Ski_the_east01This is one of the dumbest things I've ever read on NS
1. You didn't factor in down payment. You're home value and your loan cannot be the same number.
2. Renting is essentially throwing away money. You are not making your money work for you
4. You are while making mortgage payments your are purchasing an asset and it is earning equity and you are building borrowing power
5. You are building credit
6. Tax benefits of owning a home
7. Owning a home isn't always considered an investment, it's more 'intelligent consumption' especially when compared to renting
8. You claim a 5% fixed rate like it's a bad thing, a fixed rate that low is very beneficial when you consider the stability attached with that rate. There is also always the option of refinancing
1. Have you even heard of a simplified model? If you want to get oh so technical, fine, say a $50,000 down payment on a $350,000 house, with a $300,000 mortgage. Happy now?
2. Paying interest is essentially throwing money away as well. And should your home ever go down in value, your basically trapped (as the 2008 crisis proved so well). That interest money is not "working for you", unless you define it as gaining credit. That roughly $280,000 that was paid above and beyond the loan is burnt money essentially.
3. What happened to #3?
4. Better off paying rent and setting aside the extra money a mortgage/home would be costing to you towards buying a home outright (or almost outright). Instead of paying 5%, let your money earn 5%. After 10 years of putting maybe a grand into an earning account, that is much more equity then the measly amount paid off on the principal of the house.
5. If you have good credit history not much of a concern. Nothing will destroy your credit like a missed mortgage payment.
6. I overlooked the mortgage interest tax deductions, but deductions max out at a low amount for most people, nowhere near the total amount paid each year. Not to mention most of that is offset by the costs of property taxes and other miscellaneous taxes on home ownership.
7. God forbid someone lose their job and find themselves unable to make the payments, then all those payments were for nothing. A renter simply moves into a place they can afford. If you think you have enough stability for thirty years, then I say go for it.
8. I never said 5% was a bad rate, I just used it as an example, since it's fairly common. Or you could refinance to one of those great adjustable rates, we all saw how that worked out. Also, you're not factoring closing costs and all the other BS that banks tack on.
Look, I'm not saying renting is ideal, but having a mortgage can potentially be much worse, especially for young single people. For certain people, for example married couples with families and a mini-van, a mortgage would begin to make more sense.
Also, you cannot say all homes go up in value. Sure they'll go up in terms of inflation, but in real terms that's always a question mark, with the very real possibility of going down in value depending on location.
It's a complex question that each person should consider very carefully. Let's not rush into taking on "good debt."
