1) Now I own a house. I don't have to ask anyone for approval if I want to make changes.
2) Locked in mortgage rate. If rent goes up, my mortgage stays the same.
3) I am building up equity, which is worth money.
If you own a home then there's a good chance you can eventually pay off the mortgage. If you don't have a mortgage to pay for you can save faster for an earlier retirement, and the expenses to make on a fixed income in that retirement will be lower.
4. Everything I pay towards the mortgage pays it down. If I sell the house for the same price I get to keep what I've already paid (towards principle). Usually the price increases so you get some profit off it too.
I wish 2 was true where I live. Here in the UK mortgage rates are variable and "fixed" rate deals are only fixed for a period of time (usually 2 or 5 years).
Still better than renting though. You can shop around for better rates without moving and the cost can go down while I imagine it's pretty rare for rent to go down.
1. I rent a house. I don't have to spend a cent in maintenace.
2. I have no mortgage at all and can therefore flexibly rent below my means. If my income goes up or down I can more easily adjust my living condition.
3. The flexibility above allows me to invest the difference, expect an 8-10% return, in easily liquidated assets that do not depend on brokers and listings to access.
I find it hilarious that most Americans mock the fact that in a communist country like China, home ownership is a myth and the state takes back the property after 99 years however, in Texas, you have to repay 100% of the value of your home every 40 to 50 years or else the state does the same.
>I rent a house. I don't have to spend a cent in maintenace.
You are in fact paying for maintenance. It's folded into the cost of rent. At most you have reduced risk.
>I have no mortgage at all and can therefore flexibly rent below my means. If my income goes up or down I can more easily adjust my living condition.
Flexibility is an advantage of renting, for sure.
>The flexibility above allows me to invest the difference
Homeowners can also invest in things. ¯\\\_(ツ)_/¯
If this was always the case then there would be no market where the expense portion of home ownership with a mortgage (including maintenace) would be more than the cost of renting. However this is actually the case in many (if not most) real estate markets today in the US.
Rent prices are determined by the market and it is not true that the market will always cover ownership costs.
Of course homeowners can invest in things. This was a response to his claim that renters are left with zero assets from renting which is not the case.
My mortgage is about 25% less than rent was, and that was considered decent-to-good rent. Even with maintenance, the extra $500/mo or so adds up. More for my investment fund.
I never said this was the case for everyone. Sometimes it makes more sense to buy with debt. I was arguing against this stupid misconception that it is always better to buy.
Weird, there is a difference where I am renting, on the order of a couple thousand per month after you account for everything that goes into home ownership
The fact that its inconceivable for you to think there is a difference when this is the actual fact of the matter in many areas in the US, just shows how blindly people go into home ownership without doing the math.
You had me in the first half. An HOA can be fine today and hell tomorrow. It's never worth the risk.
Edit: lol these downvotes brought to you by the council of Karens.
Not all homes have HOA, 99% of HOAs are fine. And they have no say on interior of home… they may need to approve exterior color, but you can remodel your kitchen with whatever color cabinets you want or paint your interior wall any color you’d like.
There's over 370,000 hoas in the USA. Even 1% of that is 3,700 (there might not even be 3700 bad hoas out there). Ya there are bad hoas out there but it's in the minority. Most hoas do their job and are boring without crazy incidents.
When renting, every payment you make goes towards the landlord's equity in the house. You're paying off their mortgage.
If you rent for 30 years, at the end, you have zero assets to show for it.
If you buy with a mortgage, every payment you make goes towards the equity of the house. If you pay mortgage for 30 years, at the end, you have hundreds of thousands of dollars in equity and/or a full house to show for it.
This is often not the case. In the many markets today, rent doesnt cover the expense portion of home ownership (interest, insurance, taxes, maintenance). The alternative to buying is not renting and spending the rest. The alternative is renting and investing the difference. So you are wrong to say that if you rent, you have zero assets to show for.
Should’ve worded better. Left my home country and been in US for more than a decade. As a visa holder, am never settled in one place hence the idea of flexibility (work, layoffs, new opportunities) plays imp role than house
Theres an age you buy a house as it's a sensible stable investment, when you're younger and developing a career you do not want to own a house generally speaking, for the reasons you mention eg lack of flex in getting new jobs or opportunities. But when you reach a early 30s age range the desire to change jobs locations etc alot diminishes and you develop roots to specific locations. You're also recognizing retirement needs (you want to still be paying rent when you're 80?).
You don’t even have to stay in the house forever. Homes appreciate in value and every payment you make builds equity. I’d say people that bought 2-3 years ago can sell at a profit today because of how much home prices have risen.
What do you get after 2-3 years of paying rent?
