repairs, I didn’t want a house that required any fixing, so very much a cookie cutter townhome. We’re getting by with two incomes and are overall less stressed than living in NY, but we are up to our eyeballs in credit card debt, but yay, equity (not)! I really feel like the US is one of the hardest places to get by and feel pretty grim about our ability to get and stay out of debt without a major overhaul, which is perhaps the point (letting go of the fantasies sold of the outdated model of home ownership, climbing ladders, traditional family trappings of multiple cars, vacations and mindless consumption, etc).

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You make so many good points in here, I don't know which thread to follow! Your experience of the lending process as invasive and shame-inducing really resonates for me. A side of me appreciates the regulations we've added on mortgages since 2008, because they protect buyers from being led toward loans that are too risky for them. But maybe we should place more of the responsibility on the lenders — not just to investigate our creditworthiness, but to simplify the loans and provide proper guidance through the lending process?

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May 20Liked by Dana Miranda

This was great, thanks for sharing. As a Sydneysider, with the prices of small apartments above $1 million, I’m trying not to be too envious (even if your town is conservative).

I’d love to hear more about how friends can - and should - buy property together!

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I absolutely love that suggestion! I've heard some stories of non-romantic housing partnerships, and I love the way people are trying to bend our understanding of community and wealth with this movement.

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Ooo yes, something I've vaguely thought about. Would be good to hear more stories about this (of they exist)!

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THIS: “Why do we hold up homeownership as the gold standard of adulthood and financial responsibility in this culture? Why are we all expected to aspire to this?”

This resonates with me so much, including but also beyond homeownership. I’m turning 36 in two months and feel like the wobbliest giraffe in this thing called “adulting”. I feel so behind.

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May 20Liked by Dana Miranda

In 2007, at the height of the housing boom, we bought our 2480 sq ft house in Tulsa, Oklahoma, for $165K.

The original asking price, which we agreed to, was $185. We had arranged for a down payment of about $8500. But (re:2007) when the bank appraised the house, they valued it at $165K. The owners accepted that offer (I think they had paid something like $110K-$120K 7 years before) and we took out a loan for that exact amount and used the planned downpayment to buy furniture instead. Interest was over 6%. I forget the exact number.

At that time, in 2007, I had been self-employed for 8 years and my wife didn’t have a job. So we had some extra hoops to jump through for the bank paperwork. Like accounting for variations in income year over year. Fortunately, my software business had begun to see some success (which was why we decided to buy a house) and I had had a couple non-fiction books published. So that wasn’t overly stressful.

Original payments were in the $1600 range. In 2008, during the crash, the mortgage went “upside down” but we weren’t selling, so it wasn’t an issue.

In 2017, we refinanced to take advantage of the increased property value and get rid of the PMI. That reduced the payments significantly, but of course tacked on another $2500 in fees and extended the mortgage out to 30 years again.

By that time I was no longer self-employed, but I had only just started my new job. So again with the bank paperwork hoops. But we got the interest rate down to 4.25%, I think. Payments are currently in $1400 range. Oh, and we were able to avoid getting a new appraisal for the re-fi. The bank more or less just shrugged and went with comps. Which was enough to move our equity over the 20% mark.

My running (tired) joke is “Home ownership is a scam.” =) You have to mow the lawn and fix the leaks—or the bank gets cranky.

In 2022, we opened a HELOC so we could start improving the house. That process was straightforward, since by then I had 5 years of employment behind me, and we didn’t go for the full equity. With that we’ve put solar panels on the house and had foundation work done and similar big-ticket items. Since the HELOC has a higher (and variable) interest rate, I prioritize paying that over the base mortgage. Though we have paid more on the mortgage since the re-fi to trim those 10 extra years.

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May 20Liked by Dana Miranda

Oh. I meant to mention: Our credit rating in 2007 was … recovering. In 2002 and 2003, in the wake of the dot com bust, we had to take our credit rating out back and kill it for food.

Ah, the memories. Going to credit counseling and being told to find a job. Because, yeah, that hadn’t occurred to me… Having credit card collections calling our neighbors after we stopped taking their calls. Finally finding a way to consolidate the credit cards and freeze the balances. We didn’t get that mess fully paid off until after we sold our first house in 2007–which didn’t happen until 2-3 months *after* we bought the house mentioned above.

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Oh, the predatory debt collectors! I think a lot of that has been improved with policy, too. And with cell phones and caller ID :)

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Great post, Dana! The process of buying a home should be demystified...but here's the secret: the literal process is not that complicated. Mortgages aren't complicated and neither are the other requirements of buying like title insurance, property taxes, etc. You most certainly do not need a real estate agent — they and our larger culture have just convinced us they are necessary to handle all the paperwork. My then-husband and I bought our house for sale by owner, and we had not enlisted a real estate agent to work on our behalf. Even though I was practicing law at the time, I hired an attorney to look over the contract, which is a smart move, although real estate contracts are standardized and you can retrieve a contract for your area from your local or state bar association.

I understand the larger issues can be complicated, as many of the other commenters have noted.

The story of my purchasing my home is not nearly as interesting as how I lost that home to a near foreclosure, and what I learned through that process—yuck!

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This is a great point, Joan, thank you! I didn't use a real estate agent or a lawyer when I bought my house, and I feel comfortable with the outcome. You're probably right that it's not as complicated as everyone involved makes us think, but they seem to keep all of the parts intentionally disconnected and obfuscated so it's hard to put the pieces together. I do think the cost of mortgages is as complicated as it seems — amortization turns my non-mathelete brain into knots! — but that could be made a lot simpler with some political and cultural will.

