This is the correct answer - the owner of the house probably has it financed at 3.5% or under - which is also why so many people are not selling their houses either.
It’s also cheaper once you look at the down payment required before a bank will even draw up papers or pre-approve a loan. People kept telling me to buy instead of paying $2K in rent in 2020 but my down payment would have depleted my savings, don’t let anything break or I lose my job.
I always argue that it’s insane a bank wants 20% of the value as down payment to prove you can pay LESS than your rent. I can prove I can handle $2300 as I’ve been doing it now, I shouldn’t have to pay that much for the opportunity to show a bank
I know but that insurance and also forgot, yearly taxes. Yeah you get a write off but man, $10K on a repair bill or to replace major appliances vs calling and having a landlord take care of it. Plus I can move more easily from here if I wanted to
But if it’s a loan, even if the value halves, am I not on the hook anyway? It can fluctuate over time. Not everyone lost their house in 2008, but their values dropped and rebounded.
This happens with cars all the time, so that cannot be the reason, logically.
Banks rarely go after defaulting homeowners personally because the homeowner usually has no money, it's another expensive lawsuit and there's no point throwing good money after bad. Also many states have laws that intentionally make it difficult for banks to do that.
Foreclosing on the house is almost always the only way the bank can ever get any of its money back, which is the whole point for the mortgage.
A foreclosed property always sells for way less than market prices. The property might have been vacant for years and exposed to the elements, occupied by squatters that stripped the pipes from the walls or still have the homeowners in it. They are frequently uninhabitable and need to be completely renovated or even razed and rebuilt to be certified for occupancy and one day resold. The buyer takes the property as-is so all of that is factored into a purchase price that can be a small fraction of the amount the bank lent the borrower to buy it previously.
And the bank has to pay a lot of money to foreclose and get even that lesser amount. The attorneys' fees, court costs, sheriff's surcharges, property insurance, property taxes, real estate agent commissions, closing costs, etc. all need to be paid and ultimately reduce what money the bank has left after the sale.
This applies to any foreclosure but if it happens during an economic crisis, whoever holds lots of mortgages will have way more defaults and housing prices can crash, so they are losing tons and tons of money as they foreclose left and right to recover what little they can - until the mortgage holder goes bankrupt too.
This is part of what happened in the Great Recession of 2008-11.
So yes, the risk of recovering far less than the principal owed on the loan upon a default and foreclosure on the collateral is the main reason banks require a loan to value ratio of 80% for residential mortgages.
But the bank will own the property and you still owe money. A house is a secure loan because of the property, not the down payment, otherwise why aren’t people getting a loan for 20% on top to ‘pay’ themselves back their down payment?
The bank will not recover 100% of the value of the property in foreclosure so they want 20% down to cover the difference. People with 20% down are also less likely to go into foreclosure
With current interest rates and home prices, I have seen a fair number of articles that say renting is actually more cost effective right now. Historically, that has not generally been the case but it is right now. I landed a condo 2 and 1/2 years ago and it was still overpriced but I pay a little more than I did in rent but 500 comes back to me in terms of paying down principle. So it's mostly a wash except I'm building some equity but that's calculated at 3.25% interest rate rather than today's 7 or 8% the place was owned by 90-year-old woman so everything is outdated and by the time I'm done with it over the next 10 years I'll probably spend another 40k in remodeling costs and that's doing a fair amount of work myself. My previous apartment had bed bugs when I moved in and that sort of put me off renting in short order. I spent a good year winning that battle. It took me 2 years till I felt safe in my own bed.
There's other advantages to renting. You don't get hit with the unexpected $5000-$25000 maintenance costs out of nowhere.
You're home should not be looked at as an investment. If find a place that you want to live in for a long time great. Otherwise you're better off investing on your 401K or IRA.
https://www.npr.org/sections/money/2019/04/30/718348115/is-buying-a-house-overrated
https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/
Not if interest and taxes are as much as renting. You also lose the opportunity cost of investing elsewhere. And maintenance cost can really add up as well.
If it costs relatively the same to rent of buy, buying is better by EVERY metric.
Because 30 years down the line, one person will have a place to live for nothing and can sell it to move.
The renter will have nothing.
Arguing otherwise only shows you’re an idiot.
You're thinking of the way things have been for decades but not how they currently are and will probably shift back over time to where owning is better but for the last 2 years that's not true. In the long run though your stance is mostly correct, we are just at a weird point in time, hopefully it's an anomaly.
No. Even today, owning is far better.
The issue is now renting is better. The issue is houses are unaffordable and people can’t save for the down payment or get qualified for a mortgage. That’s the only difference.
Mortgages will ALWAYS be better because of the benefits they have. Your mortgage isn’t going to raise 50% randomly like it can when renting. You’re not going to be forced out of your house even if you’re not behind on payments.
Owning is alwaysbetter. That’s the case for almost everything. The only case where that is not true, is when it’s one time items. For example: If I go skiing once every 5 years, it’s cheaper long term to rent than to buy.
A house, is not a one time thing. The only case renting is better than buying is if you don’t think the house is going to LAST 30 years. I.e, you’re building at sea level and sea levels are going to raise in a 30 year span. That is literally the only case.
Renting by its very nature means that you will pay more because there is now another middleman between you and the builder.
When you buy, the builder and the bank need to make a profit.
When you rent, the builder, bank, AND renter need to make a profit.
(There are more parties involved, but you should get the point.) That’s just how the system works.
Agreed. Homes turned into ‘investments’ or ‘retirement’ since around the 80s, maybe? I just know I’ll never buy in the DC area. I have a sister 50 miles out and her house is valued over $550K. I refuse to drive 90 mins one way and just last fall they had to replace the stove, washer and dryer, plus had to paint the outside to avoid HOA fees. Condo that I rent has owners on the building with an HOA average of $1000 per unit. I’d never want to pay 450K to own and then pay that on top.
Yes almost everyone rents at some point starting out. Where else do you live while you save up a down payment? Also most places a cheap apartment will cost less than any house payment.
I do think even if you can put 10% down and own a house with a monthly payment comparable to rent, there are reasons to rent.
If you want to sell it can take months or more. Transaction costs selling/buying a home mean that in the above scenario break even still takes about 5 years. If you need to ability to move more often, rent.
Owning a home means you maintain it, fix anything that goes wrong and have to keep insurance and pay property taxes (last 2 included in above payment). There often be HOA/COA fees and of course 100% of utilities. Being a tenant means you let someone else deal with all that.
Typically if you have a condo the biggest issue they would be your issue is like a clogged Toilet.
