don't own your own home! ???

I guess I am just way too old-fashioned and conservative. I like knowing that as long as I can pay the "rent" (aka property taxes) I can live here growing my own food and heating my home, water and cooking from our own deadfall wood. We worked very hard to pay off our mortgage just as fast as we could.

...slight deviation... but relevant.

When I knew I was moving to the N.Central WI area, we applied for a home loan. We were pre-approved for a certain amount. With that ammo, we went house-hunting. Each place we viewed had at least five acres and the largest had 120.We ranked the houses and land for amenities, location, lay, outbuildings, etc. and chose the one we wanted. It was 40 acres with a farmhouse and a run down outbuilding or two, but the lay of the land was PERFECT (almost all slight south slope with an incredible view).

We went back to the mortage company and got approved for the loan through a bank in IL. For those who know the Chicagoland area, our mortgage company was Barrington Mortgage (one of the larger - and I'm embarrassed to say - hoity toitier) but we had a friend who worked there.

This bank got the deed, appraisal, title info, and all reports from the sale and approved us. I got in the car to drive north and go to the bank, and 2 horus into a four hour drive, my wife called crying... the bank had now turned us down. WHY? Because they - weeks later - just now noticed that there were more than x acres and this qualified as a "farm" which means the bank cannot second the paper to the Federal Government (the real issue) thus they won't approve the loan.

I called the mortgage company and they went ballistic. The bank had already given them written approval, and they wanted to go to court. They called the bank and the bank refused to honor their agreement. Long story short, the bank (after a few days) pulled the septic report and used one of the comments on it to get out of the original agreement, thus avoiding a lawsuit. Barrington Mortgage however dropped that bank as a client, which hurt them FAR more than my lawsuit could have.

So, in the remaining two hours, my wife - god bless her - called and called... finally finding a local bank who was willing to carry the paper themselves and put the owner's money in escrow on the septic... thus creating a kosher deal. With 10 min left in my drive, I knew where I was going to meet the sellers. Talk about STRESS!!! (Thank you God and my wonderful wife).

The bank carried our paper until the septic was complete, and then we refinanced the entire deal at 4.3 % FIXED!!!

Now, ask me if I like banks? I hate them and the very concept of them... but this local bank gets my business until I draw my last breath, and everyone's business that I can tell.

R

i imagine there are some cases where this would be true. i guess there are predators everywhere. just look at the supreme courts decision concerning iminent domain. that is predatory real estate business at its greatest.

several years ago i heard of a family in myersville maryland that lost their home when they were sued by relatives of "former" owners of the property. apparently the "current" family living on the property did not have a clear deed. they paid taxes on that property for over 30 years. they lost the court case and lost the property. i suspect that the property in question was not in dispute for many years. i do suspect that someone got curious and researched and found a loophole and for the sake of profit, filed a lawsuit. all property in this area has skyrocketed in value with the development that is happening here. i suspect that real estate predators are looking for easy lawsuits like this everywhere.

having said that, property taxes can range from $800 per year to $3500 per year in my area. even if it is a "low" $1200, that is $200 per month. insurance can be $100 per month. mandatory sewer and water hook-up fees depreciated over ten years + the cost of quaterly bills can be $100 per month. already that is $500 per month to own the property even if it is paid for. i begin to wonder if renting is such a bad idea?

Wow, lots of interesting opinions. I guess I agree with Diane - I just have always wanted to OWN my own home. That's the American Way, isn't it? Plus I want to have a good job with a good pension and lots of savings so that when I retire around age 65-70, I can putz around on the farm for the rest of my life and garden and ride horses and harass chickens!

Renting is a horrible idea, Why would someone live where the taxes are so high? just move to a state with much lower taxes.

__________________
marching to the beat of a different drummer

That's what insurance is for. Pay off the mortgage. Pay off all debt. You are much better financially that way. The chances of someone suing you are far less than your losing your job, having health problems, etc..

A good friend of mine was employed by a bank as a lending officer. I asked him what the bank's position was regarding mortgages. He stated that they were told to enthusiastically encourage all their good customers to borrow the equity built up in their homes. I asked him if that was what he was doing with his own mortgage. His answer, "I am paying off my mortgage as fast as I can!" One needs to be careful where they get their guidance.

__________________
Agmantoo
If they can do it,
you know you can!

I wonder whats ahead when the realestate buble bursts. And the "dollar" is in for some shakey times ahead.
Nope I'm not gonna follow *her* advice and put a mortage on here.
Its a good feeling not to owe any bank anything.

Now iffin I could do away with the ---- property taxes........

Red Devil makes a very great point. Local banks know the land and the people and make good loans. I wonder how much of this stagnation is due to there being fewer local banks that can make intelligent decisions.

Even if I lose it the day after it's paid for, my number one goal is to pay off the mortgage on my house/farm. There is too much litigation in the US, but the worry associated with that does not compare to what I feel from having my home "threatened" with debt. Since taking out my first college loan, I've been in it (debt) for over thirty years, and it is time to be rid of it. God willing and my health holds, It will be gone in a couple of years. Now, death and taxes will probably linger a while longer...than I will.

