3 ms·

Although that may be true, if the house is paid for by a loan, you have the additional insecurity that you need to pay $XXXX per month for the next 15-30 years.

Although that may be true, if the house is paid for by a loan, you have the additional insecurity that you need to pay $XXXX per month for the next 15-30 years. If something happens and you can't afford it anymore you risk foreclosure.

twblalock 7y ago
If a renter could not make the monthly payments it would result in eviction. Both eviction and foreclosure are bad for your credit, and both mean you need to find somewhere else to live.
titanomachy 7y ago
"If something happens and you can't afford it anymore you risk foreclosure." That's assuming the home value has gone down in addition to losing your job or whatever. If the home has kept its value, you can probably use a line of credit to bridge while you sell the house.
magicalhippo 7y ago
If something happens with my income I can just pay the interest for some time (several months to a year), which in my case is roughly half my monthly payment. How is that if I were to rent?
frobozz 7y ago
After those 15-30 years are up, you no longer have to pay that $XXXX per month. In 20ish years, inflation is likely to have significantly reduced the value of $XXXX, it could have as little as half the purchasing power it does today. If renting, the rent is likely to increase (particularly if you move) so that you are still paying $XXXX in today's money. If repaying a mortgage, you are likely to be paying roughly $XXXX in absolute terms (depending on interest rate changes). So yes, you are tying yourself to a risk that you will lose your house (and any difference between the outstanding loan and its sale value) if you lose your job over a certain period. However, after a certain period you are also reducing the risk that you won't be able to afford your housing costs if you lose your income. Lenders are also more likely to consider a term extension to enable you to make more realistic payments, than a landlord is to agree to lower your rent.

twblalock 7y ago

If a renter could not make the monthly payments it would result in eviction. Both eviction and foreclosure are bad for your credit, and both mean you need to find somewhere else to live.

titanomachy 7y ago

"If something happens and you can't afford it anymore you risk foreclosure." That's assuming the home value has gone down in addition to losing your job or whatever. If the home has kept its value, you can probably use a line of credit to bridge while you sell the house.

magicalhippo 7y ago

If something happens with my income I can just pay the interest for some time (several months to a year), which in my case is roughly half my monthly payment. How is that if I were to rent?

frobozz 7y ago

After those 15-30 years are up, you no longer have to pay that $XXXX per month. In 20ish years, inflation is likely to have significantly reduced the value of $XXXX, it could have as little as half the purchasing power it does today. If renting, the rent is likely to increase (particularly if you move) so that you are still paying $XXXX in today's money. If repaying a mortgage, you are likely to be paying roughly $XXXX in absolute terms (depending on interest rate changes). So yes, you are tying yourself to a risk that you will lose your house (and any difference between the outstanding loan and its sale value) if you lose your job over a certain period. However, after a certain period you are also reducing the risk that you won't be able to afford your housing costs if you lose your income. Lenders are also more likely to consider a term extension to enable you to make more realistic payments, than a landlord is to agree to lower your rent.