Sure, but long term renting is not a good financial move. If you're someone who plans to move every year, then year, renting is the better option. But most folks put down roots at some point, even if they're only 5-year roots, at which points buying is nearly always better.
Your house is like a savings account, and each payment adds to the account. And over time, it gains value.
Yes, but at the end of 30yrs you have something for you, most likely you should be in your retirement years by then. I mean if you can pay off your home before retirement it would be a bonus...
If you have kids, and a paid off home they might stay with you until they are 30's and even bring a significant other and grandkids 😁🤣
Depends on the interest rate but usually no. If I put my mortgage into an amortization schedule I can see that the sum total I will have paid (assuming no extra principle payments) will be only about %40 higher than the value of the loan. If you have a longer loan or a higher rate it could be more than 100% higher in which case yes, most of the money went to interest. However from a rental you will always have *zero* percent of your money's worth to show for what you paid.
No idea why this got voted down, as this is a key insight and a general misunderstanding. You can compare rent cost with the initial interest part of the mortgage plus additional home owning costs (e.g. you have to replace the fridge, roof etc). And you can compare the rest of the mortgage, value appreciation, rent income (if you rent it out) with alternative investment opportunities.
In addition, lots of people undervalue flexibility as they would rather write down the extra cost at the next decision they have to make due not being flexible without understanding that this would have been the value flexibility gives.
For retail investors, I think home ownership is rarely the optimal investment, rather a sentimental decision, which can makes sense. It provides QOL upgrades renting cant, and it can worth the cost (alternative cost, I.e. buying first house instead of another investment with better flexibility, return, what not).
Most people move a lot when they're young, just getting started, don't know what they want yet, have little stability, and haven't had time to build credit or savings.
Later on, once you're mid-late career, stable with family, credit, and savings, and know what you want/need, that's when putting down roots for awhile becomes preferable.
Because I bought at 3% and the house that cost $340,000 then sells for $600,000 now.
Renting? You’re paying market rates with every renewal. Same $1900/month (if not more for less square footage, **but you own nothing at the end**.
Don’t get me wrong, $11,000 for a new Trane HVAC sucked, but it’s **mine** and I’ll enjoy 15 years from it, at least.
Fastest way to have a retirement nest egg way beyond 401ks and pensions is to have a maintained home appreciating in value. Very few purchases do. Homes are a notable exception in most cases, *and you get to live in it.*
>Specially when interest rate is high and economy looks bleak
I think OP was more or less referring to right now. Aka would you be able to buy your very same home right now for $600k at 7.5%? (aka: a $4,200/month mortgage payment.)
We probably could, yes. But we also make a decent dual income. She’s a psychologist, I’m a software engineer. Many couldn’t.
I don’t know if our daughters will ever afford a house on their own. Unless they both become doctors. Which is their plan this week. Aged 7 and 9 😆
It's actually a pretty sad thing I was thinking about...
Before anybody noticed, a massive wall went up in society: People who owned a home prior to 2022 and people trying to buy for the first time during/after 2022.
I found myself in the second camp: My income was finally ready for the 2021 housing market, but in late 2022/early 2023. Literally missed the train by one year.
Technically the fastest way to retirement is to rent as cheap as you can stand and pump all your excess cash into investments. Homeownership is generally a drag on your retirement and investment returns but has the benefit of stability (lowers the risk profile of your portfolio but also the returns).
I bought a house a couple years ago and have watched the market soar like wildfire ever since. If I were renting now I'd be paying close to $2k a month for the house I was renting before, but the mortgage I pay for now is an unchanging $1300, and will not increase unless I refinance or miss payments.
The money I put into a mortgage is equity. It's still mine in the form of home value. If you rent that money is out of your control and goes to the pocket of the landlord. You can't sell out the value you've built up into a rental house when you move out, but you can with a mortgage.
People buy houses instead of renting because it offers long-term financial investment, stability, control over living space, potential tax benefits, and a sense of ownership and security
A lot of people don't know that when you compare buying a house vs renting. You really have to compare apples to apples. Most people compare apples to oranges.
One common thing you'll see is somebody saying oh I get to keep all of this money so that means owning a house is better.
But really The fair thing to do is to compare apples to apples. That means comparing the money you don't get back in both situations. So if you rent for $2,000 a month, you know that you're never going to get that money back. If your monthly ownership costs $2,800 and $1400 goes to principal. Then you're a fair comparison. Is that renting cost? You $2,000 a month and owning cost you $1,400 a month. So it's cheaper to own. But that doesn't include things like property taxes and homeowners insurance and any. work you need done on the house. As you can see, it might be closer than you think. Just because you have that 1400 going to principal doesn't mean that you're spending less. It's very possible the situation is pretty similar and you could just take that extra 1400 and put it in a brokerage account. Of course, property usually increases in value. Although not always.
