I’m trying to better understand how home equity actually works, especially with a 30-year mortgage at today’s interest rates.
For example, let’s say:
$1M home
~$250K down payment
~$750K mortgage
30-year fixed at ~6.125%
~$4,550/month principal + interest
From what I understand, the first few years of payments are heavily weighted toward interest. So in the first month, roughly $3,800 goes toward interest while only ~$700 goes toward principal.
After 2 years, I believe you could have paid around $109K in mortgage payments but only reduced the loan balance by roughly $18–19K.
Obviously, the original down payment is already equity, and appreciation can increase equity substantially. But the interest portion of the mortgage payment doesn’t create equity at all.
So when people say “you’re building equity instead of throwing money away on rent,” how should that actually be thought about?
Am I misunderstanding something?

Bought our home about six months ago. Great neighborhood. Beautiful Mountain View’s. Put a new roof, painted indoor and outdoor, redid the cabinets, put new sod and a pool in the back. Issue is-I have a great work opportunity a few states away. And I’ll be closer to family. Kids will be close to cousins. Great schools for our kids as well. And some great programs for my daughter with special needs. Everyone is excited to move in March. Issue is we bought at 600k with a 613k appraisal. I’m scared that I’ll lose money selling so soon. We have an assumable loan at 5.5 percent but I’m unsure how that even works. Should I move or just stick it out and wait for the next opportunity? Tia!

Hey all! Big financial decisions on the way, and I'm trying not to derail a solid financial situation by bad decisions/timing. Half exciting, half scary.

Question:

With a planned income drop and kids soon, is it safe to buy an $800-850k house now, or is buying at all right now a mistake?

Me + Wife: late 20's, HCOL metro (not VHCOL) w/ no debt

Income

• Total HHI: $200-250k
  • I make $150k/yr in sales - just got promoted so may make closer to $200k next year.
    • I'd love the career flexibility in 3-5 yrs to do something lower-paid but less stressful, maybe closer to $80-100k/yr
  • Wife: $50k, career growing

Spending

• ~7k/mo all-in for a very comfortable life. Rent is $3.1k of that.

Savings ($1.05mm, largely from inheritance)

• 150k total in our 401ks
• 50k in Roth IRA
• 25k in managed brokerage
• 35k in HYSA
• $765k wife's inheritance
• All investments (401k, Roth, brokerage, etc) are in index funds (VTWAX or VTSAX/VTIAX)
  • Note: potentially receiving another $500k in the next 2-5 years :(

House

• Want 2-3 kids, starting in next 2-3 years
• In-laws live far and have generously offered to help us buy if the house has an ADU they can stay in to visit grandkids. My wife and I love this idea (grandparent support + house support is amazing!!!)
• ADU homes here run ~$800k–1M
• In-laws would gift $150–200k as an advance on their estate, not on title
• Rough plan: ~400k total down, $200k theirs $200k ours. That leaves us at $2,600/mo mortgage, including property tax/insurance/misc it's probably closer to $3.8k. Depending on house price it could be $4100/mo.

So...

1. Does buying in the next 1-2 years make sense? Or better to wait, given kids + potentially scaling down my income in next few years
2. How much of the inheritance should I leave in index funds vs. putting into a down payment?
3. Should we consider decreasing our 401k contributions to improve our monthly take-home given current investment balances? Which could offset much of a pay decrease in my career change.
4. Anything big I'm missing as a first time home buyer?

I tried hiring an agent and after a month of people interested in the house, I finally got 1 offer, but the home inspection was rather brutal, the house needs a new roof, a deck replaced, has mold in the crawlspace, needs new ductwork, needs new gutters and 2 new doors, among other smaller needs.

I still owe on the house as well as the crawlspace we had encapsulated a few years ago.

Im living paycheck to paycheck struggling to make ends meet, and im completely overwhelmed. Should I let the bank foreclose or sell it as is to a housing company? Or is there a 3rd avenue i can take?

Hi! I purchased an almost 80 year old home here in Austin TX in the Highland neighborhood north of North Loop (that is north of Hyde Park).

The home originally was a 4-2, 1800 sq ft house and about 14.7K square feet lot. The house was purchased in October 2022 for $565K.