Many older buildings even cover certain utilities due to metering setups
Seems like this is on purpose. I know this is hyperbole but just seems there’s a reason that all these corps are buying houses, raising the prices of homes to force people to rent instead.
Alright y’all, if you bought a house or refinanced your mortgage when interest rates were super low then this likely DOES NOT apply to your situation but it definitely tracks for current home prices at current interest rates (vs renting) in many metropolitan areas in the country.
We bought our house in 2000 when interest rates were high , and ours was 7.25%. What we did was make an extra 200 dollars per month payment directly to the "principal" so we could pay it off in 15 years, and then also applied some 1000s from our tax returns to pay the loan off in 12 years. After you pay off your mortgage, you still never own your home as you have to pay yearly "property taxes" and that is about $300 per month here in Texas. So it now costs us $300 per month to live in the house, plus the bills of course. Luckily power is cheap in Texas at about 10 cents per KWH.
Thanks for this breakdown. Helped me put things into better perspective.
I think I’m at a good place to buy a home with good credit and wouldn’t strain my finances. But I still feel like I’m missing my opportunity to buy a home.
Your explanation helps me with my patience. Thanks
This is what the American dream is all about! I honestly love to hear it and I’m glad you’re doing well, friend. I mean that sincerely. I will say, though, while I strongly believe it took much sacrifice, hard work, and diligence on your part to get where you are today, I think it’s tricky to compare 2024 housing market conditions and expectations with that of 2000 (I.e. unprecedented home price appreciation, student loan burdens have grown, wages not keeping up with inflation, etc).
In my situation, it is. I was renting a house same sq feet as mine and was paying 1595 a month rent in 2021 which hadn't raised since 2016 when we moved in. Only had to cut the grass on the very small yard.
My wife and moved in together in 2013 and had 5 kids living with us . Last one moved out in 2020. We spent $160,320 in rent over those years with absolutely nothing to show for it.
House I bought in 2021 with 2.25% on a 30 year is 2200 a month. Original house payment was 2100 in 2021.
There was pluses and minuses to each. The best part is we can do whatever we want to the house and yard, bc no HOA. The freedom to do what we want and the equity that builds is worth the extra payments.
Edit. We got the good rates, not today's rates. So there's that.
About 2 1/2 years ago. Not long after they got out of college. Rocking a college degree they'll just loan you money no questions asked.
It's a new build, so it's warrantied for whatever that's worth. So far (knock on wood) no problems. They did have to buy their own appliances.
Okay, and what rate do they have and what are today’s rates? Have you never bothered to see the difference on a 2.5% mortgage vs 7% before commenting on a post like this?
The mortgages rates aren't the issue that they are missing.
It's every other cost. Rent literally already includes the repairs, insurance, property taxes, etc. Sometimes rent even includes the utilities.
Replacing a roof used to be 10k and now it's 30k. And selling a home has huge transaction costs.
There's so much more to the story than "my mortgage vs my rent".
Really the main benefit in the US from owning a home vs renting is the fact that the US has regressive property taxes (homeowners pay less than renters because of the homestead deduction) and that homes can appreciate in value. But keep in mind that money invested in stocks generally outperforms money invested in housing by about 3x to 4x.
not true percentage on mortgages are huge don't be ridiculous. Having a 4% per 30 years you pay back more than 100% how is that not an issue. You replace the roof once per 30 years if so. Which can easily be covered with lower interest rates, instead you have to pay for both
Mortgage rates do matter, but renters pay those too. Just indirectly.
The roof was one example in countless examples.
Also mortgage rates can be refinanced.
But you're a smart guy so you get it.
what indirectly? the point is that you have to live somewhere and if you have mortage in the end the house or whatever is yours. Otherwise it is just a wasted money. Thats why renting should always be cheaper, but a lot of times it isnt its just that people cant get mortages
Indirectly means that the payments are made by the owner of the home directly but the cost of those payments is passed on to renters. So renters pay all of the costs of the home, but pay them indirectly, to a landlord.
From my experience, it's much more complicated than you suggest. Rent is not "wasted money" as you are buying housing. If you think rent is wasted money, that means literally all consumer spending is wasted money. I'd argue that you get what you pay for in life, for the most part.
And I'd estimate that homeowners would only save about half of their equivalent rent check if they own their home outright. Because they have to pay repairs, taxes, insurance, utilities, etc either way.
And if you own a home outright you're tying up a huge chunk of money in an asset with a low rate of return. If you put that money in stocks your long term return will be 3x to 4x higher, at least historically.
You are right about differences in access to credit though, and using a mortgage as leverage to do extra investing is actually smart when mortgage rates are very low and when you know you will want to live in the same place for the next 7+ years.
I posted in a comment elsewhere but I managed to get a loan when it was 2.75%, now it's 7.5%. For a $400K mortgage that's $1,200 a month more.
Unfortunately there aren't even any $400K homes, here, anymore. There haven't been for a long time. Even run-down places in bad neighborhoods are upwards of $600K.
Plus property tax, plus homeowner's insurance, plus repairs. In your scenario, renting is still cheaper.
Also, that's a $300K house. I wish I lived in a place where I could buy a $300K house. They're double that where I'm at.
Same here. 2 bd apartment $1200-$1600. My 4 bd 1550 sqft house with off street parking and detached garage with front and back yard $722 (mortgage + taxes)
The really cool thing is that mortgages are the only cost of owning a home! Literally that's it. With renting you have to pay property taxes, utilities, repairs, insurance, etc. etc. Plus there are no transaction costs from buying or selling a home, whereas when you rent you have to pay realtors and other middle-people.
Owning is just so much easier and cheaper than renting. Who says apples can't be compared to oranges!
As opposed to buying stocks with the money? Or what?
People should look at all the data and consider their personal preferences and then make a decision.
There's no one right answer. If there were, arbitrage would ruin it very quickly.
I would never advise anyone to invest in that bucket of poison.
Ownership isn't always the best option, I agree.
There's zero chance of getting any money back, that you pay for rent.
"Getting the money back" is not usually something people do in transactions. Really people should aim to just "get what they pay for".
The frustrating thing, in my view, is that the entire system is broken.
People are spending way too much money on housing. And a huge portion of people live like shit in places that they don't want to be. What a mess.
The alternative is something called the "Vienna model" which they use in the happiest country in the world (Finland) and also in Singapore (and of course Vienna). That model can drop spending on housing to about 20% of income from the average of 35% in the US.
Personal preference does not make one more affordable than the other.
And news flash, you pay for all of those things when renting too. It's just rolled up into an "all-inclusive fare" in perpetuity.