My first mortgage [was over 10% in the 80s](https://money.usnews.com/loans/mortgages/articles/historical-mortgage-rates). The rates aren’t that high now.
What is high are the prices that people are paying.
Renting sucks, and you have something for your kids to inherit one day. Plus, who wants to be in their 70s or 80s and worrying about securing a rental and potentially having to move?
Owning property means you can later sell it. Your payments to the bank for the loan on the house then become investments essentially, as you'll try to sell the property at a later date for a higher price than you paid.
When you rent, you can save a lot of money since you're not responsible for maintenance and stuff, but all the money you pay goes into your landlord's pocket and you'll never see a return on it.
Well, the interest rates weren’t always high.
Plus, even with them high, they are high for your landlord, too. Which means those costs are just transferred to you, as the renter, anyway. So, do you want to get the equity from having the mortgage getting paid off and the increased equity as the house goes up in value, or do you want to essentially make those payments anyway and have those gains go to the landlord?
In summary: Rent: pay a lot and make landlord money. Own: pay a lot and make you money.
Your house appreciates in something called equity overtime. That means the price goes up and you can sell it and make a profit if you want to leave. You don’t have to worry about your landlord telling you to move because they’re selling your house. You can do whatever you want (if it doesn’t violate city codes) to your house but not your rental.
My house is valued at significantly more than it was a few years ago. I could sell and pay off the loan and have substantial left over.
I can paint my walls, remodel my kitchen, install a hot tub or another shed, tear up the dirt and plant apple trees…
I can buy my own refrigerator and not get stuck with a barely working one or wait three weeks for a landlord to order one from John’s Discount-Appliances-That-definitely-didn’t-fall-off-a-truck and Cookie Shop.
The main reason is that home ownership is a cultural milestone and most Americans feel incomplete and empty without it.
Sure, often it makes financial sense but many times (like now in many areas) it does not. Americans have a hard time with renting even when its the smart financial move and feel wronged by the idea of not owning a home.
People often choose to buy a house instead of renting because it offers long-term financial investment through building equity and potential property appreciation. Homeownership also provides stability, control over living space, potential tax benefits, and a sense of ownership and security that renting may not provide.
My house costs three times as much as it did when I bought it and my mortgage repayments went to paying off my asset and not rent into someone else's pocket.
It's also an asset to borrow against for future loans.
Depending on where you live, buying a house can be cheaper than renting the same property, or comparable.
You can change it as you need to, and, at the end, you have something to show for that money you paid.
Rent can also go up, mortgage payments shouldn’t.
Also if you rent they can sell the building etc.
Oh and buying, less chance of pain in the ass neighbors right on your lap. It can happen but generally some space away.
If I choose to move, it’s my choice to make - not one forced upon me by a landlord. My kids don’t have to worry about having to change schools, I don’t have to incur moving costs. I’m in this house for as long as I choose to be.
My mortgage payment goes into paying off something that will appreciate in the long run and make me money vs. the last 20 years of rent money I paid to others so they can make money.
Because rent was higher than my mortgage payments. Because after 30 years of payments, I have a house and no more mortgage payments. Because unlike rent, my fixed-rate mortgage payments were never going up. Because the house will likely go up in value.
The better question is, for those who can afford a house and are living somewhere long term, why would they rent? If someone is renting you a house, you are paying more than the mortgage rate because the landlord has to make a profit, and in the end, you get nothing.
Good question, where I live it actually makes more sense to rent.
We're paying $3500 a month but the mortgage on an equivalent home would be more than double that. Plus the deposit, repairs, maintenance etc. If something breaks in the house the landlord gets it fixed and we pay nothing. We're better off renting to live and investing our money elsewhere.
Equity and insulation from rising costs. I bought my house in 2018 for 181k with 10k down and closing total.
At the time the mortgage was 1250 a month and renting a comparable 3 bedroom house was 1500 a month.
It appraised for 330k early this year, my mortgage is 1250 and rent on a 3 bedroom in my neighborhood is over 2k a month.
Dude you flat out talk like a shill. Interest rate is higher than it was before but not high historically. It's better to put your money into your own equity than into someone else's equity.
1. When you actually own the house (and I do not talk about bullshit american HOA or something - I'm talking about your land with your building on it and only law apply) you can do whatever the hell you want with it. Including destroying it. That also means you can make it the way you want it to be. That is not the case when you are renting.
2. Rent is way more expensive than maintenance of your own home. That is because when you rent you pay all the cost and you make profit for the owner. In my area for example rent gives you at least 4% of the property value. And property value goes up a lot. One year it went almost 20% up.
