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Houseonomics: Why Owning a Home is Still a Great Investment: Why Owning a Home is Still a Great Investment

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Houseonomics: Why Owning a Home is Still a Great Investment: Why Owning a Home is Still a Great Investment


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Even with a "housing bubble" you can still become a millionaire, not by flipping, but by simply owning your own home

  • Investing in your own home is as potentially rewarding as investing in the stock market. Learn how your home can become a major engine for your prosperity.
  • Make smarter decisions about buying, selling, refinancing, remodeling, vacation homes, and more.
  • Introduces a completely new way to accurately assess the value of your home or the home you are thinking about buying.
  • 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.

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    Your Home and the Million-Dollar Question

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    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


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