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It's not a matter of responsibility, you're responsible for making a payment each month, either way, so that cancels out.
Your paying the same kinds of money out of pocket each month in either case. You might as well own what your emptying your wallet for when you're done, than not. Wealth begets wealth, it snowballs.
In understand your point. It costs money to buy, sell, and broker house/mortgage. People have to live in their houses (in a normal economy) for like 3-5 years before even making a break even point on home. Just bought my first house and we're drowning in interest at the moment. Rents will fall faster when interes rates change than we will be able to refi. BUT it'll be better for us in the long run.
Its true that you need to save up the initial down payment. But in the long run it's smarter to do so, than renting.
It's definitely not a short-term investment, unless you really try to play the real estate market.
But I'm not speaking towards trying to turn a short-term profit, just not having a short/long-term loss.
Put it another way, whose mortgage would you want to pay off, yours, or someone else's?
Finally, real estate prices continue to always go up, so even if you had to sell short-term where you've been paying mostly interest you could probably sell the property for more value to make up the difference.
All home loans are mostly paying interest up front, it's not into the later years of the loan when you start paying substantial principle payments.
A neat trick is to always make an extra small principal only payment with each month mortgage payment, and that can change a 30 year loan to an 18 year loan.
Just make sure the write in the memo field on your check "principal only payment", or else the loan company will try to just take that extra money and put it on the interest only portion of the loan (they're tricky that way).
Historically rental costs have always gone up, and not down.
Did you mean the monthly mortgage payment amount on a home loan?
Ownership truly is better.
This is all neglecting that after that 18-30 years, you don't have that payment. Also, if you get a home that is much closer to your annual income, you can pay it off in a much shorter time. With the way properties are going right now that is almost a joke to say, but here I am, living on a dream. Also, having dealt with slumlord landleeches charging me $1k/month for a house that would have sold for $30k five years ago, I can honestly say that I never want to be subjected to a landlord again. Banks may be scummy, but they are heavily legislated scummy. Also, I would much rather be responsible for my house than some asshole. The house has mold, sparking outlets, the foundation is cracked in multiple locations, and huge cracks are forming in all of the walls as the house warps working towards collapse. And when I brought this all to the landlord's attention they tried to illegally evict me and raised my rent by $125/month. We immediately started viewing new places. My wife is pregnant, and if that baby has a single birth defect I am suing these two into oblivion.
~~I don't understand this sentence?~~
~~When you're done with the loan and it's paid off you don't have to make any more payments, so I'm not sure what you're trying to express?~~
Edit: I understand now. It was implied in what I was saying, so not being ignored. I was assuming people would know that when a mortgage is done being paid off you no longer have to continue to make payments.
Oh totally agree. I was suggesting 30 because most people seem to only have enough money to make a down payment on a 30-year loan. If you can get a 15-year loan that's much better.
I personally always got 15-year loans, because with those loans you end up paying the least amount of interest on. Thirty year loans are horrible, considering how much interest you have to pay versus principal, which is why I would suggesting you try to pay it off faster than the 30 years by paying a little bit extra every month with extra principal payments.
I was tacitly contrasting it with renting. After 30 years of renting, you still are going to be paying rent.
I was less commentating on the term of the loan and more on the total principal value. That said, for some insane reason, a 15-year mortgage also has a lower interest rate, so it is fundamentally the better option. But even with that, if you make $50k/year and are able to find a livable property for 75-80k, and get the 15-year, ostensibly there is little in one's way from paying it off in 7 to 10 years. Unfortunately livable houses for that price don't exist anymore for most of the US and making 50k is still a pipe dream. I don't even make that much and I have a Master's degree.
Not for everybody, but I’ve heard reasonable advice of getting the mortgage at a longer amortization period, then making extra payments. When I was looking it was typical to be allowed to increase the payment by 10-20% or to make additional payments up to 10-20% of the initial loan amount each year without penalty. That’s enough to potentially be paying it off in under 10 years without penalty(which is often in the range of 3 months simple interest, so still worthwhile if you unexpectedly come in to some money), but also gives you the flexibility of going back to the minimum payments if your financial situation changes.
Renting does make it cheaper/simpler to change accommodations though. Think things like starting a family and wanting to scale the household up from just two people to adding children and down again when those children move out. Renting makes it simpler to move closer to work, public transportation, schools, Etc. as a persons needs change. On the other hand, there’s also a lot of financial benefits to living in your own home: grants/rebates available for homeowners, not rental properties, being able to save costs by doing your own maintenance/renovations, etc..
Could you elaborate? That seems the opposite of all the advice I've ever heard of or seen with my own eyes.
Normally it's better to get a fifteen year loan, than a thirty year loan and pay extra to try to pay it off in eighteen years.