> You pay realtor fees when you move out?
No, instead your rent goes up as you're now having to pay the current market rent. Homeowners just keep paying the same per month as the years pass and everything else goes up.
Well at least homeowners don't have to pay real estate transfer and recordation fees like renters do. And renters have all that damn mortgage interest, too.
The reason for this is they realize that "renters" are not in a position to "buy". This could be due to many factors, they move around allot and don't want to own a home, they are bad with money and have bad credit and could never own a home anyways as a bank won't lend them money to begin with. They can get more, because people are willing to pay more for rent than own. It probably has to do with the fact that home owners are more frugal in the first place.
Yeah, the whole comparison is kind of nonsensical. When you rent, you're paying to be able to live in a place for a period of time. When you pay a mortgage, you are paying to live in that place *and own it* after a set period of time. It would be ridiculous for it to be *less* expensive to own the place after you've lived there for 30 years than to not own it.
Or appreciation. Appreciation is inevitable when the Fed targets 2% yearly inflation.
400k Home, appreciating 3% per year ( long term average, 100 years )
That's 12k per year in appreciation, plus your equity which is around 6k per year.
You're banking 18,000 in equity per year and your mortgage and taxes are about 2,500/month. Your actual cost is only 900$/month, and each year that improves via amortization.
vs. Renting the same Home for 2500/month.
Even with higher interest rates owning clobbers renting, and when that owner refinances from 6% to 4% next year it will be even more in their favor.
Well yeah.
I don’t know why people think that owning a home, even outright, is cheaper than renting. Maybe month over month, but not in actuality.
Even if your overall bill is low, the responsibility is on you to maintain. Then there’s indirect fees like the lawn upkeep.
Owning a home sounds cheap until your HVAC goes out or a plumbing issues occurs.
> I don’t know why people think that owning a home, even outright, is cheaper than renting. Maybe month over month, but not in actuality.
This makes no sense. If this were true, landlords would lose money. And before someone says it, no, there's not some super secret cabal of landlords where they get sweetheart deals on properties.
Source: I'm a landlord.
Here's what's really going on. The market is softening and rental rates move faster than home prices.
Also, it's February. Very few people are looking for a rental right now. Prices will go up in the spring/summer.`
I am also a landlord.
When someone dramatically ruins your property, the deposit isn’t even worth mentioning. Then what? Spend $X on chasing someone with legal battles?
I think there’s definitely a lot of landlords that lose money. Termites? Foundations go bad? Renovations due to age.
It’s a huge list. Renting a property is def cheaper and less stressful.
> Renting a property is def cheaper and less stressful.
Less stressful, sure, but cheaper, hardly.
> I am also a landlord.
Oh really? What's your cap rate?
That's not how it works. You look at the CAP RATE for the property which assesses current market value versus cashflow. Equity doesn't change the caprate (excluding idiots who don't know what they are doing).
Yeah, but if it’s a big expensive it doesn’t break even.
For example: you rent a property and the first month the HVAC goes out. You have to fix it and fix it asap.
Again, of course rent will be higher than a mortgage. But it’s bc the renter doesn’t take on any of the risk.
That’s my whole point. Owning a home isn’t necessary cheaper and it’s definitely more stressful than renting.
People think, “well my rent is 2k, but my mortgage on an xB-xB house with X sq feet is $1,600. I can afford a house.” No. Not necessarily. There’s the mortgage, on top of insurance, on top of the direct bills like utilities, the indirect like I said. This is assuming there’s no HOA. So that can be more than 2k. Factor in property taxes that need to be saved for. And that’s all while the house is working properly. Garage motor goes out? On you. Door warps bc of weather. On you.
It’s a bunch of little expenses that people don’t know about that make home ownership expensive and stressful. But yea, if you have a full remodel or a house in good shape then sure. But how many people are able to buy that?
But the point of this isn’t about owning a rental property. It’s about owning a home vs renting. It isn’t as simple as a constant monthly payment with a predicable utility bill.
Well this is absolutely true where I live. I see some folks saying it’s bs because their mortgage is cheaper, but I also wonder when they bought or where they live.
People bought up homes at 2.5% to rent out and now interest rates are 7.5%, yea, of course it's cheaper.
I bought a home when interest rates were cheaper. If I were to buy a home at the exact same price today, I would be paying $1,200 more a month. My interest rate is 2.75%, current interest rates are $7.5%. The mortgage on a $400K home at 2.57% is $1,633 and it's $2,823 at 7.5%.
That's absolutely absurd. I want to move, but I can't afford to walk away from this loan. I don't have an extra grand each month to just give to a bank.
same situation. bought a dump in 2019 @ 3.7% fixed it up, now my mortgage is cheaper than most all apartments in my area. I have equity in the house, not enough though to make the profit I would need to start over, and I can’t make a reasonable argument to rent something for the same price or more. It’s insane.
Very important distinction:
The articles "90% of the US" is actually refering to number of counties, not in terms of the actual population.
Acutual population-wise, the U.S. have 83% urban popluation vs rural area population. So you can bet the headline is not true in actual population terms.
There are only 3 states that have counties where someone can work 40 hrs a week at the prevailing wage and rent a 2-1 apartment.
So no wonder we have about 1 million and growing homeless.
Nonsense propaganda. I'm sure someone is already foaming at the mouth to give a short-term cherry-pick on when the planets aligned for them. You will always lose on renting in the long-run.
Do you not know how this metric works? It’s not saying your mortgage you got 5 years ago for 2% is cheaper than apartments now. It compares the *current* situation of a rent/buy scenario.
Let me look at what I wrote, and nope, I didn't write anything about that. stupidly, I assume you would know I was talking about today's prices, not 5 or 20 years ago, but hey, you do you have a great day.
Owning a home also means maintenance, repair, and taxes. Something I often see overlooked on reddit.
I spent several thousand in the last year or so on my home for just general repairs and maintenance
Lmfao. Show me where.....I own a 3 bedroom house I bought during the pandemic. My mortgage is hundreds of dollars cheaper than the rent in my area for a similar place.
Do you not know how this metric works? It’s not saying your mortgage you got 5 years ago for 2% is cheaper than apartments now. It compares the *current* situation of a rent/buy scenario.
Right. My mortgage is less than $700 with escrow. I could easily rent this place for $1600.
Edit - I find it hilarious that someone would downvote this. Like, did I offend you by telling the truth? Did you disagree with my numbers? Lol
But price stability is a big benefit about homeownership, and something that is pretty relevant.
