Home arrow Mortgage Forums arrow Credit Problems and Repair arrow

buy a house

Author Message
Guest









Post Posted: Sat Oct 06, 2007 7:48 pm    Post subject: buy a house
Like 0
Dislike 0

Asset in simple terms which gets money in your pocket & Liability takes money out of pocket.
Now, for a house, we can rely on resale value but we have to keep in mind the inflation. But actually house take money out of your pocket, by mortgage pay, property taxes, insurances, maintainences, utilities expanse, etc.
So, house is Liability.

_________________
Need help choosing the right loan? Get free consultation from community lenders/consultant
Icon Mini Profile livinginnky
livinginnky
Moderator



Joined: 08 Sep 2007

Posts: 631

29.96 Dollars($)
Post Posted: Sat Oct 06, 2007 9:25 pm    Post subject:
Like 0
Dislike 0

It can be either. It is a liability until it is paid for.

If a house appreciates enough through your ownership then you will make money and it is an asset. Plus typically a mortgage is paid off eventually and the house still has value so it is an asset.

But during the time you are paying if it depreciates it is a liability. Things like cars, mobile homes, boats, etc. depreciate very quickly so they are considered a liability because if you can't pay for them any more there is no way to pay them off by selling them at their current value.

Home ownership is not for everyone and the recent news in the US mortgage market has shown that to be a fact.

_________________
Eric Matthews

Mortgage Refinance and Home Loan Guide
Icon Mini Profile liaoyu03





Joined: 09 Sep 2007

Posts: 166

4.48 Dollars($)
Post Posted: Sun Oct 07, 2007 8:48 am    Post subject:
Like 0
Dislike 0

Guest and livinginnky,your viewpoint and suggestion are very valuable. i also intend to reseller the house for making money. according to your views, there are certainly something to be careful and this is risk, we should be carefully. though this is both a asset and a liability,but it is usually considered an asset, especially in a legal sense. it's worth more than you paid it is definitely considered an asset.
Jonny

Guest







Post Posted: Tue Oct 09, 2007 5:10 am    Post subject:
Like 0
Dislike 0

House is not a liability. Now, if you buy a home on mortgage, you will pay the mortgage for yourself and over the time you will gain equity. But if you rent a home then you will be paying fir the others. After a certain period of time, you will own the house but renting does not provide you that option. So a house is surely a asset for you Smile
Guest









Post Posted: Tue Oct 09, 2007 3:18 pm    Post subject:
Like 0
Dislike 0

Let me explain Jonny,

A "house" is not a liability, a "home mortgage" is. Until a house is paid for it is still considered a liability which is the mortgage.

IF a house gains equity then it begins to be an asset. But consider where a lot of people are right now. They are behind on payments on a house that is worth less than what they owe. Do you think those folks consider their house an asset?

Also keep in mind that even when it does become an asset it is still not liquid. Meaning if you want to sell it you have to find a buyer. So just because you own a home worth say 1 million dollars doesn't mean you could spend that money, you have to sell it first.
Icon Mini Profile livinginnky
livinginnky
Moderator



Joined: 08 Sep 2007

Posts: 631

29.96 Dollars($)
Post Posted: Tue Oct 09, 2007 3:23 pm    Post subject:
Like 0
Dislike 0

I have got to quit clicking the links from my email. I forgot to log in again that was me directly above.

I also want to reiterate what I said before. I agree with all posters. A house itself should be an asset. A mortgage loan is a liability. It gets confusing because the line gets blurred being the fact how a mortgage ties to a home. Unlike unsecured loans a mortgage lender can come and take your home back this is why many consider it a liability.

_________________
Eric Matthews

Mortgage Refinance and Home Loan Guide
Icon Mini Profile adonis
adonis




Joined: 22 Oct 2005



Posts: 10250
Location: ALASKA
1043.57 Dollars($)
Post Posted: Wed Oct 10, 2007 5:58 am    Post subject: RE: home is an asset
Like 0
Dislike 0

Quote:
It can be either. It is a liability until it is paid for.

That's right eric. A home is an asset if we can build up equity and for that we need to pay down any loan that is against it. It takes a lot of time and effrot to build up this asset and it gives a sense of financial security actually. If I have a home that is paid for, I wouldn't hesitate to cash the equity in it if i do need it at times of a crisis.

_________________
Procrastination is the enemy of your financial success
Icon Mini Profile larry





Joined: 27 Jun 2007

Posts: 3322

474.67 Dollars($)
Post Posted: Sat Oct 13, 2007 12:33 am    Post subject:
Like 0
Dislike 0

Hi,

I think House is not a liability but the mortgage is surely a liability that you need to pay over a long period of time. And yes, that is also true that, although house is an asset but it does not provide you liquid money unless or until you sell it. But in spite of that, even if you are paying a mortgage loan you are still gaining equity but does renting provide you that opportunity?
Icon Mini Profile willisaddo
willis.addo


best lender badge

Joined: 10 Oct 2006

Posts: 32
Location: Atlanta
17.53 Dollars($)
Post Posted: Tue Oct 16, 2007 10:07 pm    Post subject:
Like 0
Dislike 0

Absolutely not! Not to mention rent is increased every year by 2%. This is great for investors, bad for the tenant.

