The legend of the rent

[Citizen T]

Math doesn't lie; however, to deny math is situational to each instance is a misguided. Grim is talking about most likely the averages; however, the averages don't apply to everyone, and especially not in this area. The rent is so high, but the prices to buy are much much lower (outside of the large buildings)

You're correct in that math doesn't lie, but blanket statements can and do.

[Deleted]

The feeling of having your own house is even better.

[Themius]

You're correct in that math doesn't lie, but blanket statements can and do.

Which is why I say it depends and only speak of the situation in my area. People often will take their area and make it the rule.

[Trassk]

food shopping always feels good, knowing theres food in the cupboard and fridge/freezer for that week.

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The feeling of having your own house is even better.

agreed. being sat hearing the wind and rain outside (we got a lot of it here in southern england over christmas), and being sat here with the heating up and warm cup of coffee or tea, despite the day to day woes, just being thankful for having what I have makes me appreciate it.

Many people complain about there routine life and how boring it can be. But if you actually have something to be thankful for, just give a moment to think about this, your sat at home on a computer talking on a forum, probably a drink to your left and something to eat to your right, talking to a friend on skype or whatever else, getting to go to your job in the morning, and come back home to a warm house, food, fresh clothing, lay on your couch or bed and watch tv.

There are people in the world, who don't have any of this, they don't have assured warmed, assured food, assured company, assured income, assured clean water to bath and wash cloths in, they don't know if there going to be alive or dead next week.
So given that, just take a moment to actually appreciate what you have.

[Kujako]

401k has lost money over the years so I don't bother with it anymore, 372k to go on the mortgage and ~30 years till retirement. On the plus side, even during the market collapse houses here increased in value at an average of 2-3% a year. It does mean my retirement plan is tied up in my house, but frankly that seems a better option these days.

[Trassk]

401k has lost money over the years so I don't bother with it anymore, 372k to go on the mortgage and ~30 years till retirement. On the plus side, even during the market collapse houses here increased in value at an average of 2-3% a year. It does mean my retirement plan is tied up in my house, but frankly that seems a better option these days.

some people don't even get to die in there own homes, which is all some people want, having a home to call there own and not be moved into a ward in there dying days.

[Kujako]

some people don't even get to die in there own homes, which is all some people want, having a home to call there own and not be moved into a ward in there dying days.

It's also insanely affordable these days compared to rent (thanks Bernanke!). I live in one of the most expensive counties in the US. Yet my mortgage is ~1600 a month of which almost half goes to the principal of my loan. Rent on the house would be around 2400 a month. Worse case I could sell it today and buy a small place in Hawaii for cash.

[PixelFox]

The fact that your early payments on a mortgage are almost entirely interest is offset by the fact that (in the US at least) you generally don't have to pay income tax on the money used to pay that interest, hence a very BIG reason why a mortgage is better than rent, even before you consider that real estate is historically always a good investment (even if you never paid a dime against the principle on your mortgage, you probably still win as the value of your property increases over time).

Having lived through 14% mortgage interest rates in the 1970s, I find it almost amazing that people are willing to loan me lots of money for 30 years at a fixed 3.8% interest rate. "Shut up and give me the money!". It can be good hedge against inflation too. If interest rates go up, my interest cost is effectively reduced relative to what my other investments are earning from the higher interest rate. If interest rates plunge, I can always re-finance and get a lower rate. How many things in life actually work for you either way like that?

A home is also an asset that can be borrowed against in an emergency.

There are of course additional costs to be considered in property ownership (property tax, possibly additional utility bills (water, garbage) that your rent might have included, as well as insurance and higher risk (getting flooded without flood insurance) and maintenance (all houses immediately start to fall apart at a furious rate as soon as you take possession of them). Also there's the lack of mobility involved once you're "stuck" in a mortgage and buying a new home when you already own one complicates that quite a bit.

But financially owning > renting in virtually ALL cases.

It does feel great to have made the ends meet at the end of the month, and even more so when what you're paying for housing is actually getting you something permanent that you own. Early in life renting is great because it's easy (little credit required) and you'll probably move a few times before you decide you want to settle down somewhere. Later though...

PF.

[imabanana]

But financially owning > renting in virtually ALL cases.

Well, currently, there's no way I'd trade my freedom of leaving whenever I want for being tied to an "owned" place and even more to loans payment. I'm not talking only about leaving the place I live in, also my job or many other life-changing choices. (and this "whenever I want" being in 2 months for me )

Thus in my case, renting > buying.

Sure, if you can own without loan then "financially owning > renting in virtually ALL cases", but when the loan gets in, everything changes, it's extremely limiting your future life options.

[Kujako]

Well, currently, there's no way I'd trade my freedom of leaving whenever I want for being tied to an "owned" place and even more to loans payment. I'm not talking only about leaving the place I live in, also my job or many other life-changing choices. (and this "whenever I want" being in 2 months for me )

Thus in my case, renting > buying.

Sure, if you can own without loan then "financially owning > renting in virtually ALL cases", but when the loan gets in, everything changes, it's extremely limiting your future life options.

