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Buying is throwing away money too, often just as much as the rent you were paying. Yes some portion of what you pay goes to principle and you eventually own the
by TimPC 4y ago
Buying is throwing away money too, often just as much as the rent you were paying. Yes some portion of what you pay goes to principle and you eventually own the home but the following amounts are just lost money:
- interest on the loan
- utility bills
- property taxes
You also have to replace anything that breaks and are responsible for all repairs on the property. Many of these replacements and repairs don’t increase the value of the home.
At best buying a home is a forced investment plan. It forces you to take money above and beyond the cost of rent and put it into a savings vehicle that generally generates good returns. But if you’re renting you could just as easily put that excess money into the stock market if you have the discipline to not spend it.
- vel0city 4y agoYou're missing a big point of buying with a fixed mortgage though -- its partially a hedge against housing cost inflation. Sure, property taxes will go up as property values increase, but taxes aren't really that large of the total housing cost of my home. Taxes could double and it still wouldn't be the majority of the cost of my house. Most of my monthly cost of my house is P&I, values that won't go up. My mortgage, insurance, taxes, and savings towards repairs is now a good bit less than the current rent at my last apartment just a couple of miles from my house. But my house has over twice the square footage, a private garage, a private yard, etc.
- joejerryronnie 4y agoBut you’re sacrificing the flexibility of renting. While I agree the benefits of home ownership far outweigh long term renting, there are some trade-offs.
- vel0city 4y agoAbsolutely. I'm not trying to point to buying a house as the answer for everyone. If you're not planning to stay in the area for at least a few years, chances are you'll be better served by renting. Everyone needs to do their own math on what they're wanting in life, there's no one-size-fits-all when it comes to housing.