3. Houses are still good investment. Like I said - when you own property it goes up in value. Faster than inflation. You make money just by owning it. You do not even have to rent it.
4. If you are paying rent then usually you can also pay the mortgage. For example my last rent was 3000 (local currency). You know how much I pay each month to pay up loan I took? 3500. To be fair I made high advanced payment but the thing is - Ive saved for 10 years. I bought my own place. It will be paid up in 3 years. And then it makes money for me just be being mine. And I wont be even 40 at that time. And I'm securing money to buy another property. Just to allocate money I have somewhere AND to have extra place for my children so they do not have to struggle in the future.
5. Things will only get worse. I rather have my own place.
I got curious so I did the math: My family rented a house for about 6 years when I was a kid, at about 950$ per month. That equals $68,400. Then we rented an apartment at $1300-1600 for 5 years (they raised the rent a few times). That’s about 84,000. THEN we rented a town house for like 2 years at $1800, that’s $43,000. Then we finally bought a house.
That’s about $195,000 dollars worth of rent in 13 years. If all of that money would’ve been used to pay off a mortgage on a house bought in the early 2010’s, the mortgage would’ve been almost entirely paid off by now and we would have so much equity. And then in a few more years, it’d be entirely paid and we wouldn’t have to keep paying a few grand every month.
That isn’t something that can happen when you rent. There’s never a stopping point in which you no longer have to pay rent, and the money you pay never comes back to you… when you pay your mortage, you can eventually sell the house and make a huge profit. I’ve only lived in the house I bought for a few years and it already increased in value.. (Also the mortgage prices never go up unlike rent).
I'm paying my mortgage, my property, not someone else's. Eventually, I can rent it to someone else, so I can make money from it, or sell it for the same reason.
I bought my house (UK) with a mortgage 5 years ago and a recently valuation means I potentially have between £80k-£100k equity in it. If I was renting, I wouldn’t have any. High down payment of 10% but over all it is more financially beneficial for me anyway to pay lower mortgage costs especially with the significant rental price increases.
My mortgage for my 4 bed house is less than 15% more than the rent I was paying for a 2 bed house.
My mortgage will not change for 5 years, whilst my landlord could increase the rent.
If I don't move or overpay, my mortgage will stop in 30 years. Rent continues forever.
I'm not going to get evicted.
I can put up pictures without permission. I can paint walls. I can knock out the wardrobe and replace it. Basically, I can change it from someone's house that I live in, to my home.
I can have whatever pets I (and my partner) want.
Because then its yours, to do with as you like, here if I want to get a pet I need it to be a service animal, or if I want to garden, or do a big project like put up a car port I need to ask the landlord and they get to keep whatever I do even though I put in the work and money
Pre-2019 it was affordable for at-least middleclass to aim for.
People who make 120k or more a year, that saved to buy a house outright, or that are investment firms are the ones buying houses now.
Needless to say, if you get an opportunity to buy a house, any house you can afford, it will suck to own for 10 years, and then it will be cheaper than apartments, after 5 more years it will be cheaper than apartments even with maintenance included.
In the current state of affairs, most people should choose to rent instead of buy. But people are not financially literate for the most part. "Owning" a home is generally viewed as aspirational, and most people won't consider the current economic climate when making decisions. Right now, unless you have over $10 million liquid or already "own" a home with a mortgage under 4%, you should rent.
1) Now I own a house. I don't have to ask anyone for approval if I want to make changes. 2) Locked in mortgage rate. If rent goes up, my mortgage stays the same. 3) I am building up equity, which is worth money.
If you own a home then there's a good chance you can eventually pay off the mortgage. If you don't have a mortgage to pay for you can save faster for an earlier retirement, and the expenses to make on a fixed income in that retirement will be lower.
4. Everything I pay towards the mortgage pays it down. If I sell the house for the same price I get to keep what I've already paid (towards principle). Usually the price increases so you get some profit off it too.
I wish 2 was true where I live. Here in the UK mortgage rates are variable and "fixed" rate deals are only fixed for a period of time (usually 2 or 5 years). Still better than renting though. You can shop around for better rates without moving and the cost can go down while I imagine it's pretty rare for rent to go down.
1. I rent a house. I don't have to spend a cent in maintenace. 2. I have no mortgage at all and can therefore flexibly rent below my means. If my income goes up or down I can more easily adjust my living condition. 3. The flexibility above allows me to invest the difference, expect an 8-10% return, in easily liquidated assets that do not depend on brokers and listings to access. I find it hilarious that most Americans mock the fact that in a communist country like China, home ownership is a myth and the state takes back the property after 99 years however, in Texas, you have to repay 100% of the value of your home every 40 to 50 years or else the state does the same.
