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You've lost your job and were only able to get a job that paid half, how do you make your mortgage payment? If you are renting you are not locked into the prope

You've lost your job and were only able to get a job that paid half, how do you make your mortgage payment? If you are renting you are not locked into the property, you have the flexibility to move to a lower cost flat.

matt_wulfeck 9y ago
It’s not uncommon to find fixed-rate mortgages that are significantly cheaper than the corresponding rent for the same home. The risk is only high the first decade, and then it becomes a huge safety net.
watwut 9y ago
The monthly mandatory payment on my mortgage is now a lot lower then typical rent (I have freedom to pay more if I wish to). It was roughly same as rent for few years, but it went down as I paid the debt. If my salary would go down to half and my husband would got unemployed, we would still be able to pay it. You don't have to buy the most expensive flat there is in the city. And if we were not, that would still be not that much different then not being able to pay rent. In really really the worst case, you move to that lower cost flat and have bank take away your flat (since you aint paying mortgage it is theirs). But it is less likely to happen then being unable to pay rent because we got sick simultaneously with economy tanking.
- billmalarky 9y ago
  What I'm describing is a generalization since you asked about the differences in risk between renting and ownership. It sounds like you have taken a series of (wise) steps to significantly limit your exposure to the risk involved with property ownership. This doesn't make the rule invalid though it makes you the exception to the rule. > In really really the worst case, you move to that lower cost flat and have bank take away your flat (since you aint paying mortgage it is theirs). In the event of the real estate market tanking, like it did in 2008, this is not what happens in a worst case scenario. You are still liable for the cost of the mortgage you owe, if the property loses more value on the open market than the amount left that you owe on the mortgage you can't just give back the property to cancel the mortgage. You might owe $300k left on the mortgage (because you originally bought the house for $500k for example) but now the property is only selling on the market for $250k. In this scenario you can't "give back" the property because even then you still owe the bank $50k. If you can't pay, you must declare bankruptcy in addition to losing the property. So now you have no home and also your credit is so destroyed that landlords refuse to rent to you. This is a very real scenario and happened to a LOT of people during the US real estate crisis.
  - infinite8s 9y ago
    You can in the US - most mortgages are written in a way that let's you walk away from them if they are underwater.

matt_wulfeck 9y ago

It’s not uncommon to find fixed-rate mortgages that are significantly cheaper than the corresponding rent for the same home. The risk is only high the first decade, and then it becomes a huge safety net.

watwut 9y ago

The monthly mandatory payment on my mortgage is now a lot lower then typical rent (I have freedom to pay more if I wish to). It was roughly same as rent for few years, but it went down as I paid the debt. If my salary would go down to half and my husband would got unemployed, we would still be able to pay it. You don't have to buy the most expensive flat there is in the city. And if we were not, that would still be not that much different then not being able to pay rent. In really really the worst case, you move to that lower cost flat and have bank take away your flat (since you aint paying mortgage it is theirs). But it is less likely to happen then being unable to pay rent because we got sick simultaneously with economy tanking.

billmalarky 9y ago
What I'm describing is a generalization since you asked about the differences in risk between renting and ownership. It sounds like you have taken a series of (wise) steps to significantly limit your exposure to the risk involved with property ownership. This doesn't make the rule invalid though it makes you the exception to the rule. > In really really the worst case, you move to that lower cost flat and have bank take away your flat (since you aint paying mortgage it is theirs). In the event of the real estate market tanking, like it did in 2008, this is not what happens in a worst case scenario. You are still liable for the cost of the mortgage you owe, if the property loses more value on the open market than the amount left that you owe on the mortgage you can't just give back the property to cancel the mortgage. You might owe $300k left on the mortgage (because you originally bought the house for $500k for example) but now the property is only selling on the market for $250k. In this scenario you can't "give back" the property because even then you still owe the bank $50k. If you can't pay, you must declare bankruptcy in addition to losing the property. So now you have no home and also your credit is so destroyed that landlords refuse to rent to you. This is a very real scenario and happened to a LOT of people during the US real estate crisis.
- infinite8s 9y ago
  You can in the US - most mortgages are written in a way that let's you walk away from them if they are underwater.