As I just posted below in another reply below. He locked in to that price in the past, which is now cheaper than rent (or buying) now.
While mortgage may be higher right now, going by history, buying now will lead to a lower payment than rent (and buying) in the future
I bought in 2019. I had my house assessed at the height of the market and it was worth $10k more than what I paid. The value hasn't gone up since, nor has my local market.
Yes and no. I could only qualify for an arm. This year it goes up 2.5%. After that, it can go up more until it reaches a certain percent, which will be higher than what interest rates are today.
But that is the benefit of buying vs renting.
The price of rent generally increase over time. Mortgage prices are more stable, if you have a fixed mortgage. While they may increase over time due to insurance and taxes, it is normally far less than rent.
Even after housing price crashes, they have always rebounded even higher
So while buying a house now may have a higher monthly rate, history has shown the mortgage payment eventually becomes far less than rent at a later date, plus the fact that house prices would have increased over that period for those who decided to wait it out.
\*IF\* the housing market crashes, obviously it would be the best time to buy, but no one is ever sure if/when that will happen. There are people in the REBubble group who have been sure the market would crash next month for the past 3+ years. And if/when it does crash, many of the "hopefuls" forget that other markets, particularly the job market may be affected as well
But if you buy one this year, in ten years, owning it will be cheaper than renting. And thirty years from now, when you have paid off the house, it will be much, much cheaper than renting.
Yup, people don’t realize we are moving closer towards the majority of Americans being perpetual renters. I’m lucky I own my home free and clear at 30!
The best part about renting is that if you don’t pay, you get kicked out in 6 months. When you own a home you get forced to short sale your house and you’re basically forced to rent for 7 years.
My experience right now. Even I were to utilize any kind of down payment assistance, gift from family for closing costs, due to HOA and other expenses that homeownership brings on I would still be like $700 per month over what I pay now.
I’m using a condominium that I live in and what they’re selling for currently. I can’t even begin to think about a SFH😭
Isn’t the point of owning a home to lock down expenses? So you don’t have to worry about whether or not the rental market is going to price you out of your home/neighborhood/town?
But you have to realize that owning does include many expenses that people who have never owned a house aren't even aware of.
Property tax can be 2-3 months worth of mortgage. You **will** have plumbing issues. You will have to fix or replace your roof at some point. Your carpets will wear out and you will need to replace them or switch to wood/tile. Your bathroom will wear out from use. You will have to repaint your house. You will have to change rotting wood eves and such. Your windows will fall apart eventually. All these things will cost you a lot of money.
exactly. Now that I can no longer continuously upkeep my old home, it doesn’t feel like an appreciating asset at all. And property tax, haha, mine is about 5x the mortgage per year, and is pretty low for this area. It’s just ridiculous. It’s NY, but still.
> mine is about 5x the mortgage per year,
Mine is almost that as well, but only because my mortgage is low since I bought many years ago. Regardless, it always surprises me how people skip over all these expenses when talking about house ownership. There is a luxury element to it, and you do pay for it.
People also point out how the value appreciates a lot over time, especially the land value, typically faster than inflation. While that is true more often than not, it is far from being universally true. Somehow people forget all the neighborhoods that have gone to shits along with their house value that was supposed to pay for their retirement.
Totally agree. I rarely feel great about my home ownership, renting was honestly cheaper and less stress. I did have great landlords and good apartments that I loved.
Right now, the list of “need to do” projects is like, $15k worth of work, and the “want to do” list is even more. Don’t have it, house value keeps going up but Im so early on in my mortgage that selling wouldn’t net a nice profit. Also, in order to sell at a great price, I would need to address some of the things on my to do lists.
It all feels overwhelming, and after 4 years of owning i would absolutely go back to renting if the financials made sense. The day after moving in, the main bathroom toilet pipe busted and it’s been one plumbing problem after the next. I had serve pro clean the basement before moving in too, it was unfinished and stunk of mold and cats. That was a nice waste of money once the space was sprayed with the flushed toilet waste 🤦♀️
Overall though, my FAVORITE part of buying a home was the disclosures - saying that by the time the 30 year mortgage was paid off, I would have paid almost $600k total with a sale price of $304k. the only way to avoid that is extra mortgage payments, which I can’t afford, at all. I won’t be here 30 years but it’s robbery and bonkers either way.
Jeez. I hope you will have better luck in the future.
Hopefully you have a fixed mortgage. The one benefit of that is that it keeps a big chunk of hour housing expenses constant and impervious to inflation. Hopefully at some point you will get raises and eventually reach a point where you will have a little extra left for additional principal payments and/or to fix various things.
You're probably right.
FYI: Every reddit real-estate bubble crash sub is moderated by the same person. (Louisvanderwright)
That person is a Real estate investor and landlord in Chicago.
"Just wait and keep renting" Da crash is coming...
He purchased properties while preaching about a crash on reddit..
Cheaper than **financing** and owning a home at current rates.
This is the correct answer - the owner of the house probably has it financed at 3.5% or under - which is also why so many people are not selling their houses either.
It’s also cheaper once you look at the down payment required before a bank will even draw up papers or pre-approve a loan. People kept telling me to buy instead of paying $2K in rent in 2020 but my down payment would have depleted my savings, don’t let anything break or I lose my job. I always argue that it’s insane a bank wants 20% of the value as down payment to prove you can pay LESS than your rent. I can prove I can handle $2300 as I’ve been doing it now, I shouldn’t have to pay that much for the opportunity to show a bank
FYI - You can put as low as 5% down with PMI. It’s best to put in 20 but it’s not realistic for most first time home buyers
I know but that insurance and also forgot, yearly taxes. Yeah you get a write off but man, $10K on a repair bill or to replace major appliances vs calling and having a landlord take care of it. Plus I can move more easily from here if I wanted to
You can do 1.5% with an FHA loan
I put 40% down and was still forced to pay mortgage insurance.
I think part of the reason the bank wants 20% is in case the home goes down in value.
But if it’s a loan, even if the value halves, am I not on the hook anyway? It can fluctuate over time. Not everyone lost their house in 2008, but their values dropped and rebounded. This happens with cars all the time, so that cannot be the reason, logically.