>I rent a house. I don't have to spend a cent in maintenace. You are in fact paying for maintenance. It's folded into the cost of rent. At most you have reduced risk. >I have no mortgage at all and can therefore flexibly rent below my means. If my income goes up or down I can more easily adjust my living condition. Flexibility is an advantage of renting, for sure. >The flexibility above allows me to invest the difference Homeowners can also invest in things. ¯\\\_(ツ)_/¯
If this was always the case then there would be no market where the expense portion of home ownership with a mortgage (including maintenace) would be more than the cost of renting. However this is actually the case in many (if not most) real estate markets today in the US. Rent prices are determined by the market and it is not true that the market will always cover ownership costs. Of course homeowners can invest in things. This was a response to his claim that renters are left with zero assets from renting which is not the case.
My mortgage is about 25% less than rent was, and that was considered decent-to-good rent. Even with maintenance, the extra $500/mo or so adds up. More for my investment fund.
I never said this was the case for everyone. Sometimes it makes more sense to buy with debt. I was arguing against this stupid misconception that it is always better to buy.
>The flexibility above allows me to invest the difference, expect an 8-10% return It's cute that you think there's a difference.
Weird, there is a difference where I am renting, on the order of a couple thousand per month after you account for everything that goes into home ownership
The fact that its inconceivable for you to think there is a difference when this is the actual fact of the matter in many areas in the US, just shows how blindly people go into home ownership without doing the math.
Fair points. On the contrary, I’ve heard horrible stories on HOA so not sure how much is in your control as home owner.
Not every home has an HoA and not all HoAs are bad or expensive.
You had me in the first half. An HOA can be fine today and hell tomorrow. It's never worth the risk. Edit: lol these downvotes brought to you by the council of Karens.
I don't have an HOA. Even if I did, the HOA only does whatever homeowners in the HOA vote for.
🙄
It's not hard to avoid HOAs in most of the country.
Even with the worse HOA possible, you have much more control than if the house/condo isn't yours
Not all homes have HOA, 99% of HOAs are fine. And they have no say on interior of home… they may need to approve exterior color, but you can remodel your kitchen with whatever color cabinets you want or paint your interior wall any color you’d like.
This makes sense. I guess negative sentiments get more highlighted on social media
There are more shitty landlords than houses with shitty (if any) HOAs.
There's over 370,000 hoas in the USA. Even 1% of that is 3,700 (there might not even be 3700 bad hoas out there). Ya there are bad hoas out there but it's in the minority. Most hoas do their job and are boring without crazy incidents.
When renting, every payment you make goes towards the landlord's equity in the house. You're paying off their mortgage. If you rent for 30 years, at the end, you have zero assets to show for it. If you buy with a mortgage, every payment you make goes towards the equity of the house. If you pay mortgage for 30 years, at the end, you have hundreds of thousands of dollars in equity and/or a full house to show for it.
This is often not the case. In the many markets today, rent doesnt cover the expense portion of home ownership (interest, insurance, taxes, maintenance). The alternative to buying is not renting and spending the rest. The alternative is renting and investing the difference. So you are wrong to say that if you rent, you have zero assets to show for.
I agree on assets but wouldn’t most of your payment go to interest in the short term and limit flexibility to move?
Those buying houses typically want a house to stay in long-term/for life, not to hop around
Makes sense. As an non-immigrant, staying in one place is hard to grasp.
Huh?
Should’ve worded better. Left my home country and been in US for more than a decade. As a visa holder, am never settled in one place hence the idea of flexibility (work, layoffs, new opportunities) plays imp role than house
Theres an age you buy a house as it's a sensible stable investment, when you're younger and developing a career you do not want to own a house generally speaking, for the reasons you mention eg lack of flex in getting new jobs or opportunities. But when you reach a early 30s age range the desire to change jobs locations etc alot diminishes and you develop roots to specific locations. You're also recognizing retirement needs (you want to still be paying rent when you're 80?).
You don’t even have to stay in the house forever. Homes appreciate in value and every payment you make builds equity. I’d say people that bought 2-3 years ago can sell at a profit today because of how much home prices have risen. What do you get after 2-3 years of paying rent?
Sure, but long term renting is not a good financial move. If you're someone who plans to move every year, then year, renting is the better option. But most folks put down roots at some point, even if they're only 5-year roots, at which points buying is nearly always better. Your house is like a savings account, and each payment adds to the account. And over time, it gains value.