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Exactly— the various parts are disconnected and overseen and regulated by different govt agencies. And as to real estate agents… the recent court settlement by the Realtors Association proves there was collusion between the buyers and sellers agents. It’s not pretty.

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I’ve bought four houses. Still own two of them. I’ve written about this extensively on my Substack, Untrickled. I live where houses are “cheap” or I’d never be able to do it.

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How do you use your second house (assuming you live in one of them)?

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I couldn’t sell it so we rented it — terrible situations ensued. Now my son rents it, and it’s a perfect situation for all of us.

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I’m in the UK and was extremely lucky to buy my first property at age 19 while at university - it cost £45k, I had an inheritance of £15k - £5k went in as the deposit/down payment and £10k to making it liveable as it was a wreck. The monthly mortgage payments were less than my student rent due to tax relief - the 90’s!

27 years and four properties on we’re trying to move again as we with two teens we need more space (living as a family of practically 4 adults is very different to 2 adults and 2 little kids but we didn’t really think that through when we bought our current place) and I’m really questioning whether it’s worth owning property vs. renting - the hassle, costs, high taxes (we’re in Scotland where property tax is higher than the rest of the UK) - it’s eye watering. The city we live in is v.popular and people bid crazy amounts over valuation and it feels ludicrous, like something I don’t want to be a part of but renting can be really unstable - there aren’t many protections here to stop landlords deciding to turf you out at short notice.

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I LOVE this Dana! It should definitely not be shrouded in so much mystery and it's a horrible way many things are done. I often wonder where is the transparency? I find myself having more conversations with people about everything. It reminds me of the time I called my private health insurance to discuss the codes for surgery and how my specialist wouldn't work with them for a gap payment. The lady on the phone told me a personal story of her own experience and how she called around to many specialists to find one for her. We do not share enough of our own experiences. Especially with finances.

I started working much later in life due to my mental health and got my first job at 25. I've been renting for 7 years now and each year I think maybe next year will be the year we can buy a place of my own. But in Vic/Australia the average house price is often over 750k. It feels very bleak some days. I always hated that housing was viewed as "investments" and that I "could" buy a house for $400k-$500 but only on their terms. Which are quickly built in cramped estates on tiny blocks with no thought for the future or will simply just fall apart.. Our own rental is one of these houses and thankfully we were the first ones in here but there are many things that weren't done well. I feel dirt and rocks under some of the carpet areas. And I feel sorry for anyone that does eventually buy this home.

I feel fortunate that at least my partner's parents have offered to go as a guarantor for us like they did for his younger sister. But that also brings shame to when or if it does happen and having those discussions on our borrowing power to how much money will we actually have for the deposit considering we ended up using some of the savings we had been gifted in times of financial stress especially during covid or to help my partner with taxes.

I do enjoy renting and our landlords are really nice country people but I would like more space for a garden and to have people stay with us and to be closer to my partners family. At the same time owning a home feels very exhausting when I begin to think about all the processes that go with it. It's not straight forward. It's always been touted as the great Australian dream to have a house and a big backyard. I know everyone is on their own journeys and I love hearing all the different stories. Purplepingers aka Jordan van den Berg is talking heaps on the subject of housing in all forms and how many vacant properties sit empty for years even decades. We need more transparency into the types of rentals and the houses that are up for sale. Because the relators and banks ARE selling a product. Rentals and houses in such bad living conditions and no one is saying anything. There was a house I drove past all through my life. It was near a river that flooded every time after heavy rain and it would reach the house every time at least a few feet was underwater. And every time that happened they sold. It was sold and brought so many times. Having knowledge of what your buying or renting is exhausting too.

I always feel more educated when I hear about other's experiences so I'm very grateful to everyone that has shared. I've slowly been shredding the shame of not being in the position of someone else in regards to home ownership. There is just so much more than that. We are all in different moments of time, with different experiences and opportunities.

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Thanks for this. It is such a helpful perspective to have. My finance and I are recent homebuyers, only because her dad passed away and left her some money. Since we have kids it felt important to end the cycle of having to move and uproot the kiddos and ourselves to every few years.

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I want to add more details to my previous comment.

Back in 1990, my first husband and I bought our first house for $37,500. Our interest rate was 9.5 percent, which was normal then. We went FHA, which allowed us to pay under 3 percent down payment. We borrowed it from our parents -- I think about $750 from each side. We were recently out of college, had a baby and very little money. We sold that house about nine years later for $47,500. The neighborhood had deteriorated and we wanted to move to a better one. I'm so grateful we bought that house because it put us on a rung. We still don't have an expensive house, but it will be paid off in a year or so. I'm 58. Having a paid-off house is an important part of my plan to survive in my older age. If I were to rent, I'd always have that rental payment. If I live to be 80, I'll have no mortgage or rental cost for the last 20 or so years of my life. Yes, I'll have insurance and property taxes and maintenance, but if I rented, my landlord would also have those costs and would pass them on to me, plus I'd be paying an additional cost for their profit. No thank you! I want to own. (And if you saw my other note, we still own House No. 3, which we couldn't sell when we bought House No. 4 in 2008. My adult son is happy to live in one of his childhood homes and he prefers to rent for reasons of his own. That house will take us a few more years to pay off, but we'll eventually have it for rental income or to sell or perhaps to move back into, as it's all on one level and ideal for elderly people, which we're well on our way to becoming.)

https://medium.com/illumination/my-house-is-my-home-not-an-investment-169ac2b4a5a8

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