Home: Buying vs Renting
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Random thought before I go to bed. Maybe I'm missing something obvious. I bought my home in 2009 for $250,000, it has since gone up in value $100,000 which is awesome, right? Except in those 11 years I have paid over $90,000 in interest on a 30-year mortgage. (Had 4.5%, refinanced to 3.75% in 2012). Aka, broke even.
Yes, we will buy (not rent) when we move to Minnesota next year (I plan on getting a 15-year mortgage, and staying there for 20-30 years), but still........ the value of my home went up 40% in 11 years (many are not so lucky!) yet I am essentially breaking even. In other words, I could've rented the whole time and it would've been the same.
WAIT (no, I'm not going to go back and edit my previous words, I stand by my oversight) I realized what I'm missing. To rent my current home would be about 25-50% more per month than the monthly interest on the mortgage payment. Added up, renting (at $1,900/mo) would've cost me $250,000 over the 11 years whereas with the mortgage I'm basically spending $0 and, had my home not gone up in value, would've only spent $90,000 compared to the $250,000.
I hope you enjoyed this pointless post.
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Are you including your Condo or HOA fees? Homeowners insurance? I take it that you haven’t had any major expenses such as a new roof or HVAC system? Oh, don’t forget to add your property taxes...
Yes, owning is ultimately better than renting, but it is a closer thing than most realize.
The Brad
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The mortgage deduction going away under Trump's new tax plan (assuming the standard deduction is better) changes things substantially. But that is a case by case basis.
@Horace said in Home: Buying vs Renting:
The mortgage deduction going away under Trump's new tax plan (assuming the standard deduction is better) changes things substantially. But that is a case by case basis.
I ran the numbers and was coming up with a $500,000 mortgage being the threshold for most people...
-
Random thought before I go to bed. Maybe I'm missing something obvious. I bought my home in 2009 for $250,000, it has since gone up in value $100,000 which is awesome, right? Except in those 11 years I have paid over $90,000 in interest on a 30-year mortgage. (Had 4.5%, refinanced to 3.75% in 2012). Aka, broke even.
Yes, we will buy (not rent) when we move to Minnesota next year (I plan on getting a 15-year mortgage, and staying there for 20-30 years), but still........ the value of my home went up 40% in 11 years (many are not so lucky!) yet I am essentially breaking even. In other words, I could've rented the whole time and it would've been the same.
WAIT (no, I'm not going to go back and edit my previous words, I stand by my oversight) I realized what I'm missing. To rent my current home would be about 25-50% more per month than the monthly interest on the mortgage payment. Added up, renting (at $1,900/mo) would've cost me $250,000 over the 11 years whereas with the mortgage I'm basically spending $0 and, had my home not gone up in value, would've only spent $90,000 compared to the $250,000.
I hope you enjoyed this pointless post.
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Are you including your Condo or HOA fees? Homeowners insurance? I take it that you haven’t had any major expenses such as a new roof or HVAC system? Oh, don’t forget to add your property taxes...
Yes, owning is ultimately better than renting, but it is a closer thing than most realize.
@LuFins-Dad said in Home: Buying vs Renting:
Are you including your Condo or HOA fees? Homeowners insurance? I take it that you haven’t had any major expenses such as a new roof or HVAC system? Oh, don’t forget to add your property taxes...
Yes, owning is ultimately better than renting, but it is a closer thing than most realize.
Yeah we have condo fees, a total of about $60,000 over 11 years, as well as insurance, taxes, etc. I didn't want to muddy the original post with too many details, but those are 100% relevant. Luckily we haven't had any major work needed.
And yeah, it's definitely a closer thing than most realize especially if you factor in the "your home value might actually stay the same or go down" over the short/mid term.