In the past at least it seemed it was a lot harder for people to get fifteen year loans than thirty year loans, which is why I was offering the advice of trying to pay a 30-year loan off quickly, as the next best thing.
If I may ask, what industry are you working in, that you have a master's degree but earn so little?
This is a whole different discussion than the one we're having about home ownership vs renting, but I don't think anyone who's established by the time that they are in their 30s would be making 50k, they would be making a lot more, somewhere past the 100K mark for most professions, in the US at least, major cities.
In any case, I wouldn't suggest purchasing a home if you only had that much income available.
Apologies if this offends in any way, it is not meant to.
No, I'm offended by the lack of ability to get a better job, not being asked about it. I have a BS from Kent State University in Applied Mathematics and an MA from The Savannah College of Art and Design in Visual Effects. I took a job 7 years ago when I graduated with a remote company because it let me take care of an ill mother and father so they could get through to their retirement, but it has trapped me in a low-wage situation. The job started at pennies and hasn't really made it to dollars yet. I am actively applying, but everything in my industry requires credits by this point in my career and I have none, and I look underqualified for the AI sector jobs I am trying to get because I don't have any on-paper experience there either. So I am a very well-educated bonified genius with verified earth-shattering innovations and capacity-altering skills trapped in a dead-end job with a startup that has never been able to take off high enough to pay me even remotely what I provide to them. I say the innovations are earth-shattering and verified because I have discussed them with people who know what they are talking about, but are not in a position to hire me themselves, and they have confirmed. One friend actually was trying to find me some investment money through his professional and social networks to pursue one of them because it would hit so hard, but his network was not connected to the right people.
I truly wish you well, citizen, truly. I hope things work out for you.
You're going to spend (usually a bit) more per month on mortgage payments than rent, so it's not really "the same kinds of money".
Is this true in the US? Its definitely not been true anywhere I've lived in Europe. A mortgage has always been cheaper for a larger property, it's just gathering the initial deposit to buy that's the hard bit.
Not true from my experience. When I bought my house rents for similar houses were about $1.2k/mo and my mortgage is ~700/mo (which after taxes and insurance came out to ~$800/mo) but the other $400/mo can be easily eaten by maintenance costs depending on the year.
But what I haven't seen pointed out yet is that the mortgage will stay the same for 30 years, property taxes & insurnace won't grow much, but rents will continue to climb. It's been almost 3 years and houses similar to mine are now renting for $1500/mo or more but I now pay ~$900/mo for my house due a small tax increase last year that narrowly got passed (and was noted when it was proposed to be the first property tax increase in quite a few years)
That's true, I didn't really think about maintenence costs adding on. Ideally that stuff should add value back to the house so you don't "lose" it like rent, but that all depends on the housing market forever rising to infinity.
It always does. Always. As long as babies are being made, it always will.
Every decade or two there's a crash, but it doesn't go down that much when there is, and then when it recovers from the crash it goes right back up to what it was doing before.
What you commented is true in the US as well, unless you live in a very very poor neighborhood and rent.
It's not just money. Ownership means taking care of the house, and dealing with the buying/selling process. Would you advocate that university students buy a house for three years then sell again?
A good rental means you're paying the landlord to take care of things for you.
I agree in the long term, since we always need somewhere to live, that personal ownership is better; but if you're moving a lot, or perhaps depending on your job situation, I think renting is a valuable service for many people.
Assuming a university student had enough income, yes, most definitely. But most people buy houses after college, as they are busy paying for/off college first.
But realize that monthly rent payment is going to be about the same price as a monthly mortgage payment.
Well just realize that you're losing money by taking advantage of that service, and then, yes, it is valuable service, but also a more costly service.
Is it more convenient for you to have food already cooked delivered to you? Yes, of course. Will it cost you more money, will you lose more money, than if you went to the grocery store, got the ingredients, brought it home, and cook the food yourself? Most definitely.
The point I'm making is don't pay somebody else's mortgage off, pay your own mortgage off.
While strictly true, and I do not mean to be insulting, but that is a very financially dumb thing to say.
As I mentioned previously, you're giving your money to the landlord so that he can earn more money for himself, versus getting your own property and earning money for yourself.
Make your money work for you, and not for someone else. You earned that money.
I mean, that's exactly my point. Services exist to cook and deliver food. Sometimes they're desirable, sometimes they're even economically profitable for the customer.
Housing is different from food, and more important/worthwhile to own. But housing-as-a-service is still, I think, a valuable option to have.
In my experience, financially it's also a valuable option.
And yet, money is nothing in itself, unless you're a true capitalist. You're giving money to a landlord for him to provide you a service. You could instead invest that money in property and do the work of being your own landlord, and reap the benefits of that too.
I f'ing hate bots/people who waste my time with nonsense.