9 ms·
You miss something important: If you finance a house on a fixed rate mortgage you lock in your monthly cost. Market rents will continue to rise, the value of yo
by jdblair 8y ago
You miss something important: If you finance a house on a fixed rate mortgage you lock in your monthly cost. Market rents will continue to rise, the value of your property will continue rise, but your cost will not change (modulo increases in maintenance cost, insurance and property tax).
- liamcardenas 8y agoSure, but you are also forgoing the addtional rent that you could be earning if you did not live there.
- jdblair 8y agoI'm not forgetting. I have to live somewhere. If I pay rent somewhere else I'm paying market rent. That is the gp's point.
- liamcardenas 8y agoYes, but if you live in your own home, you are still paying market rent by means of opportunity cost. You are renting to yourself-- at the market rate.
- jdblair 8y agoI still don't follow. As market rent goes up you will be renting to yourself below market rate. Suppose market rent is $2000/month and my mortgage is $2000/month. In 10 years market rate rent has gone up, but my mortgage is still $2000/month.