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The real cost of owning a home

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Re: The real cost of owning a home

#161

Post by naberhausj »

ApolloFortyNine wrote: post #119

>"renting is just throwing your money away" Unless you think landlords are running a charity, some part of your mortgage is going to them as profit (over a large enough sample of renters anyways), and some percentage of your rent is covering 'bad tenants' (which you're not, right?). Their entire improvement section is also something renters tend to not think about. It's a weird situation when renting that you aren't…

Absolutely true if you're renting a home, but I feel like people never address that most people are renting apartments. These have substantially lower operating costs.

Home buying/rental is a totally fair comparison, but I know several people whose main justification for buying a home, rather than continuing living in an apartment, was that they wanted to, "stop throwing their money away". Totally ignoring how home ownership is actually more costly than renting a suitable apartment.

Of course, I fully recognize their are a lot of advantages to home ownership. Some of which you already called out. However, I doubt those advantages are actually sufficient to justify a small, but significant, portion of home purchases.

Re: The real cost of owning a home

#162

Post by the_sleaze_ »

Something I've been eyeing is the All In One Loan or FirstPosition HELOC where you take a HELOC on the entirety of the homes value, then use that credit account as your daily spending account.

It's a higher interest rate, but then you only get charged on the amount you have actually borrowed which ideally would be get lower and lower.

If anyone has any feedback on it I'd love to hear it

Re: The real cost of owning a home

#163

Post by sosborn »

wat10000 wrote: post #141
sakopov wrote: post #97

Earlier quoted context omitted.

I would argue against this. I'm not sure owning is that much better. At the very least it's just as bad as renting if you bought in the past few years... I bought my home in 2023 and since then my monthly HOA payments doubled, my insurance premiums (nearly) tripled and my property taxes have gone up about $1000. Homeownership went from 35% to 45% of my monthly income. If you bought in the past few years, owning has a…

Buying into an HOA means you're effectively renting a portion of your living arrangements. And if the dues doubled in just three years then you bought into a mismanaged HOA, which makes it worse. There's not much you can do about insurance premiums (assuming you've shopped around for better rates) and property taxes, but definitely check the financial situation of the HOA before you buy, or avoid them entirely.

> And if the dues doubled in just three years then you bought into a mismanaged HOA, which makes it worse.

Not necessarily true. Our HOA fees doubled precisely because of drastic insurance premium hikes. There wasn't much that could be done by them to avoid that, and in fact they worked hard to reduce some of those premiums the following year, which resulted in a lower monthly fee for everyone.

Re: The real cost of owning a home

#164

Post by jedberg »

The benefit of owning a home is almost always psychological, not financial. If you take the money you'd use for a down payment and mortgage and invest it instead (after paying rent) you end up in about the same place.

But the psychological benefits can be huge. You have much greater control over the place you spend most of your time. You can change it to your liking. You don't have to worry about rent increases or owner move ins or any of that other stuff that renters deal with.

And if you have kids, they get a sense of home and place.

But don't do it for financial reasons.

Re: The real cost of owning a home

#165

Post by strongpigeon »

akudha wrote: post #139
mholm wrote: post #6

Beyond the financials, the psychological impact of both being able to make greater-than-superficial changes, and having extremely predictable payments for years without worrying about substantial rent increases, is substantial. I redid/improved the bathroom to exactly what I wanted. I renovated the kitchen. I added paneling to the walls. I added a few outlets to rooms that needed more. I wouldn't do these things in a…

“Extremely predictable payments” - I don’t own a home, so I don’t know about this - I have heard mostly horror stories about HOA. Can they hike maintenance fees arbitrarily? Also, what about insurance? Last I read, at least in FL, insurance cost is out of control, is that still true?

HOAs can be a big variable cost, yes, especially in the case of underfunded condos associations with a lot of delayed maintenance. Insurance can vary a lot, but is usually a much smaller amount than your mortgage payment (though I only have experience with the PNW).

But yeah, for a single family home in a not-too-flood-prone area it'll be very predictable.

Re: The real cost of owning a home

#166

Post by turtlebits »

zeroonetwothree wrote: post #121
turtlebits wrote: post #112

The Repair section of the article could have been mitigated by a inspection and negotiation before buying. Always negotiate repairs into the offer price.

In some markets they get like 20 offers for a house. You aren’t going to negotiate anything at that point

Then don't worry about the cost of ownership because you're going to make it up in equity.

Re: The real cost of owning a home

#167

Post by tim-tday »

throw0101c wrote: post #152

Ben Felix, a Canadian portfolio manager that does personal finance videos and podcast, has been arguing for years that rent versus buy is often a wash financially, and that you should make the decision for non-financial resasons. * recent 2026 video: https://www.youtube.com/watch?v=aU7v87EhDBI * 2025a: https://www.youtube.com/watch?v=j4H9LL7A-nQ * 2025b: https://www.youtube.com/watch?v=lBG-g1CKfgs * 2021: https://www…

If you can buy low and sell high it’s worth it. Especially if you’re positioned to buy when you can lock in low mortgage rates. Above 6% you might be better off putting your down payment into the stock market and renting.

It’s also more likely that you’ll feel good about spending money to improve the home if you think you can get the money back when you sell. (And then you get to live in a more pleasant place for years)

Re: The real cost of owning a home

#168

Post by jandrewrogers »

jrflo wrote: post #153

A lot of discussion of the cons without discussion of the pros. For example: 1) your home is a hedge against inflation, your $2000 to interest sounds terrible when rent is $2500, but doesn't sound so bad if rent rises to $3500. If you live in your home for long enough, this is all but guaranteed. 2) your home is a leveraged investment. You may only be getting 4% per year in appreciation, but that's 4% gains on the to…

> your home is a leveraged investment

Which means the potential losses are leveraged too. Plenty of people have ended up in that position. It isn't all upside.

Re: The real cost of owning a home

#169

Post by zeroonetwothree »

nayuki wrote: post #107
01100011 wrote: post #104

Earlier quoted context omitted.

> No, the statement is completely true Why don't we say this about other expenditures? Am I throwing my money away when I buy dinner and not a cow? Did I throw my money away by buying a carrot and not farmland? I don't think the statement is true or false, it's just meaningless.

You somehow missed the second part of that sentence: "No, the statement is completely true: 100% of your rent money goes to someone else, and you also don't get any asset to sell later on." The oft-repeated statement that "renting is throwing your money" is an implicit contrast to owning a home, where the mortgage payment "builds equity" in your asset that can be sold later. "Throwing money away" means you don't get…

That’s not what that expression means though. Wikitionary has it as “To spend money foolishly or indiscriminately; to waste money without regard of the consequences.” Which sounds about right.

How is it foolish to spend money on housing?

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