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Well...the substantial difference is that I could borrow at 3.6% and 2.7% respectively. On my first home, I put $5,000 down on a $96,000 house. I owe $40k (15-
by iambateman 2y ago
Well...the substantial difference is that I could borrow at 3.6% and 2.7% respectively.
On my first home, I put $5,000 down on a $96,000 house. I owe $40k (15-year mortgage) and it's worth $180k. Subtract $20k in seller costs, and $20k in expenses over the past decade and I have $100k in equity.
That is about 6x better than just investing the $5k in the S&P.
- goalonetwo 2y agoHow could you only put 20k$ of expenses over the last decade? That doesn't even cover close to the principal and interests on your mortgage. You also don't account for the time-value of money. In this case you might get slightly ahead than a simple boring SP500 investment, but those returns are the outlier and it would be extremely unlikely to repeat in the future (especially with the current interest rates)
- iambateman 2y agoAgree on the interest rate change. I didn’t include P+I because when it was my primary residence it’s just my housing cost (which I can’t otherwise invest) and now as a rental those are paid for out of rental income. Regardless, my original point is that the returns outpace inflation, which I consider a political-social problem given the number of parents who are currently explaining to their kids that buying a home is a “good investment.”