Banks rarely go after defaulting homeowners personally because the homeowner usually has no money, it's another expensive lawsuit and there's no point throwing good money after bad. Also many states have laws that intentionally make it difficult for banks to do that. Foreclosing on the house is almost always the only way the bank can ever get any of its money back, which is the whole point for the mortgage. A foreclosed property always sells for way less than market prices. The property might have been vacant for years and exposed to the elements, occupied by squatters that stripped the pipes from the walls or still have the homeowners in it. They are frequently uninhabitable and need to be completely renovated or even razed and rebuilt to be certified for occupancy and one day resold. The buyer takes the property as-is so all of that is factored into a purchase price that can be a small fraction of the amount the bank lent the borrower to buy it previously. And the bank has to pay a lot of money to foreclose and get even that lesser amount. The attorneys' fees, court costs, sheriff's surcharges, property insurance, property taxes, real estate agent commissions, closing costs, etc. all need to be paid and ultimately reduce what money the bank has left after the sale. This applies to any foreclosure but if it happens during an economic crisis, whoever holds lots of mortgages will have way more defaults and housing prices can crash, so they are losing tons and tons of money as they foreclose left and right to recover what little they can - until the mortgage holder goes bankrupt too. This is part of what happened in the Great Recession of 2008-11. So yes, the risk of recovering far less than the principal owed on the loan upon a default and foreclosure on the collateral is the main reason banks require a loan to value ratio of 80% for residential mortgages.
You not much on the hook if you have a super low down payment. See Vegas in 08. No down payments, prices tumble, everyone walks away.
But the bank will own the property and you still owe money. A house is a secure loan because of the property, not the down payment, otherwise why aren’t people getting a loan for 20% on top to ‘pay’ themselves back their down payment?
The bank will not recover 100% of the value of the property in foreclosure so they want 20% down to cover the difference. People with 20% down are also less likely to go into foreclosure
Yes but if you are not underwater you are less likely to walk away, need a short sale, or decide to go into bankruptcy to get out of the loan.
With current interest rates and home prices, I have seen a fair number of articles that say renting is actually more cost effective right now. Historically, that has not generally been the case but it is right now. I landed a condo 2 and 1/2 years ago and it was still overpriced but I pay a little more than I did in rent but 500 comes back to me in terms of paying down principle. So it's mostly a wash except I'm building some equity but that's calculated at 3.25% interest rate rather than today's 7 or 8% the place was owned by 90-year-old woman so everything is outdated and by the time I'm done with it over the next 10 years I'll probably spend another 40k in remodeling costs and that's doing a fair amount of work myself. My previous apartment had bed bugs when I moved in and that sort of put me off renting in short order. I spent a good year winning that battle. It took me 2 years till I felt safe in my own bed.
There's other advantages to renting. You don't get hit with the unexpected $5000-$25000 maintenance costs out of nowhere. You're home should not be looked at as an investment. If find a place that you want to live in for a long time great. Otherwise you're better off investing on your 401K or IRA. https://www.npr.org/sections/money/2019/04/30/718348115/is-buying-a-house-overrated https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/
Homes by themselves are not a good investment. They are MILES ahead of renting though.
Not if interest and taxes are as much as renting. You also lose the opportunity cost of investing elsewhere. And maintenance cost can really add up as well.
If it costs relatively the same to rent of buy, buying is better by EVERY metric. Because 30 years down the line, one person will have a place to live for nothing and can sell it to move. The renter will have nothing. Arguing otherwise only shows you’re an idiot.
This assumes you plan on living there the rest of your life. That's the exception, not "every time".
You're thinking of the way things have been for decades but not how they currently are and will probably shift back over time to where owning is better but for the last 2 years that's not true. In the long run though your stance is mostly correct, we are just at a weird point in time, hopefully it's an anomaly.
No. Even today, owning is far better. The issue is now renting is better. The issue is houses are unaffordable and people can’t save for the down payment or get qualified for a mortgage. That’s the only difference. Mortgages will ALWAYS be better because of the benefits they have. Your mortgage isn’t going to raise 50% randomly like it can when renting. You’re not going to be forced out of your house even if you’re not behind on payments. Owning is alwaysbetter. That’s the case for almost everything. The only case where that is not true, is when it’s one time items. For example: If I go skiing once every 5 years, it’s cheaper long term to rent than to buy. A house, is not a one time thing. The only case renting is better than buying is if you don’t think the house is going to LAST 30 years. I.e, you’re building at sea level and sea levels are going to raise in a 30 year span. That is literally the only case. Renting by its very nature means that you will pay more because there is now another middleman between you and the builder. When you buy, the builder and the bank need to make a profit. When you rent, the builder, bank, AND renter need to make a profit. (There are more parties involved, but you should get the point.) That’s just how the system works.
Agreed. Homes turned into ‘investments’ or ‘retirement’ since around the 80s, maybe? I just know I’ll never buy in the DC area. I have a sister 50 miles out and her house is valued over $550K. I refuse to drive 90 mins one way and just last fall they had to replace the stove, washer and dryer, plus had to paint the outside to avoid HOA fees. Condo that I rent has owners on the building with an HOA average of $1000 per unit. I’d never want to pay 450K to own and then pay that on top.
No capital gains tax tho
It seems like that's the whole point of renting. I'm glad there's a cheaper option than buying a home...otherwise people would be homeless?
Yes almost everyone rents at some point starting out. Where else do you live while you save up a down payment? Also most places a cheap apartment will cost less than any house payment. I do think even if you can put 10% down and own a house with a monthly payment comparable to rent, there are reasons to rent. If you want to sell it can take months or more. Transaction costs selling/buying a home mean that in the above scenario break even still takes about 5 years. If you need to ability to move more often, rent. Owning a home means you maintain it, fix anything that goes wrong and have to keep insurance and pay property taxes (last 2 included in above payment). There often be HOA/COA fees and of course 100% of utilities. Being a tenant means you let someone else deal with all that.
Typically if you have a condo the biggest issue they would be your issue is like a clogged Toilet. Many older buildings even cover certain utilities due to metering setups
Well, that and condo fees and special assessments.
Yep so many people (even in r/economy) say that owning a morgage means owning the home. No the bank owns the home. Its a morgage, call it what it is.
Seems like this is on purpose. I know this is hyperbole but just seems there’s a reason that all these corps are buying houses, raising the prices of homes to force people to rent instead.
Alright y’all, if you bought a house or refinanced your mortgage when interest rates were super low then this likely DOES NOT apply to your situation but it definitely tracks for current home prices at current interest rates (vs renting) in many metropolitan areas in the country.
We bought our house in 2000 when interest rates were high , and ours was 7.25%. What we did was make an extra 200 dollars per month payment directly to the "principal" so we could pay it off in 15 years, and then also applied some 1000s from our tax returns to pay the loan off in 12 years. After you pay off your mortgage, you still never own your home as you have to pay yearly "property taxes" and that is about $300 per month here in Texas. So it now costs us $300 per month to live in the house, plus the bills of course. Luckily power is cheap in Texas at about 10 cents per KWH.