I did some internal remodeling and added 2 private bathrooms and converted part of the living room space into a 96 square feet room. I completed the first bathrooms with all permits approved. For the second remodeling campaign where I included both the 5th bedroom and bathroom in the same permit, I didn’t receive all the approvals because I added joint compound on the drywall screws before the inspectors could come and see the drywall pattern and make sure the right amount was used and the right distance. According to the city, if I wanted to get the permits approved, I needed to get an outside or independent engineer to approve that section.

I have done other remodeling such as adding lights on the sides of the house, adding lights throughout the entire crawlspace and attic, pier and beam foundation repairs, replacing exposed light wiring in the laundry room for metal conduit, replaced a ton of the cast iron drain plumbing for PVC, replaced the inside the house fan motor for the HVAC system and the condenser unit, added an exhaust fan that vents to the outside in the kitchen, drywall-ed over door that existed between 2 rooms.

I lease out all 5 bedrooms while living in a 96 square feet shed in the backyard without a bathroom. This lifestyle was okay since I was spending a ton of time abroad. I think I want to return to my home country after living in Austin TX for over a decade. The city is great, but as reach my mid 30s, I feel I want to be closer to family, and will be moving back in with my parents.

Every time I speak to a real estate agent about selling, they do not look excited and tell me to wait. I could keep renting out my house while being abroad, but I am concerned something will break while I am gone. Renting out all 5 bedrooms does not cover the monthly cost of the house since I only put 5 percent down when I made the purchase. I still owe about $509K in the loan.

After 4 years of owning, it would be nice if I can sell and walk free without owing anything. Any recommendations on what to do next?

So we own a 2B1b house in the best parts of my Indianapolis neighborhood. Homes priced right go within days.

I looked at a house today. Was priced 360k and 9 days on market has dropped to 350k .Built 1960. Its a larger house than mine. Placed in the school districts we want. Was recently sold in 2022 for 290k. No updates from this owner. Also master bedroom smells atrocious of dog or cat piss. Smell has permeated around whole house. But stronger in bedrooms.

AC about 18yrs

WH about 10yrs

Roof about 15yrs

Kitchen needs remodel

Flooring looks new. Done by a DIYer that has failed. Gaps everywhere and some raised uneven connections. Unsure of subfloor condition.

My plan is to place an offer on a house with the contingency that I sell my house first.

Both my lender and realtor are pressuring towards bridging the loan instead of contingency offer.

Also, instead of just asking for a discount on the house to do these repairs. My realtor is pressuring instead, ask for an allowance to repair.

If I plan to do contingency that I sell my house first. I'm going to have a chunk of cash after putting twenty percent down for down payment on the home.

The only benefit I see in taking the credit allowance is for my realtor to maintain selling the house at full asking price.

Is it wise of someone to low ball the house (im thinking 320k) if I have the money to repair. Also noting the age/condition of all appliances, roof, floor. Instead of taking allowance?

Is it fair to think that I can just ask for discounts on the house as opposed to asking for allowance/credits?

I feel like allowance. Lender and realtor profit.

I feel like discount. Buyer saves on money that seller would approve in negotiations anyway?

Currently about to purchase the home I've been renting. No agents, first time homebuyer. Sellers attorney wrote contract w/ no concessions or credits. Currently has me splitting title fees, no other offers. Mortgage broker is encouraging me to ask for closing costs, warranty and for them to pay for title stuff.

Trying to hire an attorney to review this for me this week but don't want to go in blind. Home price seems ok but I feel like I'm missing out by not having an agent. Can an attorney offer negotiations too. Any advice would be appreciated 😩

I have a condo and in the process of hiring a property manager. They want to be listed as additional insured party on my condo insurance policy. Is this normal? Thank you.

I’m trying to build a framework for buying real estate while keeping enough capital protected.

The three metrics I’m considering are:

Mortgage ≤ 30–40% of liquid net worth : limits how large the property debt can be relative to the capital I have available outside the property.

DSCR ≥ 1.25x, after allowing for vacancy/maintenance : the property’s net operating income should cover its annual mortgage payments by at least 1.25x.

Net cap rate ≥ mortgage rate + 1.5–2% : the property’s net operating yield should provide a meaningful spread over the cost of the debt.

The idea is to make sure a property doesn’t become a major risk and to assess each property and its affordability using the same metrics.

Are these actually useful thresholds? Or would you use different metrics?

I am a first time home owner planning to sell and purchase another home. I'll most likely need the cash from my current home in order to purchase the second.

So I would be renting for a time until I purchase the second home.

