3 ms·

Oh, and one more thing, the $783,370 figure doesn't take the time value of money into account, but your total rent paid figure does. In order to balance this ou

by hhw 13y ago

Oh, and one more thing, the $783,370 figure doesn't take the time value of money into account, but your total rent paid figure does. In order to balance this out, we'd need to take a look at the future value of an annuity for your mortgage payments of $2176.03/mo or $26,112.36/yr, which actually works out to $1,293,862.17, bringing the total cost of ownership to $1,635,215.78.

bane 13y ago
So you're kind of just tossing all kinds of big numbers out. Would you mind walking through your calculations? $26,112.36/yr * 30 years = $783,370 not 1,293,862. And then suddenly we're at $1,635,215? Where in the world did $341,353 come from? Rent takes into account time-value because rent goes up, mortgage payments don't and it's very easy to make them go down. Mortgages actually stay fixed today and into the future at a worst case, and can actually become cheaper over 30 years, while rent almost never does. edit are you comparing the cost of buying a home vs. the cost of starting an annuity at the same price as a home? If I had $500,000 to start with I'd just buy the house outright and not mess with a mortgage at all. Now I can pump up whatever investment instrument I want. More importantly, you typically can't withdraw from an annuity until you hit 59 1/2. If you're at that age and have spent the last 40 years paying rent, you've already made some bad investment decisions.
- hhw 13y ago
  It's a future value of an annuity calculation. http://www.ultimatecalculators.com/future_value_annuity_calculator.html http://www.ultimatecalculators.com/future_value_annuity_calc... You do have to take into account the time value of money with the mortgage payments still, because $1 today is worth much more than $1 30 years from now. It's the difference between nominal dollars and real dollars. Conversely, even though rent goes up in nominal dollars, it stays the same in real dollars (or even goes down as a house becomes less marketable over time).

by hhw 13y ago

bane 13y ago

So you're kind of just tossing all kinds of big numbers out. Would you mind walking through your calculations? $26,112.36/yr * 30 years = $783,370 not 1,293,862. And then suddenly we're at $1,635,215? Where in the world did $341,353 come from? Rent takes into account time-value because rent goes up, mortgage payments don't and it's very easy to make them go down. Mortgages actually stay fixed today and into the future at a worst case, and can actually become cheaper over 30 years, while rent almost never does. edit are you comparing the cost of buying a home vs. the cost of starting an annuity at the same price as a home? If I had $500,000 to start with I'd just buy the house outright and not mess with a mortgage at all. Now I can pump up whatever investment instrument I want. More importantly, you typically can't withdraw from an annuity until you hit 59 1/2. If you're at that age and have spent the last 40 years paying rent, you've already made some bad investment decisions.

hhw 13y ago
It's a future value of an annuity calculation. http://www.ultimatecalculators.com/future_value_annuity_calculator.html http://www.ultimatecalculators.com/future_value_annuity_calc... You do have to take into account the time value of money with the mortgage payments still, because $1 today is worth much more than $1 30 years from now. It's the difference between nominal dollars and real dollars. Conversely, even though rent goes up in nominal dollars, it stays the same in real dollars (or even goes down as a house becomes less marketable over time).