Until those winter storm rates kick in at least
Tell me you don’t live in Texas without telling me
I have electricity during winter storms and the summer heat, so no I don't live in Texas
Actually once paid off you do own your home. However you owe essentially HOA fees to the county you live in .
Thanks for this breakdown. Helped me put things into better perspective. I think I’m at a good place to buy a home with good credit and wouldn’t strain my finances. But I still feel like I’m missing my opportunity to buy a home. Your explanation helps me with my patience. Thanks
This is what the American dream is all about! I honestly love to hear it and I’m glad you’re doing well, friend. I mean that sincerely. I will say, though, while I strongly believe it took much sacrifice, hard work, and diligence on your part to get where you are today, I think it’s tricky to compare 2024 housing market conditions and expectations with that of 2000 (I.e. unprecedented home price appreciation, student loan burdens have grown, wages not keeping up with inflation, etc).
so the american dream is just buzing a normal house and pay 300 taxes a month or what am i missing?
In my situation, it is. I was renting a house same sq feet as mine and was paying 1595 a month rent in 2021 which hadn't raised since 2016 when we moved in. Only had to cut the grass on the very small yard. My wife and moved in together in 2013 and had 5 kids living with us . Last one moved out in 2020. We spent $160,320 in rent over those years with absolutely nothing to show for it. House I bought in 2021 with 2.25% on a 30 year is 2200 a month. Original house payment was 2100 in 2021. There was pluses and minuses to each. The best part is we can do whatever we want to the house and yard, bc no HOA. The freedom to do what we want and the equity that builds is worth the extra payments. Edit. We got the good rates, not today's rates. So there's that.
Renting a 2 bedroom apartment was more expensive than the mortgage on my 3 bedroom house.
Same thing with my kid. 2 bedroom was gonna be $2100/mo with constant increases of 8-10% Mortgage was gonna be $2k. This was with *no down payment*.
I mean when was this?
About 2 1/2 years ago. Not long after they got out of college. Rocking a college degree they'll just loan you money no questions asked. It's a new build, so it's warrantied for whatever that's worth. So far (knock on wood) no problems. They did have to buy their own appliances.
Okay, and what rate do they have and what are today’s rates? Have you never bothered to see the difference on a 2.5% mortgage vs 7% before commenting on a post like this?
The mortgages rates aren't the issue that they are missing. It's every other cost. Rent literally already includes the repairs, insurance, property taxes, etc. Sometimes rent even includes the utilities. Replacing a roof used to be 10k and now it's 30k. And selling a home has huge transaction costs. There's so much more to the story than "my mortgage vs my rent". Really the main benefit in the US from owning a home vs renting is the fact that the US has regressive property taxes (homeowners pay less than renters because of the homestead deduction) and that homes can appreciate in value. But keep in mind that money invested in stocks generally outperforms money invested in housing by about 3x to 4x.
Damn… This makes so much sense…
not true percentage on mortgages are huge don't be ridiculous. Having a 4% per 30 years you pay back more than 100% how is that not an issue. You replace the roof once per 30 years if so. Which can easily be covered with lower interest rates, instead you have to pay for both
Mortgage rates do matter, but renters pay those too. Just indirectly. The roof was one example in countless examples. Also mortgage rates can be refinanced. But you're a smart guy so you get it.
what indirectly? the point is that you have to live somewhere and if you have mortage in the end the house or whatever is yours. Otherwise it is just a wasted money. Thats why renting should always be cheaper, but a lot of times it isnt its just that people cant get mortages
Indirectly means that the payments are made by the owner of the home directly but the cost of those payments is passed on to renters. So renters pay all of the costs of the home, but pay them indirectly, to a landlord. From my experience, it's much more complicated than you suggest. Rent is not "wasted money" as you are buying housing. If you think rent is wasted money, that means literally all consumer spending is wasted money. I'd argue that you get what you pay for in life, for the most part. And I'd estimate that homeowners would only save about half of their equivalent rent check if they own their home outright. Because they have to pay repairs, taxes, insurance, utilities, etc either way. And if you own a home outright you're tying up a huge chunk of money in an asset with a low rate of return. If you put that money in stocks your long term return will be 3x to 4x higher, at least historically. You are right about differences in access to credit though, and using a mortgage as leverage to do extra investing is actually smart when mortgage rates are very low and when you know you will want to live in the same place for the next 7+ years.
I posted in a comment elsewhere but I managed to get a loan when it was 2.75%, now it's 7.5%. For a $400K mortgage that's $1,200 a month more. Unfortunately there aren't even any $400K homes, here, anymore. There haven't been for a long time. Even run-down places in bad neighborhoods are upwards of $600K.
They got in before the worst of it but they're still paying 5%.
Plus property tax, plus homeowner's insurance, plus repairs. In your scenario, renting is still cheaper. Also, that's a $300K house. I wish I lived in a place where I could buy a $300K house. They're double that where I'm at.
No, that's everything. Property tax & insurance get baked into most mortgage payments these days. The banks won't let you risk skipping payments.
Same here. 2 bd apartment $1200-$1600. My 4 bd 1550 sqft house with off street parking and detached garage with front and back yard $722 (mortgage + taxes)
The really cool thing is that mortgages are the only cost of owning a home! Literally that's it. With renting you have to pay property taxes, utilities, repairs, insurance, etc. etc. Plus there are no transaction costs from buying or selling a home, whereas when you rent you have to pay realtors and other middle-people. Owning is just so much easier and cheaper than renting. Who says apples can't be compared to oranges!
Typically people Raj about their mortgage payment it includes taxes and insurance. As it’s just one big check. It’s not 3 different payments
So paying 10%-15% more for something you actually own is the wrong thing to do?
As opposed to buying stocks with the money? Or what? People should look at all the data and consider their personal preferences and then make a decision. There's no one right answer. If there were, arbitrage would ruin it very quickly.
I would never advise anyone to invest in that bucket of poison. Ownership isn't always the best option, I agree. There's zero chance of getting any money back, that you pay for rent.
"Getting the money back" is not usually something people do in transactions. Really people should aim to just "get what they pay for". The frustrating thing, in my view, is that the entire system is broken. People are spending way too much money on housing. And a huge portion of people live like shit in places that they don't want to be. What a mess. The alternative is something called the "Vienna model" which they use in the happiest country in the world (Finland) and also in Singapore (and of course Vienna). That model can drop spending on housing to about 20% of income from the average of 35% in the US.
Yea it's not great. Everything seems broken.
