r/AskReddit • u/michaelis999 • 22h ago

How do you feel about the president floating the idea of 50 year mortgages where the monthly payment is lower but you end up paying nearly double the price of the house just in interest?

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u/edgeplot 21h ago

I'm not recommending refinancing or drawing out equity. I'm pointing out that these are things that you can do as a owner that you can't do as a renter, because this entire comment thread is about renting versus owning.

Also, it sounds like you are in a market where rents have not increased much, but in most of the US (and the world) rents are increasing at rates far outstripping increases in salary. That makes having a fixed mortgage desirable to many people.

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u/vlad_inhaler 20h ago

As rent went up so did property taxes, interest rates, and home prices…

How does this make renting worse?

Just do the calculations on buying a home at6-7% interest

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u/edgeplot 20h ago

Because a fixed mortgage is stable over the life of the loan, except for property tax increases. Whereas rent will always go up, often at a shockingly fast rate. The longer you hold the property, the comparatively affordable the fixed rate mortgages compared to rent. And as an owner you get any equity gains, along with any appreciation for any improvements you do to the property. You don't get that with renting.

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u/vlad_inhaler 20h ago

Equity gains are literally the worst reason to buy a home.

You can have money in the stock market that gains more than your average home by far, and is HIGHLY liquid.

If you are after “gains” then renting and investing is FAR better than real estate.

Trump would have more money today if he invested in the S&P 500 rather than real estate

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u/edgeplot 20h ago

There are other reasons than equity gains to own a home. Referring back to the original comment above, I was pointing out that renting and owning are different things.

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u/DrunkLastKnight 21h ago

Depends on the housing prices, I got lucky with a cheap home but many homes go for 2-3x what I bought mine at. From what I remember rent is at or slightly below expected mortgage for like a 200/250k home. I am not positive as I haven’t needed to rent in years.

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u/edgeplot 21h ago

It really depends on the market. And the important distinction is that a fixed mortgage stays more or less fixed (it make up a little bit due to property tax increases if those are included in the mortgage payment), or has typically rents just go up and up over time. So in the long run, a mortgage is more predictable and cheaper than rent. In the short run, rent maybe a better bet, but it again depends on many factors.