We are constantly told that buying a house is the best investment we could possibly make, especially by the media. Is it really? In this essay, you will find out, to your amazement, that, the way people currently buy homes and from a purely financial perspective, for the vast majority of people, buying a home is absolutely the worst investment they will make in their lives. You will also learn again that, if you believe 10% of what you see on TV or in the movies, you are grossly misinformed. Most of the stuff you get from the media is just bull crap.

Marketing

The constant bombardment of marketing we get from the housing industry, politicians, and media is designed to keep you focused on certain elements to prevent you from realizing you are being taken for a ride. They tell you what they want you to believe to keep you from finding out the truth.

First, they work hard on selling you a home based on the evaluation of homes. For this evaluation, they compare the price of new homes being sold today in relation to the price of new homes that were sold 10, 20, or 30 years ago. That is a deception. If you check out the selling prices for new homes from 10, 20, and 30 years ago as compared to the price of THOSE SAME HOMES TODAY, you would find that most of those homes have increased very little in value, if any. There are a number of reasons for this and the most responsible culprit is a thing called urban crawl. Yes, they know about it and have a name for it.

There have been exceptions to this such as the 1960's when there was a growth boom in the US, recently when the commie government created this housing bubble, and in some areas where people started wanting to fix up old homes and live in them because of a housing shortage in that area. For the most part, most houses in this country have not really increased in value very much since their sale. This is especially true following the recent housing bubble bursting.

Urban crawl is the main culprit causing this to be true. What happens is that, when you buy a home, the next housing contracts are building nicer homes in a different area which people of the same socio-economic level prefer so that the same socio-economic level of people stop buying homes in your neighborhood and definitely don't want to buy used homes when they can afford the nicer new homes. This quickly decreases demand for homes in your neighborhood which suppresses the market value for your homes and causes a different group of people who cannot afford the nicer new homes to become the people looking at homes for sale in your neighborhood. This means that most neighborhoods which start out as upper middle class neighborhoods will eventually become a at least lower middle class neighborhoods. This keeps the value of the homes from increasing much, if at all.

Another thing which effects this significantly is area economics. When enough of the better paying jobs disappear and people begin moving out of a neighborhood, demand for those homes by people from that socio-economic class dries up causing the demand to shift to lower socio-economic classes. This can cause homes to actually depreciate in value and become less and not more valuable so that a middle class neighborhood becomes a lower class neighborhood. This permanently suppresses the value of those homes.

Here is some food for thought. Until the commie's started the poor housing contracts a few decades ago, no contractor had every built homes for the lower class but there have been lower class neighborhoods for well over 100 years. All of those neighborhoods started out as middle and even upper class neighborhoods and became lower class because of urban crawl. The middle and upper class neighborhoods are almost always moving in almost all communities so that most homes really do not appreciate much in relation to inflation. Therefore, the price of new homes today being compared with the price of new homes from any time past doesn't mean anything.

Next, they will have you focus on the principle you will pay for that home in relation to the increasing costs for new homes to make you think you will end up owning a home which will be worth much more and, therefore, be a very good investment. Part of this is to keep you from paying attention to the other costs you will pay for your home, especially the interest on the mortgage. For example, on a $100,000 home with a 30 year mortgage at 10% interest, they WILL NOT work the math for you to show you how much you will pay for that home. When the true cost of the interest becomes an issue, they will further deceive you by telling you that the interest is tax deductible in such a manner as to cause you to think you will get all that interest back from the government in taxes every year.

First, let's look at the interest and I really love this because one of the cons for selling homes is to tell you that paying rent is throwing your money away. You should know that financial experts call the interest on a loan rent on that loan because rent is just what you pay to temporarily borrow the use of a property including money. This means that the interest you pay on a loan is actually rent you are paying for borrowing the use of that money and rent is rent.

Second, if you figure out the rent on the money you are borrowing to pay for your home with a 30 year mortgage at 10% interest, you will find that you have to pay that 10% of the total of your loan every year for the full 30 years you have that mortgage. It only takes basic math to realize that every 10 years of the mortgage, you will pay the full purchase value of the home which means that, with a 30 year mortgage, you will pay 3 times the purchase value of the home in rent on the money you used to purchase the home. This also means that, when you include principle and interest, you will pay 4 times the purchase value of the home which means your home will have to appreciate 400% for you to break even on the investment and few homes achieve that. In other words, you are going to lose money on your investment. That is never a good investment and we are just getting started.