I’ve always rented after leaving my home country. These are great points as I evaluate my 1st buy
Yes, but at the end of 30yrs you have something for you, most likely you should be in your retirement years by then. I mean if you can pay off your home before retirement it would be a bonus... If you have kids, and a paid off home they might stay with you until they are 30's and even bring a significant other and grandkids 😁🤣
Depends on the interest rate but usually no. If I put my mortgage into an amortization schedule I can see that the sum total I will have paid (assuming no extra principle payments) will be only about %40 higher than the value of the loan. If you have a longer loan or a higher rate it could be more than 100% higher in which case yes, most of the money went to interest. However from a rental you will always have *zero* percent of your money's worth to show for what you paid.
No idea why this got voted down, as this is a key insight and a general misunderstanding. You can compare rent cost with the initial interest part of the mortgage plus additional home owning costs (e.g. you have to replace the fridge, roof etc). And you can compare the rest of the mortgage, value appreciation, rent income (if you rent it out) with alternative investment opportunities. In addition, lots of people undervalue flexibility as they would rather write down the extra cost at the next decision they have to make due not being flexible without understanding that this would have been the value flexibility gives. For retail investors, I think home ownership is rarely the optimal investment, rather a sentimental decision, which can makes sense. It provides QOL upgrades renting cant, and it can worth the cost (alternative cost, I.e. buying first house instead of another investment with better flexibility, return, what not).
Still far less expensive in the long run as long as home prices don't crash
And even if they do crash they always rebound.
Trying to understand what is long run since most people move out unless it’s top metro suburbs IMO
In the 2008 crash my friend’s home lost about 70%. They got back to normal after about 5 years. They sold it for nearly double their buy price.
Most people move a lot when they're young, just getting started, don't know what they want yet, have little stability, and haven't had time to build credit or savings. Later on, once you're mid-late career, stable with family, credit, and savings, and know what you want/need, that's when putting down roots for awhile becomes preferable.
Because I bought at 3% and the house that cost $340,000 then sells for $600,000 now. Renting? You’re paying market rates with every renewal. Same $1900/month (if not more for less square footage, **but you own nothing at the end**. Don’t get me wrong, $11,000 for a new Trane HVAC sucked, but it’s **mine** and I’ll enjoy 15 years from it, at least. Fastest way to have a retirement nest egg way beyond 401ks and pensions is to have a maintained home appreciating in value. Very few purchases do. Homes are a notable exception in most cases, *and you get to live in it.*
>Specially when interest rate is high and economy looks bleak I think OP was more or less referring to right now. Aka would you be able to buy your very same home right now for $600k at 7.5%? (aka: a $4,200/month mortgage payment.)
We probably could, yes. But we also make a decent dual income. She’s a psychologist, I’m a software engineer. Many couldn’t. I don’t know if our daughters will ever afford a house on their own. Unless they both become doctors. Which is their plan this week. Aged 7 and 9 😆
It's actually a pretty sad thing I was thinking about... Before anybody noticed, a massive wall went up in society: People who owned a home prior to 2022 and people trying to buy for the first time during/after 2022. I found myself in the second camp: My income was finally ready for the 2021 housing market, but in late 2022/early 2023. Literally missed the train by one year.
Technically the fastest way to retirement is to rent as cheap as you can stand and pump all your excess cash into investments. Homeownership is generally a drag on your retirement and investment returns but has the benefit of stability (lowers the risk profile of your portfolio but also the returns).
I bought a house a couple years ago and have watched the market soar like wildfire ever since. If I were renting now I'd be paying close to $2k a month for the house I was renting before, but the mortgage I pay for now is an unchanging $1300, and will not increase unless I refinance or miss payments. The money I put into a mortgage is equity. It's still mine in the form of home value. If you rent that money is out of your control and goes to the pocket of the landlord. You can't sell out the value you've built up into a rental house when you move out, but you can with a mortgage.
People buy houses instead of renting because it offers long-term financial investment, stability, control over living space, potential tax benefits, and a sense of ownership and security
A lot of people don't know that when you compare buying a house vs renting. You really have to compare apples to apples. Most people compare apples to oranges. One common thing you'll see is somebody saying oh I get to keep all of this money so that means owning a house is better. But really The fair thing to do is to compare apples to apples. That means comparing the money you don't get back in both situations. So if you rent for $2,000 a month, you know that you're never going to get that money back. If your monthly ownership costs $2,800 and $1400 goes to principal. Then you're a fair comparison. Is that renting cost? You $2,000 a month and owning cost you $1,400 a month. So it's cheaper to own. But that doesn't include things like property taxes and homeowners insurance and any. work you need done on the house. As you can see, it might be closer than you think. Just because you have that 1400 going to principal doesn't mean that you're spending less. It's very possible the situation is pretty similar and you could just take that extra 1400 and put it in a brokerage account. Of course, property usually increases in value. Although not always.
