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paganlobster t1_j7psr5v wrote

Reply to comment by B-Roc- in These housing numbers are insane. In some towns the cost to buy a house is 10x the average salary. by LopsidedWafer3269

Is there a benefit to paying a mortgage company for a house you'll probably die before you own vs. a landlord for an apartment you'll never own?

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ladybug1259 t1_j7q5qr2 wrote

Depending on the housing market and time period--equity. Your estate or heirs can sell the house and keep the difference between the sale price and the mortgage (assuming there is any) versus with an apartment you don't own any of that value.

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paganlobster t1_j7qpdt0 wrote

Good point, thanks. I don't plan on any heirs but I am watching my family dealing with the fallout of my grandparents' estate. Seems like a massive burden to leave them all with even if it is equity they can use. It's still unclear to me whether it's worth it to me personally.

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barry_abides t1_j7r34o3 wrote

In theory, you could build equity the first 10-20 years, once you hit 62 you could get a reverse mortgage (or other financing/home equity loan earlier than that) to tap into the equity to pay for living expenses (sort of an elaborate savings account/retirement plan). Also when calculating whether it's cheaper to buy vs. rent don't forget to factor in taxes - all the interest you pay on the mortgage is tax deductible. If you sell the house after 2 years, the capital gains from any increase in value are also not taxable. Mortgage payment will also stay constant, while rent generally increases (property taxes and insurance will likely go up though).

Plus you have the advantage of not giving all your money to subsidize landlords who are exploiting a basic human need - housing. If you have a decent landlord who keeps up with maintenance and doesn't ask for significant rent increases, it may be better to stay in your current situation.

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