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> Unsurprisingly, renters tend to have lower incomes than those who own their own homes Not only that, but renters are often put in the situation where their r

> Unsurprisingly, renters tend to have lower incomes than those who own their own homes Not only that, but renters are often put in the situation where their rent is the same as a mortgage, but can't afford to save for a down payment. Renting is a cockroach motel.

coredog64 4y ago
Two years ago I had to replace my roof and the cost was more than the sum of mortgage payments for a year. Not too long before that, the AC needed replacement and that was ~ 6 months of mortgage payments. I’m grateful that I can afford it, but I understand that the mortgage isn’t the entire cost of the house and that renting allows me to leverage someone else’s capital in an efficient manner.
- xhkkffbf 4y ago
  It's worth remembering that mortgage payments rarely include utilities, but some rental leases do. Also, getting out of a rental is often as easy as just leaving. Some unscrupulous types forget to pay the last few months of rent before skipping out giving themselves an unofficial discount. When owners want to sell, they need to pay commissions, inspection costs, transfer taxes, title searches and a few more unexpected and hidden charges. The transaction can take months and that's when you find a buyer. Yes, many people like to focus on the extreme profits that some lucky people have found in the right neighborhoods, but housing prices do go down and they often go down by a staggering amount. When you're underwater on your mortgage, you're trapped. You might be able to afford the monthly payments but you can't sell because you don't have the spare cash to pay off the mortgage. The high down payments evolved as a safety mechanism for the banks first, but also for the home buyers because markets fluctuate.
  - kcplate 4y ago
    >When you're underwater on your mortgage, you're trapped. You might be able to afford the monthly payments but you can't sell because you don't have the spare cash to pay off the mortgage. You can short sell if the lender is willing. Caveat being they will gift you the difference which can count as income and is taxed. There was an Obama era program during the last housing bubble burst that provided tax relief as well as incentives to the lenders to allow the short sale. Not sure if it’s still active, but it helped a lot of folks avoid foreclosures.
jononomo 4y ago
My landlord has to replace a rotting front porch, and that will cost him five months worth of the rent I pay him. There is so much more cost associated with owning a home than just the down payment and the mortgage payments. In fact, it often makes a lot more sense financially to rent, and it is also a lot more flexible.
- Sohcahtoa82 4y ago
  > In fact, it often makes a lot more sense financially to rent, and it is also a lot more flexible. If you need the flexibility, then yeah, sure. But if you have no plans to move or don't think you'll ever need to move, in the long term, owning is always going to win. Rent money just goes into a black hole. Mortgage payments build equity until you pay it off, at that point the asset is 100% yours and you're no longer making payments. Sure, you're paying for maintenance, but the maintenance costs will be less than what you were paying before. Also, rent always goes up, sometimes faster than inflation. A fixed mortgage doesn't. When I bought my house at the end of 2015 for $330K, Zillow estimated the rental value at $1,800/month, and my mortgage was $1,500/month. Now, cash value is estimated $560K and the rental value is estimated to be $2,700/month. If I chose to rent 7 years ago, I'd be spending $1,200 more per month right now. Another couple years, and I could be spending double.
  - ghaff 4y ago
    >but the maintenance costs will be less than what you were paying before. Presumably yes but especially older homes still require ongoing expenses. Some are admittedly flexible in a given year. But property taxes, insurance, utilities, and property/house maintenance can still hit $10,000 a year or so fairly easily (though big maintenance projects tend to be a bit lumpy).

coredog64 4y ago

Two years ago I had to replace my roof and the cost was more than the sum of mortgage payments for a year. Not too long before that, the AC needed replacement and that was ~ 6 months of mortgage payments. I’m grateful that I can afford it, but I understand that the mortgage isn’t the entire cost of the house and that renting allows me to leverage someone else’s capital in an efficient manner.

xhkkffbf 4y ago
It's worth remembering that mortgage payments rarely include utilities, but some rental leases do. Also, getting out of a rental is often as easy as just leaving. Some unscrupulous types forget to pay the last few months of rent before skipping out giving themselves an unofficial discount. When owners want to sell, they need to pay commissions, inspection costs, transfer taxes, title searches and a few more unexpected and hidden charges. The transaction can take months and that's when you find a buyer. Yes, many people like to focus on the extreme profits that some lucky people have found in the right neighborhoods, but housing prices do go down and they often go down by a staggering amount. When you're underwater on your mortgage, you're trapped. You might be able to afford the monthly payments but you can't sell because you don't have the spare cash to pay off the mortgage. The high down payments evolved as a safety mechanism for the banks first, but also for the home buyers because markets fluctuate.
- kcplate 4y ago
  >When you're underwater on your mortgage, you're trapped. You might be able to afford the monthly payments but you can't sell because you don't have the spare cash to pay off the mortgage. You can short sell if the lender is willing. Caveat being they will gift you the difference which can count as income and is taxed. There was an Obama era program during the last housing bubble burst that provided tax relief as well as incentives to the lenders to allow the short sale. Not sure if it’s still active, but it helped a lot of folks avoid foreclosures.

jononomo 4y ago

My landlord has to replace a rotting front porch, and that will cost him five months worth of the rent I pay him. There is so much more cost associated with owning a home than just the down payment and the mortgage payments. In fact, it often makes a lot more sense financially to rent, and it is also a lot more flexible.

Sohcahtoa82 4y ago
> In fact, it often makes a lot more sense financially to rent, and it is also a lot more flexible. If you need the flexibility, then yeah, sure. But if you have no plans to move or don't think you'll ever need to move, in the long term, owning is always going to win. Rent money just goes into a black hole. Mortgage payments build equity until you pay it off, at that point the asset is 100% yours and you're no longer making payments. Sure, you're paying for maintenance, but the maintenance costs will be less than what you were paying before. Also, rent always goes up, sometimes faster than inflation. A fixed mortgage doesn't. When I bought my house at the end of 2015 for $330K, Zillow estimated the rental value at $1,800/month, and my mortgage was $1,500/month. Now, cash value is estimated $560K and the rental value is estimated to be $2,700/month. If I chose to rent 7 years ago, I'd be spending $1,200 more per month right now. Another couple years, and I could be spending double.
- ghaff 4y ago
  >but the maintenance costs will be less than what you were paying before. Presumably yes but especially older homes still require ongoing expenses. Some are admittedly flexible in a given year. But property taxes, insurance, utilities, and property/house maintenance can still hit $10,000 a year or so fairly easily (though big maintenance projects tend to be a bit lumpy).