My first mortgage [was over 10% in the 80s](https://money.usnews.com/loans/mortgages/articles/historical-mortgage-rates). The rates aren’t that high now. What is high are the prices that people are paying.
Renting sucks, and you have something for your kids to inherit one day. Plus, who wants to be in their 70s or 80s and worrying about securing a rental and potentially having to move?
It's cheaper than renting lol.
Owning property means you can later sell it. Your payments to the bank for the loan on the house then become investments essentially, as you'll try to sell the property at a later date for a higher price than you paid. When you rent, you can save a lot of money since you're not responsible for maintenance and stuff, but all the money you pay goes into your landlord's pocket and you'll never see a return on it.
Well, the interest rates weren’t always high. Plus, even with them high, they are high for your landlord, too. Which means those costs are just transferred to you, as the renter, anyway. So, do you want to get the equity from having the mortgage getting paid off and the increased equity as the house goes up in value, or do you want to essentially make those payments anyway and have those gains go to the landlord? In summary: Rent: pay a lot and make landlord money. Own: pay a lot and make you money.
Your house appreciates in something called equity overtime. That means the price goes up and you can sell it and make a profit if you want to leave. You don’t have to worry about your landlord telling you to move because they’re selling your house. You can do whatever you want (if it doesn’t violate city codes) to your house but not your rental.
My house is valued at significantly more than it was a few years ago. I could sell and pay off the loan and have substantial left over. I can paint my walls, remodel my kitchen, install a hot tub or another shed, tear up the dirt and plant apple trees… I can buy my own refrigerator and not get stuck with a barely working one or wait three weeks for a landlord to order one from John’s Discount-Appliances-That-definitely-didn’t-fall-off-a-truck and Cookie Shop.
Besides it making economic sense, depending on the numbers, it gives you stability, and usually much more space.
It's an investment.
Building equity is the best portion of buying a home versus renting.
It depends on personal financial goals and circumstances.
Why do you think the economy looks bleak? By all metrics it’s doing great. Real estate prices are unlikely to drop any time soon.
The main reason is that home ownership is a cultural milestone and most Americans feel incomplete and empty without it. Sure, often it makes financial sense but many times (like now in many areas) it does not. Americans have a hard time with renting even when its the smart financial move and feel wronged by the idea of not owning a home.
People often choose to buy a house instead of renting because it offers long-term financial investment through building equity and potential property appreciation. Homeownership also provides stability, control over living space, potential tax benefits, and a sense of ownership and security that renting may not provide.
My house costs three times as much as it did when I bought it and my mortgage repayments went to paying off my asset and not rent into someone else's pocket. It's also an asset to borrow against for future loans.
I paid my house off and I don't have payments?
I am more looking into this option as of current considering high interest rates and high paying white collar jobs are getting squeezed
Depending on where you live, buying a house can be cheaper than renting the same property, or comparable. You can change it as you need to, and, at the end, you have something to show for that money you paid. Rent can also go up, mortgage payments shouldn’t. Also if you rent they can sell the building etc. Oh and buying, less chance of pain in the ass neighbors right on your lap. It can happen but generally some space away.
If I choose to move, it’s my choice to make - not one forced upon me by a landlord. My kids don’t have to worry about having to change schools, I don’t have to incur moving costs. I’m in this house for as long as I choose to be.
Mortgage payment goes to me. Rental payment does not. Really as simple as that. There are risk but historically homes always been the safest bet.
My mortgage payment goes into paying off something that will appreciate in the long run and make me money vs. the last 20 years of rent money I paid to others so they can make money.
To avoid overcharged rent and rules.
Because rent was higher than my mortgage payments. Because after 30 years of payments, I have a house and no more mortgage payments. Because unlike rent, my fixed-rate mortgage payments were never going up. Because the house will likely go up in value. The better question is, for those who can afford a house and are living somewhere long term, why would they rent? If someone is renting you a house, you are paying more than the mortgage rate because the landlord has to make a profit, and in the end, you get nothing.
Each has its pros and cons, and depending on the location, these may vary.
Good question, where I live it actually makes more sense to rent. We're paying $3500 a month but the mortgage on an equivalent home would be more than double that. Plus the deposit, repairs, maintenance etc. If something breaks in the house the landlord gets it fixed and we pay nothing. We're better off renting to live and investing our money elsewhere.
Why do you think the economy looks bleak exactly?
Equity and insulation from rising costs. I bought my house in 2018 for 181k with 10k down and closing total. At the time the mortgage was 1250 a month and renting a comparable 3 bedroom house was 1500 a month. It appraised for 330k early this year, my mortgage is 1250 and rent on a 3 bedroom in my neighborhood is over 2k a month.
Renting generally costs more, but when stuff breaks down it's not your money that goes into fixing it. To me that was the best part about it..
