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Houseonomics: Why Owning a Home is Still a Great Investment: Why Owning a Home is Still a Great Investment
- By Gary N. Smith, Margaret H. Smith
- Published Apr 21, 2008 by FT Press.
Book
- Sorry, this book is no longer in print.
About
Features
Even with a "housing bubble" you can still become a millionaire, not by flipping, but by simply owning your own home
Description
- Copyright 2008
- Edition: 1st
- Book
- ISBN-10: 0-13-713378-2
- ISBN-13: 978-0-13-713378-9
The subject of two articles recently published in the New York Times and endorsed by many leading economists, the authors have developed a completely new process for accurately assessing the value of your home or a potential home. For generations, buying a home has been the best investment Americans could make. But what about now? In the wake of the "housing bubble," some talking heads claim that it's become foolish to own a home with a mortgage. They're wrong. In Houseonomics, two leading economists demonstrate why owning a home is still an excellent investment for most people in most places and help you make smarter decisions wherever you are. This book isn't for aspiring slumlords or flippers: it's for anyone who simply wants to move towards financial security, with a roof over their heads, and a home to call their own. You won't find "too good to be true" schemes here: you'll find a sensible, rational, and totally up-to-date explanation of the economics of home ownership. You'll discover how to calculate the intrinsic fundamental value of a house based on a completely new valuation strategy developed by the authors; develop a vision for financial prosperity via home ownership; and treat housing decisions as the investment decisions they really are. Learn how to negotiate more effectively when purchasing, selling, financing, refinancing, or remodeling; decide when you should prepay your mortgage; and intelligently evaluate rental/vacation properties.
Sample Content
Online Sample Chapter
Your Home and the Million-Dollar Question
Sample Pages
Table of Contents
Acknowledgments xix
About the Authors xxi
Introduction 1
Chapter 1 The Million-Dollar Question 5
Our Homes Are Our Castles 7
An Engine to Prosperity 8
Uncle Sam Wants You to Be a Homeowner 10
The Million-Dollar Question 13
Slow and Steady Wins the Race 15
The Bottom Line 15
Chapter 2 Your Home is an Investment 17
Investment Versus Speculation 17
Your Home Dividend 19
The Nifty Fifty 23
Waiting to Buy 24
It Is Hard to Time the Stock Market and Housing Market 24
Taking the Long-Term View 25
Don’t Day Trade Homes 26
Your Home Is an Investment 29
A Home to Call Their Own 29
Look at the Whole Picture 30
What Am I Supposed to Look at Again? 31
The Bottom Line 32
Chapter 3 Now is a Good Time to Own a Home 33
A Home in Fishers, Indiana 34
Cash is King 38
The Lynch’s Southern California Home 43
Your Home Is Not an ATM 46
The Millionaire Paupers 47
Housing as a Portfolio Decision 49
Homes North, South, East, and West 51
The Bottom Line 54
Chapter 4 Finding a Home and Closing the Deal 55
How Much Home Can You Afford? 55
How to Choose a Home 59
How to Choose a Realtor 61
Is the Price Right? 63
This House Will Be Sold on November 11 63
The 6 Percent Fortress 64
Moving Merchandise 67
Happy Clients 69
The Closer 70
The Times They Are a Changing 70
Match This 72
Realtors: Can’t Live With Them or Without Them 72
Negotiating Boldly 74
Good Things Come to Those Who Wait 75
Regression to the Mean 76
The Bottom Line 78
Chapter 5 Debt Doesn’t Have to Be a Four-Letter Word 79
Using Loans to Live Beyond Your Means 80
How to Invest Like Warren Buffett 81
Loans Create Leverage 82
Leverage + Compounding = Wow! 84
Loan Payments 85
The Unpaid Balance 85
Comparing Loans: The Total-Payments Error 87
The Right Way to Think About Loans 88
Bad News, You Won the Lottery 89
Can You Make Money Borrowing at 12 Percent to Invest at 7 Percent? 90
The Bottom Line 91
Chapter 6 Choosing the Right Mortgage 93
Finding a Lender 93
Getting Preapproved 95
Saving for Your Down Payment 97
Mortgage Terms 101
Mortgage Rates 102
Anchoring 103
Mortgage Points 107
Sure, I’ll Lend You Money 109
30-Years, 15-Years, or ? 109
Adjustable Rate Loans 110
Creative Financing 113
Buying a House with Creative Financing 114
Biweekly Mortgages 115
Graduated Payment Loans 116
The Bottom Line 119
Chapter 7 Refinancing and Home Equity Loans 121
Heads You Win, Tails I Lose 121
Prepayment Penalties 123
Does Refinancing Pay? 123
The Break-Even Refinancing Rate 124
Wake Up, Little Susie 126
The Time Value of What? 126
Mental Accounting 128
You Can Sell Your Home Without Selling Your Home 129
Say No to Credit-Card Debt 130
One Way to Pay for College 131
The Bottom Line 132
Chapter 8 Remodeling 133
Sunk Costs 133
Does Remodeling Pay for Itself? 135
Remodel Sooner, Not Later 139
Make It Bigger, Not Better 140
What’s a Remodeling Project Really Worth? 141
Leaky Windows 144
I’d Rather Do It Myself 145
Paying By the Job or By the Hour? 147
The Big Job in Waltham 147
The Bottom Line 148
Chapter 9 Rental Properties and Vacation Homes 151
You Used to Pay the Landlord, Now You Are the Landlord 151
Adverse Selection 152
Moral Hazard 152
Long-Distance Landlords 154
Ah, the Tax Code 156
Fishers, Indiana, Again 156
If I Bought It, It Must be Worth the Price I Paid 160
A Home with Two Rentals 161
Those Darn Taxes 162
The Investment Value of a Vacation Home 163
The Bi-Coastal Renkens 165
The Bottom Line 166
Chapter 10 Letting Your Home Take Care of You 167
HRAs 167
Life Is a Journey: From Porterville and Indio to Thatcher 170
Should You Raid Your IRA to Pay Off Your Mortgage? 171
Reverse Annuity Mortgages 173
Grandma Ford 173
What Do I Owe You? 175
RAMed by a RAM? 176
The Bottom Line 177
Chapter 11 Selling Your Home 179
Home Dividends, Again 180
Curb Appeal 181
Clean It Up! 182
Pictures on the Wall 183
Loss Aversion 184
Waiting for the Right Price 186
Our Price Is Firm, But the Terms Are Negotiable 187
The Bottom Line 187
Afterword 189
Appendix A An Owner-Occupied Home in Fishers, Indiana 191
Appendix B A Rental Home in Fishers, Indiana 195
Appendix C Your Home 199
Index 205