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The US median mortgage payment is around $1,000/mo. I can comfortably invest much more than that each month while renting a satisfactory apartment and spending
by closeparen 8y ago
The US median mortgage payment is around $1,000/mo. I can comfortably invest much more than that each month while renting a satisfactory apartment and spending freely. I just can't get anywhere near owning an equivalent condo.
- yholio 8y agoThat math is a bit funny. Rent is pure consumption while mortgage is consumption plus equity accumulation. Of course, owners have less left for investment, but they are already investing a significant part of their mortgage payment. With 15 years left on the mortgage at a 4% interest rate, about 60% of your payment goes to principal and only 40% to interest. And since most people prefer the flexibility of rent to the headaches of ownership, rents tend to be significantly higher than the non-equity part of the mortgage, so ownership is a more efficient way to invest and live at the same time, precisely at the cost of that flexibility of consumption.
- closeparen 8y agoSorry I wasn’t clear: I can invest well more than the home equity people are building in normal markets. Just not enough to own in my local, extremely expensive market.