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okay, let's compare scenarios. scenario 1 you "save" 2000 a month by spending it on a mortgage scenario 2 you pay 1500 a month for rent and save the other 5
by nazgulnarsil 18y ago
okay, let's compare scenarios.
scenario 1
you "save" 2000 a month by spending it on a mortgage
scenario 2
you pay 1500 a month for rent and save the other 500.
in which scenario do you come out ahead? that 1500 a month is GONE.
- johnrob 18y agoIf the math were really that simple there would be a massive arbitrage opportunity :). I think there are other variables at play, such as: - down payment: the renter takes the down payment and gets interest on it for N years - closing costs - repair costs - property taxes
- nazgulnarsil 18y agoand you think that difference will exceed $18k a year for 30 years?
- johnrob 18y agoI think your example is more realistic if the numbers are more like 3000/mo to buy and 1500/mo to rent. If rental prices were as close to mortgage rates as 2000/1500, then not only would buying be obvious, it would not even be a much larger financial commitment. The extreme case is when rent equals mortgage.
- pchristensen 18y agoIf you have a new mortgage, then somewhere between $1000-1800 is spent on interest, NOT saved, and it is GONE (well, it's a little less because of the tax advantage for mortgage interest).
- coliveira 18y agoYes, you're right, but this value goes down year by year. While the rent costs never go down.