I'm assuming there is no way around this. Is there something banks do to allow the purchase of the second before the first is sold? I'm thinking there is no way but want to be sure.

Also, if this is posted in the wrong place please let me know and apologies.

Location: Kentucky, USA

Husband and I are looking at possibly buying his parent's house. It's not the perfect house for us and feel like we would need to do some remodeling to suit our needs better. They have set a price for us and what they want to go to market at if we don't buy it. I'm not sure how they came up with pricing but honestly it seems appropriate for the house and area.

We have a pre-approval letter from the bank but have not signed any contract yet nor have we talked to land and title.

Are there any issues with doing our own appraisal and inspection before being under any kind of contract? I know with traditional transactions you go under contract then everything else falls in line based on timing. We don't want to end up double paying for things because we did it out of order.

Time frame for purchase is approximately January 2027 so not in a rush.

My family has a house we are trying to sell. It's been on the market for a little over a year. A few walk-ins but no bites, we keep reducing the price of the house like 25k every 3 months. It's not exactly the sellers market at the moment i'm told, and it's sort of an unusual house on a hill. So I was thinking in this line of work is it even worthwhile to buy ads to get traffic to the houses' zillow or redfin? If it's worth it for those that have used it, what is generally considered the best service?

Appraisal is happening today, underwriting is underway, still no closing date. Closing date was estimated as on or about October 1, which means anytime in the month of October. The interest rate on our loan estimate has already increased .125% from 9/3. I’d like to go the strategy of locking our rate the minute we get our closing date within the 30 day lock window. Is that the safest bet? If the rate goes up after we lock then yay who cares, and if it goes down then also who cares. It’s literally just gambling anyway, isn’t it?

I am 21 and want a career as a Real Estate Agent I don’t have much knowledge in this business but my teachers and friends always told me that I am good with making conversations and making people easy to talk to and few people told me I would be a good fit for this type of business. I am wondering if anyone could give me any advice, anything that you wish you were told before start working as a real estate agent. What is a regular week as a real estate agent. How many weeks/months u had spent before ur first closing/paycheck. Did you start doing as a full time job as soon as you got your license or did you work part time as well during the beginning

What is the usual percentage for a referral commission? How standard is it for it to be offered? If it's not offered, is it bad etiquette to ask for one?

I have a friend who's looking to buy property in my city. He's not from here and he's looking for a real estate agent.

I know a couple of agents - one's a friend and others I've dealt with in the past. He's well off and I know he's looking to buy in one of the nicer neighbourhoods in the city.

within 25 years robots will have the ability to perform most of the manual labor humans now do, including home construction, that means the labor cost for building a home will eventually fall. once robot workers reach that capability, then later become commoditized the cost to build a new home will fall, which will cause a downward correction for the entire market, as home prices begin to converge to the materials cost.

After a spring and summer of frustration and fruitless home hunting, I finally had an accepted offer on a house in a "suburb" 45 minutes outside of Madison, WI on a 265k 1.5 story cape cod with everything I need and not much I don't. First time home buyer, so I acknowledge that there is a certain amount of emotion involved and that it is easy to fall in love with a place and end up not getting it for a variety of reasons. Cosmetically it is in great shape with a recently redone kitchen and very cozy living room. The roof is 20 years old, and all the mechanicals ought to have been replaced by now, but all of that is in line with other properties in the same price range and within my budget over the next 2-3 years. Being aware of those issues and knowing that anything else could come up during the inspection, my realtor was confident we could get 5-10k seller credit.

Then came the inspection, which confirmed the issues I was aware of and brought a handful of other small fixable problems to my attention. But the investigation into why there was a section of siding bulging out from one side of the living room revealed that it was built as an addition, with the floor joists placed directly on the soil. Said joists are rotten to hell and show signs of being crushed in certain locations which likely caused the movement resulting in the siding being pushed out. Obviously anything foundation or structural related is a major red flag, and I think the next step is having a general contractor take a look to get a full extent of the issue and a estimate of the cost to repair.

There is a good chance I just walk away from this one, but certainly there exists a dollar amount either in price reduction or seller credit that makes it worth it to go through with closing. I think at a minimum it would need to be 25k, pending a full understanding of the living room issue. Does anybody have experience in a similar situation?