Now let's look at the tax con. YOU DO NOT GET THE FULL AMOUNT OF YOUR INTEREST ON YOUR MORTGAGE BACK IN YOUR TAXES EVERY YEAR OR ON ANY YEAR!!!! Get that straight and deal with it. The way it works is like this. If you pay $10,000 in interest on your home mortgage, then you will get to DEDUCT that $10,000 or part of it from the income on which you will have to pay taxes next year. So, if your income is $30,000, you will not have to pay taxes on $10,000 of that $30,000 which will actually save you only about $2,000 in taxes. BUT since you will have to pay 2% in land taxes or commie rent on that $100,000 home, you will end up paying that $2,000 which means you won't save a dime on taxes. If anything, you will probably pay more.

Then there are the other costs for buying and owning a home. These include a nice fat closing fee to the financial institution where you get your mortgage, another fat fee to the realtor, insurance, sales taxes, and other such costs. This can easily take the real cost of a $100,000 home with a 30 year mortgage at 10% interest to well over $400,000 and the vast majority of homes will not appreciate that much in real dollars (less inflation) in 30 years.

Then we have the more recent scam permitted by our loving politicians which permit the lenders to "front end load" you mortgage so that you only pay interest and no principle on your loan for the first 3 to 5 years of the loan. They do this to make sure they will get more rent on your money than you will borrow the money for in the event you sell the home before the mortgage is paid off. That is like forcing you to pay more rent on a apartment than for how long you lived in that apartment. The Bible would call this stealing.

Then there is the equity risk which is completely assumed by the home buyer and not by the financial institution. Any value of the home which is lost do to a decrease in property value for that neighborhood will be taken from the home buyers equity until the equity is all gone before the lender loses any money. When your equity is all gone, the lender will repossess the home, sell it to get their remaining money out of it, and you lose everything, every dime you put into that home.

Let me show you a different way to purchase a home with you being the capitalist and not the lender being the capitalist. I am going to show you how to save a lot of money and even make your home a good investment. What I am going to do is show you how to pay rent on an apartment instead of rent on money to have your house paid for in full in just 12 years. This example will be over simplified to make it easier to follow the numbers but you will actually do things just a little different making more money sooner especially with your investment portfolio. I will do a comparative analysis between buying a home the normal way and buying a home my way. We will assume the $100,000 house you want will have a 30 year mortgage at 10% interest so that you would pay a little over $1,111 per month on the mortgage and you can get a nice apartment for only $500 dollars per month. What you will do is rent the apartment for $500 and put the rest of what you would pay for the home mortgage into a bank account and transfer that money to your portfolio at the end of each year with an annual interest return on the portfolio of 10%. (For simplicity, I only put $500 in my portfolio every month while renting and then $1,000 per month after I bought my home meaning I would actually put more for each year in real life.) I will show you on a year-by-year basis how it will work out and the difference in your investment at the end of the 30 years. Note that this is a very conservative estimate and to see what it will cost you in your market, all you have to do is change the numbers to match those in your market.

What I will show with the below table is cumulative values on a year-to-year basis and it will be simplified. For example, I will not move saved money into my portfolio until the end of the year so there won't be any interest shown on that saved money until the end of the following year when, in practice, I would move that money into the portfolio as soon as possible to increase my return as quickly as possible. At the bottom of the table, you will see the differences between the way you are taught to buy a home and my way.

Note that this table doesn't include things like sales taxes, insurance, and other costs for the mortgaged home and does not include savings from things like utilities by living in a smaller apartment.

Notice in this that I bought my $100,000 home for cash in the 12th year with enough money for such things as closing costs and realtor's fees AND in the 13th year, I began putting a full $12,000 a year into my portfolio when I would have actually put in the $13,000+ I would have paid for the mortgage. I only paid $72,000 for rent on the apartment and got my house for its value of $100,000, and still have $547,190.08 in my portfolio while the mortgaged home cost me over $400,000. The difference is one million dollars in your favor. And folks, that is how a capitalist does it. Isn't capitalism great? :-) If you do it their way, you're getting screwed, aren't you.

And you stupid commie's thought you knew what you were talking about. :-) Get a clue. Capitalism is fantastic for those who know how to use it and use it right.

It is time for revival on a global basis. Acknowledge your crimes against God's Laws, repent of those crimes, and seek the amnesty of our Lord Jesus the Christ. John 3:16 - For God so loved the world He gave His only begotten Son so that who so ever believes in Him will have everlasting life.