How is buying a house worth it?
By - Last_Br3ath
Because I don’t want to pay rent or be at the mercy of a landlord.
I agree with you, but i must add you are then at the mercy if your lender. On another note screw HOAs they should not be able to fine you into foreclosure.
My mortgage is the same amount as my rent was.
When I moved out of my last house I made $30,000. Can’t do that with an apartment.
Plus I like controlling what my living space looks like. Don’t like a wall? Tear it down. Yard looks like shit? Dig it up and plant new stuff.
You can opt out of house buying if you want. It doesn’t make you a loser. To each their own.
I bought a house as I I know once the mortgage is paid off, it's mine to do whatever I want with. I can sell it, rent it out, or pass it down.
In my area to rent a single bedroom apartment/flat would be £800-£1000 a month, my mortgage is £750 a month for a 3-bed with a garage, conservatory and garden. That £750 isn’t going to someone else but instead most of it goes into the house and can be retrieved when I sell.
I’m not rich at all but also not poor enough to qualify for council housing or similar so really buying the house is the logical decision on a purely financial basis
Where are you that you can rent what sounds like a decent place for £64 a week!?
I know right? £60 a week was what I paid for a single room with no ensuite for university....in 1998!
That’s the only thing I saw in the post... £60 pound a week. Must be under the stair case like Harry Potter.
A house can be your greatest financial asset. They almost always appreciate in value if you put in the maintenance. Because of this, they are like the number one method of economic mobility.
My parents bought my apartment rather than renting it because they said it's actually cheaper. I think it's cos real estate values usually increase so even if I only stay for a few years while I'm in uni they'll sell it for more than they paid into it.
Why buying a house, at the right time and at the right price is good.
1.) You own the home. You decide what you can do with it. You can paint it, change it, upgrade it, ect. No one can just kick you out of it, so long as you are paying your mortgage if you have one. No one controls aspects like heat, pets, ect.
2.) Every dollar you spend paying mortgage is dollars you can potentially see back. Look, you may never be able to afford a house fully, but I'm sure you could pay that mortgage for a few years. Lets say it's over a 5 year span. You pay $600/month for rent, and $800/month in a mortgage. After 5 years is up apartment was $36,000, House was $48,000. You leave that apartment and you have that $12,000 possibly in your pocket. Nice. However, every penny of that $36,000 is gone. Lets say you leave that home after 5 years now. Say you bought it for $100,000 (to make it easy). You paid $48,000, and we'll say about $25,000 of that went to the principle of the home, and the rest went to other fees. You sell the house now for $110,000, because you can. We'll do a generous $5,000 for closing/realter fees. $110,000 - ($5,000 fees + $75,000 in remaining mortgage) = $30,000 dollars profit. Due to capital gains not being taxed until they exceed $250,000, you don't even give the government one penny of that. So now, after 5 years, you walk away with **$30,000** instead of *$12,000*. Not bad if you ask me!
Thats crazy cheap rent. But as your life develops you might not be entitled to social housing. You could find a huge jump in monthly expenses
There's no point where that would/could happen.
This whole thread just seems silly. Buying a house is worth it, for most people. You seem to have special circumstances where it won't ever be worth it *for you.* You seem confident in that, for whatever undisclosed reasons, you'll never be able to afford more than $90\*\* a week and be able to stick in social housing for your whole life. If that's truly the case, why bother asking the question? I would point out nearly 100% of people fall out of subsidized housing for one reason or another, so it seems you are poorly planning for your future.
I'm asking as I'm curious. That kind of the point in asking any question. If it's worth it for most people I'd like to understand why and how, given the risks and negatives.
Via work I've dealt with people who've had to declare bankruptcy and lost their homes due to unforseen circumstances like job loss. I know people struggling more than I am as they've had to find money to fix a boiler. I see older people in tears as they know they can't leave their home to their kids. It all seems like too big a risk, thus why I'm trying to understand why to take that risk - a lot of arguments made here don't stand up against the criticisms, or could also be made about renting privately.
No one 'falls out' of social housing, whatever that means (I didn't say 'subsidized housing').
Most things in life are risky. Buying a house, changing jobs, moving, having kids, taking out any loan, college, dating, getting married… the list goes on. You won’t know whether anything is worth it until you take the risk.
What do you mean, why?
Everyone is entitled to social housing if needed. As a disabled person I'm unlikely to be in a better position financially.
If you're in social housing and start earning more you're not kicked out - in that situation people either buy their home or move into private rent/buy privately of their own volition.
In many areas the mortage is the same price as the rent, so in 20 to 30 years you don't have to pay that monthly expense anymore assuming you plan on sticking around.
What if you don’t stick around?