Renting is simply hazardous to your wealth. A mortgage is considered good debt.

_________________
Will Addo
Wells Fargo Home Mortgage
678-473-6776-O
www.wfhm.com/wfhm/willis-addo Website

“Your credit score: Those three little numbers
can have a six-digit impact on your life.”
Icon Mini Profile livinginnky
livinginnky
Moderator



Joined: 08 Sep 2007

Posts: 631

29.96 Dollars($)
Post Posted: Tue Oct 16, 2007 11:11 pm    Post subject:
Like 0
Dislike 0

I know this is blasphemy to brokers and lenders here but renting can be better than buying a home. I do somewhat agree in the fact that there are very few situations where renting is better than buying. And let me clarify by adding renting is never better than owning, but that is a whole different conversation.
_________________
Eric Matthews

Mortgage Refinance and Home Loan Guide
Icon Mini Profile jameswells
james.wells




Joined: 26 Sep 2007

Posts: 30
Location: Zionsville, IN
13.53 Dollars($)
Post Posted: Sun Oct 28, 2007 12:07 pm    Post subject:
Like 0
Dislike 0

My opinion:

The poster is right- the home you live in normally takes money out of your pocket until resell and should be considered a liability. Even if you don't have a mortgage on the property you will have property taxes and insurance along with repairs and maintenance.

An asset is something that makes you money, so if you rent a portion of your home and and have positive cash flow then you can consider your home an asset.

Rental properties can be either an asset or liability- it all depends upon cash flow. If the renters don't pay, damage the property to the extent where repairs outweigh the income etc.- it is a liability. If you have good cash flow on a rental property then it is an asset.

If you noticed during my post I kept referencing CASH FLOW. Look at the cash flow for any possession and you can easily determine if it is an asset or liability. The only factor that makes this distinction difficult is the time factor. If you buy your house for $100k and make payment for 5-10 years, during that time it is a liability, if you then sell the property for a profit (say $200k after 5-10 years), then, and only then, does it become an asset (although one you no longer posses).

_________________
Zionsville Indiana Real Estate

Indianapolis Web Site Design & SEO
Icon Mini Profile Caron
Caron
Moderator



Joined: 19 Jul 2005

Posts: 1519
Location: florida
281.04 Dollars($)
Post Posted: Mon Oct 29, 2007 3:00 am    Post subject: RE: Home - Asset or liability, depends on cash flow
Like 0
Dislike 0

Hi James,

What an explanation! Indeed, a house can be a liability as well as asset depending upon whether you pay for it or whether it provides you with cash flow. So, the cash flow, or should I say, the postive cash flow is something that decides whether it's an asset or liability.

good luck

_________________
Mortgage Shopping made easy with booklet
Icon Mini Profile charlesarmbruster
charles.armbruster
Community Expert
Community Expert

best lender badge

Joined: 12 Oct 2006

Posts: 169
Location: Chandler, AZ
43.85 Dollars($)
Post Posted: Fri Nov 02, 2007 1:34 am    Post subject: BUY A HOUSE -- ASSET VS LIABILITY
Like 0
Dislike 0

So, isn't it true that all mortgages held by the lender are also considered liabilities? Indeed!
_________________
Chuck Armbruster
Phoenix, AZ

payjunction chuck [on facebook]
Icon Mini Profile jenkin7
jenkin7




Joined: 04 Jun 2007

Posts: 4537
Location: Hawaii
728.43 Dollars($)
Post Posted: Fri Nov 02, 2007 3:34 am    Post subject:
Like 0
Dislike 0

Hello,

Making monthly mortgage payments is a liability but once there is enough equity in your house, it is an asset.

I guess it is far more better to pay mortgage than paying rent because the former ultimately leads to building up equity and prepares for a steady source of cash flow.
Quick Reply
Your Name
Subject
Image Verification


Can't read the image? click here to refresh
Message body

All times are GMT - 7 Hours
Page 1 of 1

 
Highlights
Bookmark this page
Share |

Helpful References
Mortgage Guide
Mortgage Terms
Mortgage News
Book Center
Shop and Compare lenders
30 Yr. Fixed Vs. 5/1 ARM


Calculators     [View all]
Are you eligible for loan?
How much you can afford?
Calculate monthly payment
Calculate APR


Financial Tools
Credit Repair Tool New
Mortgage Planner
Simple Budgeting Tool


Our Community
MortgageFit Blog
Community Professionals
Community Rewards
Introduce yourself
Website tools


Community Rewards
Five simple ways to earn money with the Mortgage Community.

MortgageFit on Twitter

Followers (265)








Community Chat

We have chosen to apply the Creative Commons Attribution License to all works we publish. This work is licensed under cc by 2.0
Page loaded in 21.173 seconds.