Your house isn't worth what you're paying

[UM-Bot]

Phillip Tilley: Your house isn’t worth what you’re paying for it, then again it never was. An estimated 12 million Americans owe more on their mortgage than their homes are worth. Add to that the fact that home prices are dropping, down 9% from a year ago. Real estate was traditionally the one thing you could count on, going up in value at 10% annually on average. One of the mechanisms of the money matrix is to make you pay more for your house than it is worth. This is usually accomplished through the sinister use of compound interest. There was a time in this country when compound interest was considered usury and was illegal. Today, sadly it is the norm.

If you had started buying a house in 1980 for $50,000 at an interest rate of 8.5%, not unusual at the time, over the course of the 30 year mortgage you would have paid $200,000 in interest. That means when you signed the papers to buy that $50,000 house, you really agreed to pay $250.000 over 30 years for that house. That is five times as much as it was worth at the time.

Likewise if you were looking to buy an average home in America now at a price of $200,000, you will really be paying closer to a million dollars over 30 years with $800,000 of that in interest! If the real estate agent told you the house is worth $200,000 but you will be required to pay a million for it, would you do it?

Recently while called before Congress, former Fed Chairman Alan Greenspan called the banking and housing crisis a “Once-in-a-century credit tsunami.” Once in a century means one time in a one hundred year period. I pointed out in my article “2012 and the Economy” that the monied elite were on a 100 year timeline from December 21, 1913 to December 21, 2012. It seems Alan Greenspan vindicates that fact.

One way to avoid paying more than a house is worth is to pay cash for it in one lump. The only problem with that is that most of us,(98%) do not have the ability to pay full price up front. Only two groups of people can do that, those who are the monied elite, and criminals. Poor dumb honest b******* have to apply for credit.

Alan Greenspan said, “There is a flaw in the model that defines how the world works.” This flaw is The Money Matrix! Greenspan further said, “I still do not fully understand why it happened.”

In the old days, before the money matrix, banks actually had money they loaned to people to buy a house.

They charged a small interest rate, 4%, which allowed people to pay off the house in a ten year period with a default rate of less than one half percent. That means 99.5% of everyone were able to pay back the loan of real money to buy real estate.

Today, banks do not loan real money because they do not have any money to lend. There is no money! Instead they extend credit, a negative in the first place, add to that compound interest of 8% over 30 years. The idea is to separate you from all the income you will earn in your lifetime. It is a mechanism of the Money Matrix.

Wake up people, the money matrix has you!

Phillip Tilley is author of The Money Matrix of the New World Order and other articles.

[little_dreamer]

You have to live somewhere. It's a bad deal only if you are paying significantly more to buy a home instead of renting it.

[Mbyte]

I didn't read any of it. I know your right. The price of houses is absaloutly ****ing ******ed. Houses in dublin shot up to 2 to 3 million because of a boom in the econemy. they've come down a bit but they were never worth that. House prices and the way they fluctuate is idiotic. Some people don't want to be appart of the property game, they just want a home. they also don't want to sell their souls with this bull morgage for your entire life and if you happen to become unemployed due to unforeseens consequences you will lose it all.

I hate the way poor countries borrow money and they pay back intrest on it and the end up paying back what they got but they are still paying off the intrest and it turns out that it's not possible to pay back the loan. I'd pay them back give a bit of intrest and then give them the finger.

Edited November 6, 2008 by Mbyte

[Bish815]

I always heard that it's cheaper to own a house then it is to rent. For the past 5 years I've been wondering when does it get cheaper. I've been seriously thinking of going back to renting because least back then all my money didn't go to the house & it's taxes.

[chrisfreak]

ha, I'll build my own house

[momentarylapseofreason]

ha, I'll build my own house

That's the way to go.

But anyone paying rent is totally wasting their money.

At least with a house you are investing your money into something worthwhile.

But the houses are way overpriced.

Edited November 6, 2008 by momentarylapseofreason

[Sag!ttarius]

I put money aside for 10 years before we took the jump on our first house. Paid it cash, no mortgage, like everything else (cars, furniture). I've always lived credit free. Makes you breathe a heck of a lot better during this type of financial crisis.

[KyrusRose]

I put money aside for 10 years before we took the jump on our first house. Paid it cash, no mortgage, like everything else (cars, furniture). I've always lived credit free. Makes you breathe a heck of a lot better during this type of financial crisis.