Well you sell it, and hopefully the house is worth more than what you bought it for. Either way no money lost if it was the same price as rent
Also, you make back the difference between what's left on the Mortgage and the Sale price.
Say you have a 250K House and the Mortgage was 240K (after Down payment.) Five years in and you've knocked off like ~20-24K. That means there's only 220K or so left on the Mortgage. If you sell that house for 250, you have 30K to walk away from. And that's unlikely because it will likely raise in value so you might have closer to 40K or even 50K.
Of course there are sunk costs in the house (repairs and upkeep), but that's not so bad. If you play your cards right, make a few extra payments over time, and keep an eye out to refinance the loan (or take a second loan to pay off the first loan early) you can often end up making a lot of money back when you sell your house.
And like you said, when you take into account that all of that money *would* have been lost to Rent, it's basically a savings plan.
Not all of us can live in local authority housing unfortunately. The waiting lists are so long for a reason. The reason your costs are so low is that you are largely subsidised by tax payers, not saying there’s anything wrong with that. But in its simplest terms… There has to be more people paying into the pot, than there are people taking from it.
For those people they often consider buying a house is better for their/their families future, than renting at the full (unsubsidised) market rate from a landlord. Most people need somewhere to live and those are their two main options
I'm aware of those things, but I'm asking people to explain why buy vs rent when buying can mean higher cost and greater risk when ultimately most people just end up selling instead of giving to kids.
It seems currently there's far more stacked against anyone trying to buy their own homes too.
I’m not sure it can mean higher cost or risk when the full picture is considered over a lifetime. Let’s run through a scenario in the south east where I am (not London)
You buy a house, mortgage cost £800pm over 30 years. You are responsible for any and all maintenance, say £200pm for ease
You rent the same house for £1000+ a month from a private landlord, you don’t have to worry about maintenance but your rent likely increases over time
Some people would legitimately argue that one or other option is better for their lifestyle etc. but for simplicity they are somewhat comparable.
Where the two really deviate is though. That the person A has no mortgage after 30 years (just maintenance costs) which gives them a huge amount of stability and increase in available funds for living their life. Person B pays rent at an ever increasing rate until the day they die. Could easily be 60+ years, likely putting heavy strain on their finances their whole life. Particularly once they stop work. This is the main difference I see and hopefully goes some way to answering your question, why some people choose to buy over rent
The biggest reason you want to buy/build a house is really the freedom of doing what you want with it. You can also use all the ground for yourself. If you rent something you arent allowed to just build a pool, to drill holes at a certain size, changing the floor and all that.
In addition to that, people already mentioned you are at the mercy of the landlord. If the landlord wants to move in he can (after like 2 years of trials , but still can). You also have no choosing, no right on what he buys to "make your home liveable". He can give you the most garbage boiler once its broken.
Overall tho, currently houses are way to overpriced (atleast in Germany), so yes , its not really worth it unless you really have the money and value those freedoms so fcking much.
People buy houses for many reasons. We bought our first house because we wanted a house to live in in a nice neighborhood. I made lots of improvements to that house and when we sold it several years later we made a big chunk of money.
Home insurance and programs like home warranties are useful for when things break or something happens. We used our home insurance on our first house to have the roof completely replaced after a bad wind storm tore up some shingles. The new roof was an attractive selling point when it came time to sell.
If you had kids you'd want a big yard for them to play in. I personally can't stand living in anything other than a detached house because I enjoy my privacy and my space. I kind of enjoy working on the house and I definitely enjoy working in the yard.
Where I live (Brazil) is common for the owners to ask the house back within 2 months (sometimes even less time) for no reason (most of the time the owner needs to sell his house and then plans to live in the house he`s renting) and it turns into a big headache to find a new place while fixing everything in the old's house.
64 pounds a week is ridiculously low for rent.
A lot of folks pay like $1000+ for rent. And at that point, it's better to just put $1000 on mortgage and own a house instead.
Yes, but it's not just $1000 on mortgage, it's thousands on upkeep on top of that. And then huge debt if you can't keep up with the mortgage.
But you own a house afterwards.
You own nothing if you pay rent for years.
I'd rather maintain a house I own, rather than not own a house.
Things don’t typically break all the time. Unless you’re living in a fixer-upper, upkeep is not that expensive.
I live in a home that is over 100 years old. So far all I’ve done is landscaping. I’m planning on re-doing the front and back porch but it’s fine the way it is for now.
Front-loaded compounding interest is a bitch also. I do want to buy a home. People who bought homes in the past, the value had gone up astonomically. There are good reasons not to buy though. I think it depends on your income and situation whether it is a good idea.
