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I don't know. I personally am more scared of carrying such a huge mortgage on myself. A home worth $1M means $200,000 liquid cash + $800,000 in mortgage princi
by NTDF9 10y ago
I don't know. I personally am more scared of carrying such a huge mortgage on myself.
A home worth $1M means $200,000 liquid cash + $800,000 in mortgage principal + $570,000 in interest + $300,000 in taxes...over 30 years.
Will house values keep growing to offset $570,000+$300,000? At what point does this greater fool theory end?
- kobeya 10y agoDon't buy a home you can't afford the mortgage on.
- NTDF9 10y agoMy point is: Are those mortgage and tax levels sustainable over 30 years, considering how fickle the tech industry is? The downside risk seems so much greater than upside potential
- aaronblohowiak 10y agoIs your interest calculation tax adjusted?
- sigterm 10y agoThe house value does not need rise enough to offset the interest + taxes unless you're buying it and leaving it unoccupied for all this time. If you need a house to live in, the monthly rent for a 1MM house is likely going to be over $3k. Over 30 years this will come out to be $1.08M, much more than the $870k in mortgage interest + taxes for owning the house. On top of that there's the 20-30% tax discount on the mortgage interest that will make owning even more favorable.
- NTDF9 10y ago>> If you need a house to live in, the monthly rent for a 1MM house is likely going to be over $3k.Over 30 years this will come out to be $1.08M, much more than the $870k in mortgage interest + taxes for owning the house Over 30 years, if house prices go down due to whatever reason, so will rents (more or less). Homeowners will be underwater and suck up all the downside risk. Renters will remain free of crushing debt. The only way homeowners are protected is if the house appreciates enough to eat up that downside risk before a future catastrophe arrives, right?