Been hearing it since 2008.
I guess blowing my money on rent (approx $60 000) since then would have been better?
If you do the math and wait another 5,10, 15 years you'll probably see that you would have been better off renting. Its very difficult to convince someone of this once they purchased a home and they're defending their position, but numbers don't lie in the end. Whats going on with the current house prices will come to an end, it ALWAYS does, this time isn't different.
Also add up how much interest you paid, property taxes and other maintenance since 2008. Im willing to bet you're going to come up with OVER 60K, and thats money that you will never get back, just like renting.
Hard to say. If there is a house for $560k and we put the 60k towards a downpayment instead, we now have a mortgage of:
$500k
If we are lucky enough to get a 3% avg mortgage for 25 years (avg has historically been 6-7% I think) the costs would be:
$3k monthly (mortgage+property tax+HO insurance)
$200k in interest paid at the end of 25 years
$50-100k on repairs/upgrades over the course of owning the home
So total cost for this house after 25 years is approximately
$860k
Renting at the rate you suggested for 25 years you would have a cost of
$375K
That leaves the Renter with $485k they can put towards investments over the Homeowner. These investments may rise or fall, but so can house prices. It's a crap shoot for both really. The major advantage for the Renter though is that his money is liquid, if his investments start falling he can switch them over to something else in a matter of minutes. The Homeowner on the other hand will have a much tougher time convincing a buyer to take the house when prices are falling. If the Homeowner can afford to keep the house during the price declines then he is fine, no real loss is had until he sells. The worry is that because house prices have been going up so much compared to incomes, when mortgage rates increase the Homeowner may not be able to afford his monthly payments and will be forced to sell at a loss.
ccasion5:
Also what happens when you get sick, lose your job or a million other things that can possibly go wrong and now you can't pay your bills?
In a country where 40% of people live paycheck to paycheck you don't have many options.
I'm gonna make this post short.
Couple of things:
1. You're comparing $1000 a month rented apartment to a 500k house?
2. Why not buy a cheaper house, who tells you to buy a 500k house?
3. Why pay for 25 years, when you can pay it off earlier? (if you can't pay it off earlier you should be in a cheaper house)
4. Yes, I'm sure most renters save up all the money they can just to invest, which by the way is no sure thing either.
5. Unknown future- I'm not sure what my house will be worth then as you won't know what your stocks will be worth.
6. Known future- I will be living in my paid off house, while you will be renting where and for how much?
1. You don't have to rent an apartment, you can rent a condo, house, whatever your heart desires. If the price goes up you can pack up and move. Not so easy with a house. 1300-1400 you can get a nice condo or upper level of a house.
2. Are you aware of the average price of a house in toronto? :lmao:
3. Good luck with that, most people are broke month to month trying to pay it off at 25 years.
4. Nobody saves up all of it because life happens. Cars break down, people get sick/injured and might be off work etc.. The difference is when you're renting you have money saved up and can deal with these issues. Most people who own homes dont have that buffer.
5. That is true, only difference is you have ALL of your money in one place. If you know anything about investing this is a big no no. Also you're paying hundreds of thousands of dollars of interest on your "investment", usually thats not how investing works :lmao:
6. Your paid off house will cost you so much in the end if you actually do manage to pay it off that it wont even be funny.
If you looked at the numbers yourself and realized how much money you're really losing you'd change your mind.
BTW i used to be like you since thats the mentality of most people. However i got sick and tired of the conflicting opinions and sat down one day with a pen, paper and a calculator. I now see it for what it is. Do the same and learn something.
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Sure you could. And that's an entire mortgage payment that's going down the tubes rather than going towards your equity. Unless renting a house is substantially cheaper (I'm sure some would argue that it is anyways), then it doesn't seem worth it IMO.
Have you looked at what percentage of that mortgage payment is actually going towards your house vs interest?
Dont forget to add in property tax, which you will never get back as well.
^ this.
I would rather pay mortgage than pay rent..... if I had the choice/ability. I'm getting married at the end of the year. If we don't find a place, I have 3-6 months rent on standby for additional time if needed. If not, that'll be additional track/race fees for 2014
So you'd rather pay $1000+ in interest a month, plus another $300 in property taxes, pay for maintenance (roof, furnace, water heater etc) and have all of your money in one thing?
Real estate is always considered as one of the best investment. But one must have knowledge about various facts related with it. If you want to buy new house you can take help of real estate agent.
Real estate is not an investment. Its a place to live.
For me, choosing to buy a house over just renting and investing your money through other means is just a preference and belief that that is what is best for you. There are too many variables at work to say one way is better than the other. Rather than enslave yourself to a mortgage, you could use your money to buy a business and who knows what the outcome could be.. Could go broke or end up a millionaire.
I have always been irritated by the talk about renting and "just throwing your money away". That is nonsense.
Nontheless, I just took the plunge and bought a house this week largely because Im just sick of the lifestyle of renting and having to deal with a landlord. With home ownership, I haven't even moved in yet and already I see the costs piling up. Land transfer tax, lawyer fees, added insurance, home inspection, not to mention all the minor issues in the house that I will need to address ($)..Then there is the silly amount of interest that I will be paying on the mortgage, even at todays very low rates.
Of yeah, when I end up selling this thing, Im going to have to pay these scumbag real estate agents ridiculous money too. Already I miss renting!
Agree with you there. Most people fail to see both sides and instead make a choice and then feel the need to defend their choice rather than admit that perhaps there is another, better way.