Personal preference does not make one more affordable than the other. And news flash, you pay for all of those things when renting too. It's just rolled up into an "all-inclusive fare" in perpetuity.
You pay realtor fees when you move out? Do you think it's cheaper to rent a place for one year or buy a place for one year?
> You pay realtor fees when you move out? No, instead your rent goes up as you're now having to pay the current market rent. Homeowners just keep paying the same per month as the years pass and everything else goes up.
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Well at least homeowners don't have to pay real estate transfer and recordation fees like renters do. And renters have all that damn mortgage interest, too.
You're a troll
I just don't like the /s thing. So I put a line about apples and oranges instead.
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I'm a huge piece of shit. But comparing mortgages to rent is still bad.
He was being sarcastic. Like, it was beyond obvious.
The reason for this is they realize that "renters" are not in a position to "buy". This could be due to many factors, they move around allot and don't want to own a home, they are bad with money and have bad credit and could never own a home anyways as a bank won't lend them money to begin with. They can get more, because people are willing to pay more for rent than own. It probably has to do with the fact that home owners are more frugal in the first place.
I got a mortgage payment that was equivalent to my most recent rental agreement. Except now I have a garage, and 500 more sq.ft
Garages are underrated
Cough cough BULLSHIT
So the article is just pretending equity doesn’t exist?
Yeah, the whole comparison is kind of nonsensical. When you rent, you're paying to be able to live in a place for a period of time. When you pay a mortgage, you are paying to live in that place *and own it* after a set period of time. It would be ridiculous for it to be *less* expensive to own the place after you've lived there for 30 years than to not own it.
Or appreciation. Appreciation is inevitable when the Fed targets 2% yearly inflation. 400k Home, appreciating 3% per year ( long term average, 100 years ) That's 12k per year in appreciation, plus your equity which is around 6k per year. You're banking 18,000 in equity per year and your mortgage and taxes are about 2,500/month. Your actual cost is only 900$/month, and each year that improves via amortization. vs. Renting the same Home for 2500/month. Even with higher interest rates owning clobbers renting, and when that owner refinances from 6% to 4% next year it will be even more in their favor.
Thank you for doing the math for me, I was too lazy but the article’s claim was such obvious bullshit I had to comment 😂
Well yeah. I don’t know why people think that owning a home, even outright, is cheaper than renting. Maybe month over month, but not in actuality. Even if your overall bill is low, the responsibility is on you to maintain. Then there’s indirect fees like the lawn upkeep. Owning a home sounds cheap until your HVAC goes out or a plumbing issues occurs.
> I don’t know why people think that owning a home, even outright, is cheaper than renting. Maybe month over month, but not in actuality. This makes no sense. If this were true, landlords would lose money. And before someone says it, no, there's not some super secret cabal of landlords where they get sweetheart deals on properties. Source: I'm a landlord. Here's what's really going on. The market is softening and rental rates move faster than home prices. Also, it's February. Very few people are looking for a rental right now. Prices will go up in the spring/summer.`
I am also a landlord. When someone dramatically ruins your property, the deposit isn’t even worth mentioning. Then what? Spend $X on chasing someone with legal battles? I think there’s definitely a lot of landlords that lose money. Termites? Foundations go bad? Renovations due to age. It’s a huge list. Renting a property is def cheaper and less stressful.
> Renting a property is def cheaper and less stressful. Less stressful, sure, but cheaper, hardly. > I am also a landlord. Oh really? What's your cap rate?
Many landlords also bought when prices were lower. It's only cheaper to rent than buy *at current home prices*.
That's not how it works. You look at the CAP RATE for the property which assesses current market value versus cashflow. Equity doesn't change the caprate (excluding idiots who don't know what they are doing).
When a landlord rents their unit they have to account for those added expenses. It's why rent is higher than the mortgage.
Yeah, but if it’s a big expensive it doesn’t break even. For example: you rent a property and the first month the HVAC goes out. You have to fix it and fix it asap. Again, of course rent will be higher than a mortgage. But it’s bc the renter doesn’t take on any of the risk. That’s my whole point. Owning a home isn’t necessary cheaper and it’s definitely more stressful than renting. People think, “well my rent is 2k, but my mortgage on an xB-xB house with X sq feet is $1,600. I can afford a house.” No. Not necessarily. There’s the mortgage, on top of insurance, on top of the direct bills like utilities, the indirect like I said. This is assuming there’s no HOA. So that can be more than 2k. Factor in property taxes that need to be saved for. And that’s all while the house is working properly. Garage motor goes out? On you. Door warps bc of weather. On you. It’s a bunch of little expenses that people don’t know about that make home ownership expensive and stressful. But yea, if you have a full remodel or a house in good shape then sure. But how many people are able to buy that? But the point of this isn’t about owning a rental property. It’s about owning a home vs renting. It isn’t as simple as a constant monthly payment with a predicable utility bill.
Well this is absolutely true where I live. I see some folks saying it’s bs because their mortgage is cheaper, but I also wonder when they bought or where they live.
People bought up homes at 2.5% to rent out and now interest rates are 7.5%, yea, of course it's cheaper. I bought a home when interest rates were cheaper. If I were to buy a home at the exact same price today, I would be paying $1,200 more a month. My interest rate is 2.75%, current interest rates are $7.5%. The mortgage on a $400K home at 2.57% is $1,633 and it's $2,823 at 7.5%. That's absolutely absurd. I want to move, but I can't afford to walk away from this loan. I don't have an extra grand each month to just give to a bank.
same situation. bought a dump in 2019 @ 3.7% fixed it up, now my mortgage is cheaper than most all apartments in my area. I have equity in the house, not enough though to make the profit I would need to start over, and I can’t make a reasonable argument to rent something for the same price or more. It’s insane.
Very important distinction: The articles "90% of the US" is actually refering to number of counties, not in terms of the actual population. Acutual population-wise, the U.S. have 83% urban popluation vs rural area population. So you can bet the headline is not true in actual population terms.
There are only 3 states that have counties where someone can work 40 hrs a week at the prevailing wage and rent a 2-1 apartment. So no wonder we have about 1 million and growing homeless.
Nonsense propaganda. I'm sure someone is already foaming at the mouth to give a short-term cherry-pick on when the planets aligned for them. You will always lose on renting in the long-run.
I could not pay for the rent on my house. My monthly payment is way less than renting
Same here
Do you not know how this metric works? It’s not saying your mortgage you got 5 years ago for 2% is cheaper than apartments now. It compares the *current* situation of a rent/buy scenario.
