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Even with regards to maintaining a degree of flexibility, it might be worth considering if you actually do lose money on closing costs + taxes + value loss than

Even with regards to maintaining a degree of flexibility, it might be worth considering if you actually do lose money on closing costs + taxes + value loss than you will on rent, even for a short term. Half or more of every mortgage payment is invested in an asset, 0% of every rent payment is.

ghaff 6y ago
On the other hand you're foregoing any further returns on the money you take out of savings to pay the down payment and closing costs. It's definitely not as simple as rent is throwing money away compared to buying.
- freeone3000 6y ago
  For a $200,000 down payment on a $2500 a month mortgage (with 50% going to principal) versus $2000 a month rent, you'd need ten months to get past the $10,000 closing costs even assuming 10% return on next-best option and that the value of your home remains flat. Owning the place you live is probably the best investment you can make.
  - FireBeyond 6y ago
    The median household income was $68K in 2019, the highest it's ever been. That's $55K a year after tax. Now you're paying $2,000 in rent. Even if you don't spend a single cent of income on anything else besides a house, you'd still be looking at seven years to come up with that downpayment. Realistically, more like 15 years with expenses, at a minimum. i.e. "Don't buy a house until you're about 40 years old". > The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. So for the median family, $140K-$170K. I'm not sure where the median family lives that they're buying $170K homes that they were previously renting for $2K/month, but it sure ain't anywhere near here. Not to mention appraisal discrepancies, which require you to have the funds for the downpayment, for the closing, and to cover the appraisal discrepancy dollar for dollar. But generally, I'm just trying to figure out how we come to the conclusion that the average family is putting anything close to a fraction of $200K to a downpayment.
    - freeone3000 6y ago
      Usually inheritance and gifts from wealthy relatives. If you don't have that, you won't be buying a house and will forever be renting save the rare outliers with $200k/year jobs. It still doesn't make renting a good idea.

ghaff 6y ago

On the other hand you're foregoing any further returns on the money you take out of savings to pay the down payment and closing costs. It's definitely not as simple as rent is throwing money away compared to buying.

freeone3000 6y ago
For a $200,000 down payment on a $2500 a month mortgage (with 50% going to principal) versus $2000 a month rent, you'd need ten months to get past the $10,000 closing costs even assuming 10% return on next-best option and that the value of your home remains flat. Owning the place you live is probably the best investment you can make.
- FireBeyond 6y ago
  The median household income was $68K in 2019, the highest it's ever been. That's $55K a year after tax. Now you're paying $2,000 in rent. Even if you don't spend a single cent of income on anything else besides a house, you'd still be looking at seven years to come up with that downpayment. Realistically, more like 15 years with expenses, at a minimum. i.e. "Don't buy a house until you're about 40 years old". > The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. So for the median family, $140K-$170K. I'm not sure where the median family lives that they're buying $170K homes that they were previously renting for $2K/month, but it sure ain't anywhere near here. Not to mention appraisal discrepancies, which require you to have the funds for the downpayment, for the closing, and to cover the appraisal discrepancy dollar for dollar. But generally, I'm just trying to figure out how we come to the conclusion that the average family is putting anything close to a fraction of $200K to a downpayment.
  - freeone3000 6y ago
    Usually inheritance and gifts from wealthy relatives. If you don't have that, you won't be buying a house and will forever be renting save the rare outliers with $200k/year jobs. It still doesn't make renting a good idea.