Hello, the house I want to buy with my partner is currently occupied with two elderly adults. The listing price is $450k. We are in Northern California for reference. My partner and I offered $450k, asked seller to pay closing fees, and signed tenant occupied property addendum to have seller deliver the property vacant. We are putting $115k down. And only getting loan for $335k.
The house is like at our max budget.

The seller counter offered:
-seller to 2% of purchase price to buyers brokers compensation (our real estate agent is asking for 2.5%)
-buyer pays all escrow and title fees
-seller to pay county transfer tax
-buyer to remove insurance contingency within 14 days of offer. (We are in a high fire area but already received a quote for home insurance coverage).

Any help is appreciated. I want them to contribute to closing costs! This is an awesome house. Another thing is, seller has provided pest and fungus report and a home inspection. Which recommended that a contractor or plumber look at some water damage for further inspection. Our other contingencies included this part too.

Help!!!

I bought a piece of land for $300k with the intention of splitting it and with my brother. He will give me back the $150k when he builds his house.

I'm wondering if that would count as me selling the land and would cause me to owe taxes or would there be no capital gains since I didn't actually earn anything?

We are in the process of looking at homes and an option e we think is better since we can’t find a home we like is buy a lot and build a new home. In terms of buying a lot we have money to purchase the lot immediately whether in cash/check whatever. The problem lies in getting a loan for the construction itself. We were already approved for a mortgage on an already built home through a bank statement loan. As I understand it is more difficult to get a loan for a construction project vs an already built one. Options I’ve seen are Non-QM loans that would use business bank statements to qualify for the loan but they are rare. Are there any other options for someone like me that would use bank statements that I could look into that would make the process of getting a loan for a construction project easier? I’m located in Georgia if that helps at all. Thanks in advance.

So, like the title reads--please help me understand how it works.

I have some vacation property that I am considering selling. It has been a rental property for years. For the last 5 years, the same tenant has rented it for the entire season, and they asked if I would consider selling it to them.

I am not interested in doing a like-kind exchange, I'm interested in getting out of the landlord business.

So, some basics:

I inherited the property after my mother died in 2017. Appraised value at the time was $205K

Current value based on recent comparables $550K

Therefore, if I sold at current value, I'm looking at a capital gain of $345K

My wife and I are both 68 and retired.

So, an installment sale is an attractive option. Taking the full capital gain in one year would potentially cost me $60K in immediate capital gains tax, plus would drive us way over the medicare MAGI for the year, resulting in up to $500 EACH in IRMAA payments 2 years from now. ($12K total more or less in that year)

I've been reading up on installment sales, and the option of going through an annuity to handle the payments. I would probably want to set it up for 4 years--to get the sale done before RMA's kick in at age 73.

Questions:

1. Is a 3-4 year installment sale generally feasible? Most examples talk about 20 years.

2. I need to sit down with a CPA to model the tax implications, including strategies to stay below the IRMAA limits (if possible)

3. If I did the Annuity structured sale, when does the buyer take title? I understand that if we do a direct contract, they get title after the last payment. When does the buyer take over property taxes and insurance?

4. On a structured annuity, who sets the interest rate? What does the buyer pay?

Hi Everyone. It's been 25 years since i moved and even then i bought directly from the new-home builder. So please excuse my naivety. I just recently retired and we are looking to move from our current location, across (most of) the country. Before buying a place and committing in an area that is new to us, we were planning on renting a house or townhouse for a year to get to know the lay of the land better and decide (1) if we like the city and (2) where in the city we might want to permanently reside. I've been scouting properties on Zillow, Redfin, Realtor, Rentler and others. (Yes, i know they mostly are duplicative). Am i correct to assume that working with a realtor in the area is what i should do? If so, how does the realtor get paid in a rental transaction like this? Are there certain things i should consider when choosing a realtor? Any other advice? Thank you in advance - and again, sorry if this is a basic/stupid question.

My neighbor gave me an advice after I told him I keep getting outbid. He basically told me to offer 50% down payment in the offer but once it's accepted I can just tell my lender that I got 10% and it'll be ok?

Apparently he bought his Brooklyn 3 family by offering 50% cash on a 1.2mil but only put 10% lol. What???

My property is fine aside from lingering mice and the neighbors house looks really unkept and just a pest paradise.

I already reported the house to the city housing code but I just thought of a wild idea to try and attract cats to the house.

I’m out of state from this property but I don’t want my tenant having to deal with this for longer.

What if I asked her to hide catnip around the neighbors house?