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People with mortgages think they are so much better than renters, but when you really think about it they are ones in hundreds of thousands of dollars of debt. Really, if you put a 20% down payment then you own only 20% of your house and have the ability in the future to buy more. I think its the same for car loans, until you've paid off the loan its not really your car. I'm aware that technically you legally do own your house, this is more of a philisophical question.
Last edited by mikejj2004; 10-14-2009 at 09:10 AM..
Good point, that. Even if paid in full, there's always endless property taxes that, if not kept current, will result in sale of your house too. In rare cases, eminent domain can steal your house away as well. Do we ever really "own" anything? Probably not.
From a pure legal standpoint, this is incorrect. Most every state follows the "lien" theory on mortgages. That is, a mortgage is a lien on the house.
It used to be, and still is in a few places, that a mortgage was a superior title to the house. If this were the case, foreclosures would actually be evictions and would proceed through the system a lot quicker (6+ months to foreclose on someone versus 3+ months to evict).
Basically, the bank doesn't own the house in the sense that your question proposes. Downpayment and stuff has nothing to do with title and ownership.
Think about it like this, if you take your car to the mechanic and don't pay the bill, the shop has a mechanic's lien on your car. They do not own it though. The shop cannot drive your car around wherever they want or up and sell it without some action through the courts. Same thing with a mortgage.
Another thing: insurance. If the bank really owned my house, I should just be able to get renters insurance to protect my possessions. Instead, the bank makes me get homeowners insurance to protect the structure. If the bank owned the house, they would be insuring the structure.
But, I do see your point in that homeownership doesn't necessarily put someone in a better financial position as a renter.
Sorry I DO see the prudent use of homeownership as a signficant BOOST to the financial position of just about anyone that is a "home owner" regardless of whether they have a mortgage or not.
When one buys a home the equity they have in it is of course subject to the HOW GOOD A JOB THEY DID when shopping / pricing / selecting the property relative to others that may be available. Once in the home the CHOICES that one makes about improving the property may significantly INCREASE your equity.
It is flat out impossible for a renter to build equity in any way.
Now that is NOT to say that there are not SOME smart renters that CAN use the difference between what the spend to rent a place and WHAT IT MIGHT COST to own the same place to invest in other ways, but that is NOT the norm in my experience as a landlord...
To be honest, I think that even being a landlord of SOME properties is not particularly lucrative, and my research into how SOME REITs that specialize in residential rentals have done over long haul motivated me to sell my income properties and move to more flexible, less work intensive investments...
All that said, homeownership is far and away the EASIEST way in the US to maximize LEVERAGE and let others give you the funds needed to have a place to live AND the potential for equity growth!
I couldn't care less about all that financial nonsense.
My house is my home.
It's where I live and expect to die.
I pay a mortgage payment each month.
Even though the bank owns the house, I can do whatever I want with it, and I have the security that I won't be kicked out.
If I rented the house, the landlord controls the property, and I can be put out if he decides to sell or wants the house back for some other reason.
He can also constantly raise the rent within certain guidelines depending upon local laws.
My mortgage payment will never change unless I change it.
I couldn't care less about all that financial nonsense.
My house is my home.
It's where I live and expect to die.
I pay a mortgage payment each month.
Even though the bank owns the house, I can do whatever I want with it, and I have the security that I won't be kicked out.
If I rented the house, the landlord controls the property, and I can be put out if he decides to sell or wants the house back for some other reason.
He can also constantly raise the rent within certain guidelines depending upon local laws.
My mortgage payment will never change unless I change it.
LOL. Ever heard of imminent domain? You don't own squat. We're all renters in this world. The sooner you let go the white knuckle grip to the material the happier you'll be ...
While I am no fan of eminent domain , and I am closely watching the current NY case to see if goes to the Supreme Court to undo the damage they wrought with Kelo, I would also be compelled to point out that in such cases the home owners were well compensated, and provided with far more relocation assistance than any renter would be...
They may be monetarily compensated, but they are still losing what they thought was theirs.
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