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When you buy your own home, you are creating equity. The money you put into paying your mortgage is maintained in the value of the home. If you choose to, you can sell the home and tap into that equity should you need it. If you live in the home long enough, you may be able to sell it at retirement, purchase a smaller home with a portion of the proceeds, and used the remaining balance to add to your RRSP/401(k) and/or pension fund, or you can use it for travel or other recreational activities you now have the time to enjoy. It should also be pointed out that with the record-low interest rates we have today, you can usually pay a mortgage for less than it costs to rent.
You aren't building equity just because you buy a home. You need a flat market or appreciation and it would have to exceed the transaction cost to sell the house before there is any benefit on the equity side. This is a bad misconception far too many people have
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Plan B - Renting a Home
When you rent a home, you a merely doing the same thing for someone else. You do not build any equity for yourself, and the money you paid in rent is placed into someone else's home so they can tap into it if they so choose. Upon retirement, you still have to pay rent. This eats up additional funds that you would normally use for travel and other recreational activities that you now have the time to enjoy, but may not be able to afford with a fixed income and $1000/month rent.
All I can say is that if you think Plan B is a better idea than Plan A, you really need to talk to a financial advisor. For many people, purchasing their own home is the best and most profitable financial decision they will make in their lifetime, bar none. Choosing to pay rent however, is not.
Disclaimer: We purchased a modest bungalow five years ago for $250,000. The mortgage payments are cheaper than rent, and we could easily sell the home in today's market for $375,000 without any problems. YMMV.
Renting isn't always a bad choice and can come with equity building as well just not housing equity. You can often times rent a small one bedroom if that fits your needs vs buying a larger house because small one bedroom houses aren't available in your area. The cost difference between the two can be saved and thus equity is born.
And if renting a room I could pay for the whole house, I'd buy it.
Well now you have a goal. Get your education, a good job, work hard, save and buy a house. No matter what anyone says, we are not entitled to our own house because we exist. I don't know about most people but I couldn't afford to buy a house when I was young either.
People who believe they are entitled will never own much of anything or will make bad financial decisions.
You aren't building equity just because you buy a home. You need a flat market or appreciation and it would have to exceed the transaction cost to sell the house before there is any benefit on the equity side. This is a bad misconception far too many people have
Well now you have a goal. Get your education, a good job, work hard, save and buy a house. No matter what anyone says, we are not entitled to our own house because we exist. I don't know about most people but I couldn't afford to buy a house when I was young either.
People who believe they are entitled will never own much of anything or will make bad financial decisions.
That's the idea. Home is a luxury, we are not entitled to it.
That's the idea. Home is a luxury, we are not entitled to it.
Well when the entitlement minded start screeching loud enough the politicians pander, I'm the government and I'm here to help, setting the dominos in motion. The housing market,... politicians pandering and forcing banks to approve mortgages for people who (using good financial sense) would not have qualified "because everyone deserves a house" and 2008 comes to mind.
I don't know where all this entitlement mindedness came from but it's wrecking the country and causing even more poverty.
Hmmm, I have skimmed the postings, but not actually read them ALL I admit, but I still get the gist of the conversation and see most postings seem to be on target.
We just bought a new home. Prior to this we lived in an {our} owned mobile home {for many years] on a rented lot. OUR mortgage is only slightly above what the lot rent was. SO it is almost as cheap as the lot rent.
Also,the mortgage is LESS than the rent would be on this house, if we were to rent it, and in most cases almost as cheap as, or less than renting an apartment.
So...why wouldn't we buy?
I don't consider it a "luxury item"...I consider it basic shelter at a reasonable price.
And just like the mobile home, or any vehicle we ever bought on credit, this house will be paid for LONG before the 30 year note due date. Like in 5 or 10 years at the MOST. and then the taxes-only payment will be so affordable we can't afford NOT to. {Like $150/month and we are in expensive taxed state}. CAN't beat THAT for a housing cost/payment.
The ONLY block to owning a home is:
A] lack of good credit by paying one's bills responsibly;
B} lack of effort to save a Down payment;
C} and lack of adequate income to afford said house, AFTER a reasonable down payment.
ANY ONE of these can be adjusted by hard work and a willingness to MAKE owning a home a reality.
One just has to have true grit and the ability to "git 'er done"....
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