01-23-2007, 06:16 PM
WRXtranceformed Wrote:investing your money into something and not throwing it away always always always gives the edge to buying your own home.Thats incorrect, and the #1 misconception about buying vs. renting.
When you buy, you pay an enormous amount of interest to the bank. IIRC for the first 5 years or so of a $3k mortgage payment you are paying $2650 to the bank and only $350 of actual principal, gained equity. This makes sense when you have an agressive market with high appreciation. However when the market is flat, you really are just throwing that interest away. And the interest is a lot more than rent, like RJ said you have to pay to live.
As a renter, you "throw away" around $600-$800 a month. In this market, it would be a smarter financial move to take that difference of $2k and invest it or save it for a higher initial down payment when the market turns back around.