Same here, I never make payments. I'll save til I have enough and then get what I need. We saved for 3 years to buy our house, and got a really good deal, but its up in the mountains way out in the middle of nowhere, which is what we wanted. Got the extra lot next to it so when we have enough saved up we can build something to rent out. I'm not suffering too much right now, except my local land tax went up last session, but that's alright. Its a shame people don't know how to save money anymore.. its always "Must have NOW!"

[Sag!ttarius]

Same here, I never make payments. I'll save til I have enough and then get what I need. We saved for 3 years to buy our house, and got a really good deal, but its up in the mountains way out in the middle of nowhere, which is what we wanted. Got the extra lot next to it so when we have enough saved up we can build something to rent out. I'm not suffering too much right now, except my local land tax went up last session, but that's alright. Its a shame people don't know how to save money anymore.. its always "Must have NOW!"

Smart...

My property rates actually went down by 20% following an election promise by the new elected mayor. Guess what! The appraisers came a few months after the idiot got elected, he raised property values 50%... But on the rest we're on the same page. Pay cash for everything. I do use a credit card all the time, except I always pay full at the end of the month. Only reason I use it for everything, I get 2% cashback at the end of the year. They pay me to use it. Couldn't care if they track my spending habits. If they care about what I buy, they must be bored to death going though that data

[MissMelsWell]

See, some of you are lucky that you live in places where you, the average citizen, can save and buy a house for cash. Not so where I live. First, rents here are somewhere around $1600 a month for a crappy two bedroom apartment. The average house price is somewhere right around $450K, and that's going to get you a very very average house. Even with the downturn in real estate, and the economy, prices haven't fallen that sharply here in Seattle. Inventory in the housing market is moving slower, but prices haven't dropped too badly (although a little bit, but really, truly, not much).

So you can pat your back about saving to buy your house for cash, but I'm guessing the average home prices isn't a half million bucks where you live. Lucky you...

The real key is to buy far less than you can afford, make sure your mortgage is under what you would pay for rent in your area. Get the best interest rate possible. Don't take out HELOCS against your home when you can avoid it.

[War Eagle]

Since the internet took off in a big way, i've noticed house prices ridiculously hit the roof over here (Real Estate market manipulation scam).

All badly over-priced yet ppl are still stupid enough to put themselves in massive debt, giving themselves the false impression or even delusion of a great investment if or once they sell (if they ever pay it off that is). Only to find the next home just as if not more expensive & unaffordable, forcing some into the ever growing renting market trap.

IMO; most, not all homes (including my own) are worth peanuts. It's the land on which they sit on is were the real money lies.

Of course that's just the way i see it anyway.

[KyrusRose]

Smart...

My property rates actually went down by 20% following an election promise by the new elected mayor. Guess what! The appraisers came a few months after the idiot got elected, he raised property values 50%... But on the rest we're on the same page. Pay cash for everything. I do use a credit card all the time, except I always pay full at the end of the month. Only reason I use it for everything, I get 2% cashback at the end of the year. They pay me to use it. Couldn't care if they track my spending habits. If they care about what I buy, they must be bored to death going though that data

I don't do credit cards.. don't trust them. I'll use my own money when I need to through my bank card. Not the same at all. But I keep my credit rating up by taking out a small high rate loan near the end of the year, use it on Christmas gifts, then pay it back in a timely fashion. Nothing more then 3K, but by July its paid off and my credit rating is a little higher the the year before. Just in case we have an emergency and HAVE to have something right away, I won't have to worry about getting approved and I know my rate won't go through the roof. Before I got married I had a lot of problem with buying a car. My mother used my name when I was 12 to get a couple of credit cards and buy some jewelry for herself and never paid anything back. I couldn't get rid of the bad rating, had to work it down myself.

[Crai]

I don't do credit cards.. don't trust them. I'll use my own money when I need to through my bank card. Not the same at all. But I keep my credit rating up by taking out a small high rate loan near the end of the year, use it on Christmas gifts, then pay it back in a timely fashion. Nothing more then 3K, but by July its paid off and my credit rating is a little higher the the year before. Just in case we have an emergency and HAVE to have something right away, I won't have to worry about getting approved and I know my rate won't go through the roof. Before I got married I had a lot of problem with buying a car. My mother used my name when I was 12 to get a couple of credit cards and buy some jewelry for herself and never paid anything back. I couldn't get rid of the bad rating, had to work it down myself.

aww that sucks..how motherly>.< (sacrcasm)

well, i'm the same with my credit cards lolz

[SoCrazes]

I always heard that it's cheaper to own a house then it is to rent. For the past 5 years I've been wondering when does it get cheaper. I've been seriously thinking of going back to renting because least back then all my money didn't go to the house & it's taxes.