Where I live, monthly housing expenses for renting an appropriately sized place would be more expensive than owning. My wife and I had a small down payment saved and we both have good credit (thanks to my wife, she's the responsible one). A three bedroom house for us and the two kids, with enough room for us to basically stay home as the default activity... that would be way more to rent than we pay now.
We're working-class folks. Both of us have lower than average income and we don't really save anything for retirement. But we live near good schools and our house is gaining equity with each payment. It's good enough.
In some places it isn’t worth it, depending on the stability of the housing and the cost of rent. I live in a city where my mortgage is about half the cost of rent so buying made sense. However in these places it is really hard to save enough for a deposit when rent is that high! I don’t know where you are but if your rent is that reasonable and you are happy with the area then buying may not make sense for you; that is ok too!
I live in the USA so things are a bit different. But in my state it's not possible to live in low income rent control housing unless you're quite poor and also not going to university or anything like that. So the vast majority of people who have a full time job and don't have a ton of kids have no option but to pay full market price for rent. At that point it's much more reasonable. Often immediately at the time of purchase the mortgage payments will be similar or even slightly lower than rent. And if you're in a booming real estate market that difference will get bigger and bigger as time goes on. I've been in my condo I purchased for 5 years now and due to a real estate crunch here the neighborhood units now rent for almost 3 times what my mortgage payment is. And a portion of that payment goes to building equity which can be put towards a future home or anything else after selling. Typically if one is going to live somewhere more than 5 years or so then buying works out better. I'm not married or anything. I bought this home in order to have a stable place to live and lock in my housing costs against rapidly rising rates (property tax is pretty much all that can go up and that's a small part of the cost).
I love renting for now. Owning a home is fucking hard work
Mowing the lawn, property taxes, cleaning gutters, shitty neighbours that don’t clean their yards, it’s still noisy sorry but it is fkn noisy unless you live in the boons, insurance, utilities, shingle replacement, shit breaks down like your fridge, washer, heater omfg
Then despite yes it appreciates in value but so does EVERYTHING ELSE
so unless you downsize when you’re old I guess from your million dollar home to a 500k home if it’s even available at the time which it really isn’t unless you take your old ass vulnerable self into the boons
You’re probably stuck paying for retirement homes which are pricey as fuck
I hated owning a home. The costs never end even if your mortgage is paid.
It all sucks, renting, buying, whatever else they get you no matter what
See, that's one of the issues I'm talking about. I don't know anyone who's a home owner and better off financially, the upkeep seems such a huge drain on financial resources.
Usually just very well off boomers who planned really well in the 70s to 90s
I mean if it makes someone happy then that’s all that matters
$90 a week? So like... $360-ish a month...?
a one bedroom apartment where I live is $1000 lol. My mortgage currently is slightly under $1000.
That rent man, why would you even think of moving.
If it aint broke dont fix it.
I live in Australia and renting is ridiculous. Not only is rent often more expensive than a mortgage on an equivalent property, renters have very limited rights. A typical lease is only 6-12 months at which point you can be told to leave. Laws have recently been amended in Victoria but in all other states you can't have pets and can't modify the property in anyway (includes hanging up pictures on the walls).
You are subject to 4 invasive property inspections each year. These are becoming more and more over the top. The agent inspecting will typically film or take pictures which includes all of your personal belongings.
Asking for repairs often falls on deaf ears. For example, the last property I rented had an upstairs shower leaking through the floor for 6 months. The owner saw no urgency in fixing it despite the leak destroying the ceiling, walls and door downstairs. I ended up moving out because it was only getting worse and not going to get fixed in the foreseeable future. There are plenty horror stories like this and many that are much worse.
1. Rent in many cities is comparable to a Monthly Mortgage Payment.
2. You have a lot more room, typically, in a house than a rental.
3. It's *yours* and that's a nice psychological bonus.
4. If shit happens, you can *sell* the house and have money for the emergency. You still own the house, you just have to pay off the debt to the bank. So sell the house for X, pay back the remainder of the Mortgage Y and keep the difference Z. X-Y=Z. Depending on how much you have paid off, how much value your house has gained, and the market, that Z could actually be a whole hell of a lot.
5. It's an asset and with time, effort, and maintenance is one that generally gains value over time. Most other forms of property do not gain value over time: cars for example depreciate.
6. As for the appliances, yeah, that's a risk, but most home owners will either have a savings put aside for those events, take out a loan, buy appliance insurance, or just end up fucked. But the house isn't going anywhere, neither is the land it's on.
7. You often have a yard to play in. For some that means BBQs and Grilling. For others that means sitting in the sun in the summer. Many people buy those inflatable pools and jump in during hot days. I have a fire pit and on fall nights will have a bon fire and chill out back with a whisky.