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I didn’t say you shouldn’t buy if you need a place to live. I said they’re a terrible investment. Also keep in mind that while you may be paying down the landlo
by IAmGraydon 2y ago
I didn’t say you shouldn’t buy if you need a place to live. I said they’re a terrible investment. Also keep in mind that while you may be paying down the landlord’s loan when renting, you are also paying a massive amount of interest when buying. At today’s rates, you’ll give the bank $565,000 in pure interest over 30 years to borrow $400,000, making your total outlay $965,000. Either way, a large amount of money is going up in smoke.
- listenallyall 2y agoThis opinion doesn't take into account the optionality of the mortgage and the opportunities provided to the borrower. American mortgages generally allow prepayments - if the value of your house increases rapidly, you can sell, pay off the mortgage, and pocket the profit. You can pay additional principal at any time to reduce interest payments. If rates fall, you can refinance. If the economy is great, you're borrowing at 7 percent while your investments are earning 10+.
- jb1991 2y agoIf the value of your house rises rapidly, you cannot just sell because then you have to buy another house to live somewhere, which has also appreciated. See the other comments about this.
- listenallyall 2y agoNot if it's an investment property, which is part of the reason real estate isn't, as the OP states, a "terrible investment." Further, your claim isn't universally true. You could rent for a while, you could downsize to a smaller house, you could move to a location which hasn't experienced as dramatic price growth, or just an overall lower-priced region (i.e. Californians moving to Texas, Nevada, Montana, etc)
- jb1991 2y agoIn many countries, mortgage interest is tax deductible, while rent is not.