You're paying the taxes when you rent. Eventually, your mortgage payment will be a lot less than what rent will be - based on the past 50 or so years.

[MissMelsWell]

Of course, you can't ignore the tax advantage to owning a home, You can write the interest off on your taxes. Something you can't do when you rent. I'd pay my mortgage off in the next 7 years or so, whcih would be 15 years years early, except that I want the write off, AND I have a loan at 4.7% ... that's what's called "Cheap Money" I'd actually lose if I paid my house off early. I've done the math.

[momentarylapseofreason]

I would also lose money if I paid my house off early.

[MissMelsWell]

IMO; most, not all homes (including my own) are worth peanuts. It's the land on which they sit on is were the real money lies.

Of course that's just the way i see it anyway.

this is the real problem with my home. It's a 1000sq ft shack more or less. When I get my tax statement, it says my house is worth.... $900 (yes, less than the LCD screen nailed to the wall in the livingroom) the property however is worth a half million. There is NOTHING I can do to this house, short of tearing it down to increase its value. The value is entirely in the land (and when I say "land" I mean it's just a hair over a 1/4 acre).

Last summer, I got an estimates from contractors to add a 2 car detached garage with a 1 bedroom apartment beind it. A relative small and quick construction job, nothing fancy. I couldn't get an estimate under 160K to do that... first off, I paid less than that 6 years ago for the property and the house... AND even if I did built it... my house would STILL be a tear down. I'd be flushing 160K down the toilet.

I need a roof like pronto as well...I'm really really not wanting to dump 10 grand into a roof on a house that's effectively a tear down. The sad part? This is an adorable, comfortable little house in a very nice neighborhood. Problem is, it's little, and it's old, although in perfect condition.

Still, it was an AWESOME buy. I don't regret doing it at all. Although, there are days I sorta wished I'd got a condo. My lawn gives me migraines. LOL.

So I guess my point is that you really have to know what you're doing in real estate so you don't get burned. My house IS worth what I'm paying for it in the long run.... but the article is mostly right... most people's homes .... aren't.

Edited November 7, 2008 by MissMelsWell

[Bish815]

ha, I'll build my own house

That's what I did custom built my home on my own, not in a neighbor hood but on my own land.

Yeah I know it's a investment. Instead of throwing it away in rent.

[Bish815]

My property taxes went down. Thank God. But I know of people who have much more expensive homes in other states yet my taxes are higher then theirs. Most of it goes to paying schools which I have 1 child who's 2 yrs old so she ain't in school. My taxes are almost as high as the house payment. I want to buy up more land but afraid that it will raise my taxes to high.

[War Eagle]

This short vid is self explanatory.

May also help explain why everyday living costs on goods *& services are soaring outta control.

The Economic Meltdown.

[KyrusRose]

this is the real problem with my home. It's a 1000sq ft shack more or less. When I get my tax statement, it says my house is worth.... $900 (yes, less than the LCD screen nailed to the wall in the livingroom) the property however is worth a half million. There is NOTHING I can do to this house, short of tearing it down to increase its value. The value is entirely in the land (and when I say "land" I mean it's just a hair over a 1/4 acre).

Last summer, I got an estimates from contractors to add a 2 car detached garage with a 1 bedroom apartment beind it. A relative small and quick construction job, nothing fancy. I couldn't get an estimate under 160K to do that... first off, I paid less than that 6 years ago for the property and the house... AND even if I did built it... my house would STILL be a tear down. I'd be flushing 160K down the toilet.

I need a roof like pronto as well...I'm really really not wanting to dump 10 grand into a roof on a house that's effectively a tear down. The sad part? This is an adorable, comfortable little house in a very nice neighborhood. Problem is, it's little, and it's old, although in perfect condition.

Still, it was an AWESOME buy. I don't regret doing it at all. Although, there are days I sorta wished I'd got a condo. My lawn gives me migraines. LOL.

So I guess my point is that you really have to know what you're doing in real estate so you don't get burned. My house IS worth what I'm paying for it in the long run.... but the article is mostly right... most people's homes .... aren't.

Mines about the same.. its 80 years old.. we had to put a LOT of work into right off.. why we got it at such a good price, but after the investment to finish the basement and put in another bathroom, the house is worth about twice what we paid (34K) And putting a new roof on wasn't so bad. 4K and we're a little over 1600sq. Its one of those nice steel roof, too, which can go in over a shingled roof and brings the heating and cooling bills down like 20%.