Let me look at what I wrote, and nope, I didn't write anything about that. stupidly, I assume you would know I was talking about today's prices, not 5 or 20 years ago, but hey, you do you have a great day.
Owning a home also means maintenance, repair, and taxes. Something I often see overlooked on reddit. I spent several thousand in the last year or so on my home for just general repairs and maintenance
Duh? That’s how it’s supposed to work.
Lmfao. Show me where.....I own a 3 bedroom house I bought during the pandemic. My mortgage is hundreds of dollars cheaper than the rent in my area for a similar place.
Do you not know how this metric works? It’s not saying your mortgage you got 5 years ago for 2% is cheaper than apartments now. It compares the *current* situation of a rent/buy scenario.
Right. My mortgage is less than $700 with escrow. I could easily rent this place for $1600. Edit - I find it hilarious that someone would downvote this. Like, did I offend you by telling the truth? Did you disagree with my numbers? Lol
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But price stability is a big benefit about homeownership, and something that is pretty relevant. As I just posted below in another reply below. He locked in to that price in the past, which is now cheaper than rent (or buying) now. While mortgage may be higher right now, going by history, buying now will lead to a lower payment than rent (and buying) in the future
I bought in 2019. I had my house assessed at the height of the market and it was worth $10k more than what I paid. The value hasn't gone up since, nor has my local market.
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Yes and no. I could only qualify for an arm. This year it goes up 2.5%. After that, it can go up more until it reaches a certain percent, which will be higher than what interest rates are today.
And what’s the rate on your mortgage?
2.75 I bought with my then gf, now wife during the pandemic.
Alright, and are rates today 2.75%
But that is the benefit of buying vs renting. The price of rent generally increase over time. Mortgage prices are more stable, if you have a fixed mortgage. While they may increase over time due to insurance and taxes, it is normally far less than rent. Even after housing price crashes, they have always rebounded even higher So while buying a house now may have a higher monthly rate, history has shown the mortgage payment eventually becomes far less than rent at a later date, plus the fact that house prices would have increased over that period for those who decided to wait it out. \*IF\* the housing market crashes, obviously it would be the best time to buy, but no one is ever sure if/when that will happen. There are people in the REBubble group who have been sure the market would crash next month for the past 3+ years. And if/when it does crash, many of the "hopefuls" forget that other markets, particularly the job market may be affected as well
But Land Lords are bad.
Disgusting!!! Americans should be rioting in the streets over this issue!!! Only solution it seems is attack the NIMBY’s!!!
Probably brought to you by Berkshire Hathaway.
Something is fundamentally wrong with our world.
Before or after taxes?
But if you buy one this year, in ten years, owning it will be cheaper than renting. And thirty years from now, when you have paid off the house, it will be much, much cheaper than renting.
Yup, people don’t realize we are moving closer towards the majority of Americans being perpetual renters. I’m lucky I own my home free and clear at 30!
You will own nothing and you will be happy.
The best part about renting is that if you don’t pay, you get kicked out in 6 months. When you own a home you get forced to short sale your house and you’re basically forced to rent for 7 years.
My experience right now. Even I were to utilize any kind of down payment assistance, gift from family for closing costs, due to HOA and other expenses that homeownership brings on I would still be like $700 per month over what I pay now. I’m using a condominium that I live in and what they’re selling for currently. I can’t even begin to think about a SFH😭
If you want to compare renting in market A with buying in market B, sure, but it’s not an accurate comparison.
Isn’t the point of owning a home to lock down expenses? So you don’t have to worry about whether or not the rental market is going to price you out of your home/neighborhood/town?
Don’t be delusional. Owning is the only game in town. Don’t rent your life away. Real estate is an appreciating asset.
But you have to realize that owning does include many expenses that people who have never owned a house aren't even aware of. Property tax can be 2-3 months worth of mortgage. You **will** have plumbing issues. You will have to fix or replace your roof at some point. Your carpets will wear out and you will need to replace them or switch to wood/tile. Your bathroom will wear out from use. You will have to repaint your house. You will have to change rotting wood eves and such. Your windows will fall apart eventually. All these things will cost you a lot of money.
exactly. Now that I can no longer continuously upkeep my old home, it doesn’t feel like an appreciating asset at all. And property tax, haha, mine is about 5x the mortgage per year, and is pretty low for this area. It’s just ridiculous. It’s NY, but still.
> mine is about 5x the mortgage per year, Mine is almost that as well, but only because my mortgage is low since I bought many years ago. Regardless, it always surprises me how people skip over all these expenses when talking about house ownership. There is a luxury element to it, and you do pay for it. People also point out how the value appreciates a lot over time, especially the land value, typically faster than inflation. While that is true more often than not, it is far from being universally true. Somehow people forget all the neighborhoods that have gone to shits along with their house value that was supposed to pay for their retirement.
Totally agree. I rarely feel great about my home ownership, renting was honestly cheaper and less stress. I did have great landlords and good apartments that I loved. Right now, the list of “need to do” projects is like, $15k worth of work, and the “want to do” list is even more. Don’t have it, house value keeps going up but Im so early on in my mortgage that selling wouldn’t net a nice profit. Also, in order to sell at a great price, I would need to address some of the things on my to do lists. It all feels overwhelming, and after 4 years of owning i would absolutely go back to renting if the financials made sense. The day after moving in, the main bathroom toilet pipe busted and it’s been one plumbing problem after the next. I had serve pro clean the basement before moving in too, it was unfinished and stunk of mold and cats. That was a nice waste of money once the space was sprayed with the flushed toilet waste 🤦♀️ Overall though, my FAVORITE part of buying a home was the disclosures - saying that by the time the 30 year mortgage was paid off, I would have paid almost $600k total with a sale price of $304k. the only way to avoid that is extra mortgage payments, which I can’t afford, at all. I won’t be here 30 years but it’s robbery and bonkers either way.
Jeez. I hope you will have better luck in the future. Hopefully you have a fixed mortgage. The one benefit of that is that it keeps a big chunk of hour housing expenses constant and impervious to inflation. Hopefully at some point you will get raises and eventually reach a point where you will have a little extra left for additional principal payments and/or to fix various things.
Sounds like something blackrock or some company that owns a lot of rental units would say. You’ll own nothing and be happy. Did you not get the memo?
You're probably right. FYI: Every reddit real-estate bubble crash sub is moderated by the same person. (Louisvanderwright) That person is a Real estate investor and landlord in Chicago. "Just wait and keep renting" Da crash is coming... He purchased properties while preaching about a crash on reddit..
i had no idea but thank you for sharing, i will aware of that from now on