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One huge plus of buying vs renting, is that when you buy you can get a home equity line for emergencies. A huge line of credit at very low interest rate, that d
by vaksel 17y ago
One huge plus of buying vs renting, is that when you buy you can get a home equity line for emergencies. A huge line of credit at very low interest rate, that doesn't expire, or change due to future events.
- ars 17y agoIf you were renting you would have that money (that equity) in your pocket, and wouldn't need to borrow against your house to have access to it.
- anigbrowl 17y agoVaksel is wrong, but so are you. If you were renting you wouldn't have any equity to appreciate (in the form of title to your house and the difference between what you paid for it and the current market value) so it would never be in your pocket to begin with.
- ars 17y agoYou missed the point. If you were renting you would not have paid the money that otherwise went to principal - that money would still be in your pocket.
- anigbrowl 17y agoBut nor would you get any benefit if the value of the property you were renting had appreciated, though obviously this is balanced out by not having a millstone around your neck when property values crash during a recession. Having both bought and rented, I don't think there is an unambiguous financial benefit either way. Renting gives you more temporal freedom (as in being able to just walk away and move to a better place or another country), a sensible buy can give you more financial freedom (as in a large chunk of collateral).
- ars 17y ago> But nor would you get any benefit if the value of the property you were renting had appreciated If you want to invest in real estate you can. You don't have to live there.
- solutionyogi 17y agoThis is completely wrong. To use HELOC, you need to have equity in your house. In current market where house prices are down significantly, most of the folks have either no equity or they are upside down on their mortgage. These folks can't get HELOC. Even if you could get HELOC, it may not be worth it. HELOC is amortized interest only like a credit card. That means you will keep paying towards interest for first few years before you even touch the principal. Also, HELOC rate is tied to Prime rate and if it changes your payment will change. Federal Reserve has kept the Prime rate too low since 2001 and I think it's bound to go up. Please be very careful (I can't stress this enough) if you are considering HELOC.
- tptacek 17y agoIf you read a lot of Calculated Risk blog, you could easily infer that it's the people with the HELOCs that were most vulnerable to being screwed in the downturn.