It still needs a lot of work, but I wouldn't trade it for anything. Perfect town, great school and we're deep down in the woods at the end of a dead end road, so a safe place for kids to play. Almost no crime too. You can't get so lucky in big cities. The cost of living is higher, paychecks are higher. Average income here is like 17K a year and the cost of living is much lower, so the homes cost less.

[psyche101]

See, some of you are lucky that you live in places where you, the average citizen, can save and buy a house for cash. Not so where I live. First, rents here are somewhere around $1600 a month for a crappy two bedroom apartment. The average house price is somewhere right around $450K, and that's going to get you a very very average house. Even with the downturn in real estate, and the economy, prices haven't fallen that sharply here in Seattle. Inventory in the housing market is moving slower, but prices haven't dropped too badly (although a little bit, but really, truly, not much).

So you can pat your back about saving to buy your house for cash, but I'm guessing the average home prices isn't a half million bucks where you live. Lucky you...

The real key is to buy far less than you can afford, make sure your mortgage is under what you would pay for rent in your area. Get the best interest rate possible. Don't take out HELOCS against your home when you can avoid it.

How bizzare. Not considering the currency exchange rates, it is amazing that rates appear to be almost identical on the other side of the world. Here in SE QLD Oz you would pay the same for the same things.

Your onto it. Building up is the only way for a battler to kick off.

[Evangium]

How bizzare. Not considering the currency exchange rates, it is amazing that rates appear to be almost identical on the other side of the world. Here in SE QLD Oz you would pay the same for the same things.

Your onto it. Building up is the only way for a battler to kick off.

Weird. I thought it was only Macdonald's that used the concept of univeral numbers for its pricing... Be interesting to see how income and population growth compare in those areas as well.

[Sag!ttarius]

this is the real problem with my home. It's a 1000sq ft shack more or less. When I get my tax statement, it says my house is worth.... $900 (yes, less than the LCD screen nailed to the wall in the livingroom) the property however is worth a half million. There is NOTHING I can do to this house, short of tearing it down to increase its value. The value is entirely in the land (and when I say "land" I mean it's just a hair over a 1/4 acre).

Last summer, I got an estimates from contractors to add a 2 car detached garage with a 1 bedroom apartment beind it. A relative small and quick construction job, nothing fancy. I couldn't get an estimate under 160K to do that... first off, I paid less than that 6 years ago for the property and the house... AND even if I did built it... my house would STILL be a tear down. I'd be flushing 160K down the toilet.

I need a roof like pronto as well...I'm really really not wanting to dump 10 grand into a roof on a house that's effectively a tear down. The sad part? This is an adorable, comfortable little house in a very nice neighborhood. Problem is, it's little, and it's old, although in perfect condition.

Still, it was an AWESOME buy. I don't regret doing it at all. Although, there are days I sorta wished I'd got a condo. My lawn gives me migraines. LOL.

So I guess my point is that you really have to know what you're doing in real estate so you don't get burned. My house IS worth what I'm paying for it in the long run.... but the article is mostly right... most people's homes .... aren't.

OK, maybe I didn't explain myself correctly... Here's my train of thought on the subject. Houses here are far from cheap. However, we calculated our monthly mortgage for a 200K$ first home (mid 80's dollars...), nothing special, nice quality 1200 sqft bungalow. Turned out at 1600$/month. So we started putting this amount in an investment account in high yield bonds (mid 80's) at high interest rates. After 10 years, the 200K we put aside was worth 300K, which is what we used to purchase a 250k house at a time of high mortgage rates and have money left for all the furniture and renovations. So technically, we just financed ourselves while living in a small apartment. So if we had financed it, it would have cost us 400K$ + furniture + renovations, now it's cost us 200k$ out of our pocket. Same with my last F-150 truck. Instead of financing, which would bring total cost to 60k$ after interests for 6 years, I put the monthly payment aside for 4 years, compound interest and voila, a new truck for 35k$ of my own money and 10k$ of gains earned over 4 years.

Also since your mortgage interests are tax deductible, which is not the case here north of the border, it inflates property value because people can afford a more expensively priced home. Remove that tax incentive, house prices will go down significantly from artificial levels across the States. JMHO, though, could be wrong on this one. Cheers

Edited November 8, 2008 by Sag!ttarius

[Gunmunky]

"Once in a century means one time in a one hundred year period"

lol