Not really. My house is worth more then I owe and the housing market where I am is currently very short on the supply side (and more or less always has been). I could sell my house with very little notice and walk away with a fair amount of cash. Frankly, I think it would be easier to do then to get out of a lease. So I pay less money each month then I would if I rented and I'm building equity I can cash out with at any point. Not seeing a down side.

[Zathrendar]

Lol this guy won.

Paying rent is stupid. You don't actually own anything, you're saying "hey thanks for letting me live here past month, take this money as my appreciation" and you wind up with nothing but a place you lived. At least, that's what the act of paying rent is, of course some people can't afford to buy their own place.

Paying more on your mortgage each month than whats due. That's a good feeling.

It's not that simple, at all. The interest you pay on a mortgage could well equal the rent you pay whilst saving up for a house, perhaps by investing the income, all the while earning compound interest on said amounts. With interest rates as low as they are (artificially so), it may make sense to buy a house provided you can find one that is affordable, but the idea that renting is inferior simply because you don't own the house in the end is unfounded.

There are loads of considerations to take into account, based on your personal circumstances.

Of course, in the US where you can get 30 year fixed rate mortgages, locking into one at low interest rates makes a lot of sense, vs the UK where the longest one you could get is 10 years, and even then you'd require a high deposit.

[imabanana]

Not really. My house is worth more then I owe and the housing market where I am is currently very short on the supply side (and more or less always has been). I could sell my house with very little notice and walk away with a fair amount of cash. Frankly, I think it would be easier to do then to get out of a lease. So I pay less money each month then I would if I rented and I'm building equity I can cash out with at any point. Not seeing a down side.

Well, where I live currently, any estate agent will tell you not to hope selling in less than a year unless you go 30% or more under real value (which you can certainly not afford if you still have mortgage, at least not until close to its end), some offers remains for years while still under the average sale prices by a fair margin. This seems to be the current trend almost worldwide, you can consider yourself lucky then

And this is even with crazy interest rates. When I searched for a house to buy a bit more than a year ago, my bank offered me a loan that was under 3% for 20 years (including insurance and everything), and this without any negotiation, and without trying to ask any other bank, pretty sure it could still go down quite a bit.

[Kujako]

Well, where I live currently, any estate agent will tell you not to hope selling in less than a year unless you go 30% or more under real value (which you can certainly not afford if you still have mortgage, at least not until close to its end), some offers remains for years while still under the average sale prices by a fair margin. This seems to be the current trend almost worldwide, you can consider yourself lucky then

And this is even with crazy interest rates. When I searched for a house to buy a bit more than a year ago, my bank offered me a loan that was under 3% for 20 years (including insurance and everything), and this without any negotiation, and without trying to ask any other bank, pretty sure it could still go down quite a bit.

It of course varies from place to place. Have you looked at what the rental possibilities are vs the mortgage rates? With the fed' more or less giving free money to banks, the interest rates are insanely low as you said (higher now then before, but still under 5%). You can always rent a house you own when you feel like moving until it can be sold (if you want to sell it). In many cases the income from the rental, even after paying a property management firm to maintain it, is more then the monthly mortgage.

[Symphonic]

The first page is all I read.

I can say that a house is much better than paying rent. Sure, problems become your own to deal with (A/C, furnace, water heater, etc.) but your money is finally going to something that you can actually get more back or at least the same. (Some people who don't take care of anything will find themselves getting less back.)

I was a first time homebuyer in October of 2012. My wife and I (and at the time our 2 week old baby) didn't have money for a down payment, but a lot of states offer some sort of incentive / help for people in our situation. What they did was take out a second loan at a higher interest for just the down payment, while our mortgage was at the lower interest. Adding those two together and all the insurance etc. is only 30 dollars more than what we were paying for rent.

That's right, we have a "built-in-2005" home (with new carpet and new paint on all the walls as a gift from my parents for our first home) with 3 bedrooms and 1 and 1/2 baths, and triple the square footage, compared to a tiny 700 square foot 1 bedroom apartment.

I'm sorry, I don't think rent is a good deal, and what's sad is that the cost to rent an apartment is so FREAKING high, that you can't save any money to try to get a home.

[imabanana]

It of course varies from place to place. Have you looked at what the rental possibilities are vs the mortgage rates? With the fed' more or less giving free money to banks, the interest rates are insanely low as you said (higher now then before, but still under 5%). You can always rent a house you own when you feel like moving until it can be sold (if you want to sell it). In many cases the income from the rental, even after paying a property management firm to maintain it, is more then the monthly mortgage.

Also totally impossible unless I had about 50% to 60% of total price before loan (already had ~35% which is really a lot), or unless I'd chose to buy something way smaller than what I can rent.

As an example, the one I almost bought could be rented about 800-900 / month, even with this 35% I'd have to pay about 1.2k / month mortgage (with a 20 years one). Then add taxes to pay on this 800-900 income... and forget about the idea

[Deleted]

Not having to pay rent I guess.. I don't see anything positive about giving away money, ever. Although I guess it can be a good feeling when I get something I wanted to buy anyway really cheap.