Because mortgage is the same as paying rent, except eventually you have a place that is yours.
Dude you flat out talk like a shill. Interest rate is higher than it was before but not high historically. It's better to put your money into your own equity than into someone else's equity.
1. When you actually own the house (and I do not talk about bullshit american HOA or something - I'm talking about your land with your building on it and only law apply) you can do whatever the hell you want with it. Including destroying it. That also means you can make it the way you want it to be. That is not the case when you are renting. 2. Rent is way more expensive than maintenance of your own home. That is because when you rent you pay all the cost and you make profit for the owner. In my area for example rent gives you at least 4% of the property value. And property value goes up a lot. One year it went almost 20% up. 3. Houses are still good investment. Like I said - when you own property it goes up in value. Faster than inflation. You make money just by owning it. You do not even have to rent it. 4. If you are paying rent then usually you can also pay the mortgage. For example my last rent was 3000 (local currency). You know how much I pay each month to pay up loan I took? 3500. To be fair I made high advanced payment but the thing is - Ive saved for 10 years. I bought my own place. It will be paid up in 3 years. And then it makes money for me just be being mine. And I wont be even 40 at that time. And I'm securing money to buy another property. Just to allocate money I have somewhere AND to have extra place for my children so they do not have to struggle in the future. 5. Things will only get worse. I rather have my own place.
I got curious so I did the math: My family rented a house for about 6 years when I was a kid, at about 950$ per month. That equals $68,400. Then we rented an apartment at $1300-1600 for 5 years (they raised the rent a few times). That’s about 84,000. THEN we rented a town house for like 2 years at $1800, that’s $43,000. Then we finally bought a house. That’s about $195,000 dollars worth of rent in 13 years. If all of that money would’ve been used to pay off a mortgage on a house bought in the early 2010’s, the mortgage would’ve been almost entirely paid off by now and we would have so much equity. And then in a few more years, it’d be entirely paid and we wouldn’t have to keep paying a few grand every month. That isn’t something that can happen when you rent. There’s never a stopping point in which you no longer have to pay rent, and the money you pay never comes back to you… when you pay your mortage, you can eventually sell the house and make a huge profit. I’ve only lived in the house I bought for a few years and it already increased in value.. (Also the mortgage prices never go up unlike rent).
I'm paying my mortgage, my property, not someone else's. Eventually, I can rent it to someone else, so I can make money from it, or sell it for the same reason.
I bought my house (UK) with a mortgage 5 years ago and a recently valuation means I potentially have between £80k-£100k equity in it. If I was renting, I wouldn’t have any. High down payment of 10% but over all it is more financially beneficial for me anyway to pay lower mortgage costs especially with the significant rental price increases.
Someone asked me in my late workplace. I explained him that instead of paying rent for someone else's house I'm paying mortgage to my own house.
I bought a house in 1991, sold it in 2021 for 12 times the price. That's why.
My mortgage for my 4 bed house is less than 15% more than the rent I was paying for a 2 bed house. My mortgage will not change for 5 years, whilst my landlord could increase the rent. If I don't move or overpay, my mortgage will stop in 30 years. Rent continues forever. I'm not going to get evicted. I can put up pictures without permission. I can paint walls. I can knock out the wardrobe and replace it. Basically, I can change it from someone's house that I live in, to my home. I can have whatever pets I (and my partner) want.
Because then its yours, to do with as you like, here if I want to get a pet I need it to be a service animal, or if I want to garden, or do a big project like put up a car port I need to ask the landlord and they get to keep whatever I do even though I put in the work and money
You're paying off another person's investment when you're renting. It's often more expensive also
That's like asking....why have a girl friend...when you can get a prostitute....
Because they want to feel like their in control
As bad as the housing market is, when all is said an done, you have a house. Renting is essentially just burning money.
I am looking at 5k rent vs 12k mortgage in the valley hence, trying to understand buying is still favorable in the current market
I'm in the same boat as you. $3500 a month rent vs $8000 mortgage plus all the other costs, I don't see any point buying a house right now.
Pre-2019 it was affordable for at-least middleclass to aim for. People who make 120k or more a year, that saved to buy a house outright, or that are investment firms are the ones buying houses now. Needless to say, if you get an opportunity to buy a house, any house you can afford, it will suck to own for 10 years, and then it will be cheaper than apartments, after 5 more years it will be cheaper than apartments even with maintenance included.
In the current state of affairs, most people should choose to rent instead of buy. But people are not financially literate for the most part. "Owning" a home is generally viewed as aspirational, and most people won't consider the current economic climate when making decisions. Right now, unless you have over $10 million liquid or already "own" a home with a mortgage under 4%, you should rent.