Some people are more comfortable with debt, and I actually know more than a few who want to leave as much of it as possible on the table when they pass. In their minds, they win in that scenario. Different strokes for different folks I guess.

We also had a difficult time getting a loan for our farm. We have excellent credit, but anything over 10 acres here is considered a farm. Legislation exists that makes it more difficult to foreclose on a farm than on a "residence" so banks are reluctant to loan money on farms because they are less able to foreclose if necessary.

We were able to find a (crappy) bank to loan us the money, basing most of the value of the property on the house and less on the land. Not sure of the ins and outs of it, but I do know that it was difficult to find a lender, and we were thrilled when we finally did.

T

Basically that real estate lady was talking about a lien. From what I understand, ANYONE can put a lien on your house and take you to court saying you owe them $$ then force you to sell your house or give the house to that person. Sounds that simple but really isn't. That was all that I learned a few days ago.

__________________
Ted H

You may all go to Hell, and I will go to Texas.
-Davy Crockett

I am an engineer. People love to sue engineers: though I have not been sued in 28 years.

Our house is a in a Family Trust. So we DO NOT own it, the Family Trust owns it.

So, pay off your house, but have it in a TRUST if you are worried about being sued. It's not too expensive to have lawyers and accountants set up.

Good Luck,

Alex

__________________
Thou art That

Do all engineers think alike Alex? My husband is also an engineer (yes, I am nominated for sainthood) and our farm is also protected by a trust.

She may very well be savvy - and successful. But I completely disagree with her way of thinking. Everything depends on your own personal situation. I owned income properties - therefore I carried an umbrella policy on top of the normal insurance policies. This protected my assets and if anyone decided (one did) to try and sue me, the insurance is gonna fight to the death to NOT pay out a dime.

After selling the last of my properties, I dropped the umbrella policy. I still have the normal auto and homeowners insurance policies. The farm's paid off, our cars are paid off and BOY is that a great feeling!

You have to use good judgment in who you allow on your property, etc. Use contractors that carry their own insurance, and so forth.

One thing to consider in a mortgage, though, is that if you can get a CHEAP mortgage, you may be better off investing the money. i.e., if your mortage is 5.5-6% and effectively lower than THAT because you get a tax break on the interest ... you're better off investing your extra money, or starting a side business with it, or whatever, than paying off the loan.

OTOH, it's nice having the house pd off.

I'm in the position of being able to pay off my home loan (fairly small loan) in a four-five years from extra money coming in from a web business. It's a tough call. Do I pay my loan off or do I plow that money back into other businesses? I like the security of OWNING it if the economy goes south. Then I've only got to scrounge up enough to keep the lights on and the taxes paid.

But if the economy doesn't go south, that money will make me a LOT more money plowed back into marketing for the site. Errrm. Tough call. And one I'm going to have to make.

It's sort've like poker ... when do you fold?

Leva

A licensed real estate agent is not qualified to give financial advice. He/she is considered competent to give real property advice. Certified Financial Planners are qualified to give financial advice. I have worn both hats.

Whether to have a big mortgage is a decision that can only be made in each individual case. One thing to consider: the farmers who lost their farms over the last 50 +/- years, were all in debt. The ones who kept their farms were not. USDA, and Cooperative Extension Agents are also not competent to give financial advice.

I personally would love to own property and a house free and clear. Gene Logsdon's books make sense to me.

__________________
Best wishes,

Sandi

"Anger is an acid that does more harm to the vessel in which it is stored than to the object on which it is poured." Corrie TenBoom

A mortgage is not for me.I owe $21,000 more and it will be paid off by the end of the year.God willing.

__________________
marching to the beat of a different drummer

Exactly how we did it. We will finish our house in february and move in finally. We put 72000 in cash in it over the past three years after we paid for the land. Now, the appraisal is at 285,000. That's free and clear to us...but i could never sell it now. DH, myself and kids put every part of us into that house. Absolutely no building experience at all before this. It can be done. No mortgage is the way for us. Of course, I don't know anyone who would sue us either.

__________________
Christanie Farm...living life as it was intended

Homeowners insurance protects you from many legal threats. If you have a lot of equity, or a lot of assets in general, umbrella insurance is also a good idea.

Over the last four years, my investments have made an average return of 12% per year. Despite that, I have worked to pay off my mortgages. I've done this by investing less, despite the fact that there is a six percent difference between my mortgage rate and my average return on investment.

Up to four years ago, I had paid off $130K in mortgage debt. If I had instead invested the money for the last four years, I would have $204500. After paying long term capital gains, I would have $193325. Subtracting interest on the mortgage, I would have $148925, so I would have come out $18925 better over the last four years

This makes me look dumb, but you generally cannot count on doing better than 10% over time. I also really have been expecting the market to do worse.

So, you can see the difference in real numbers. If the market continues to perform, you will make more money investing that paying down the mortgage. I would rather plan for bad times than depend on good times.