beforewisdom wrote:Why buy a home?
You still put out large amounts of money each month in maintenance costs, homeowners insurance, possibly neighborhood association fees and condo fees if your home is an apartment. Then there are property taxes.
You're missing the fact that you pay all those costs when you rent, too.
Landlords don't just eat the cost of property taxes and maintenance - they bundle those expenses into your rent. You're still paying them - you just don't see them because they're all rolled up into one neat and tidy little number each month, called "rent."
Homeowners insurance, you should still have even if you're just renting. If you buy a home, you're required to insure it as long as you have a mortgage, but after your house is paid for, you can drop it if you wish, just like with an apartment. Condo fees and neighborhood association fees, you can avoid by buying a freehold home unencumbered by such fees.
So far, I'm not seeing any differences.
beforewisdom wrote:So, you end up paying out more money each month then you were before.
Only while you have a mortgage. Once the house is paid for, your monthly expenses are considerably less than renting.
beforewisdom wrote:If you manage to pay off your mortgage, you still have to pay property taxes when you retire.
Right. Just like renting.
As I said, the landlord doesn't pay the property taxes and take a loss out of the kindness of his heart. He passes that cost onto you, along with the cost of his mortgage.
When you retire, would you rather pay $1,200/month in rent, or $300/month in property taxes? The choice is obvious.
beforewisdom wrote:People get around doing this by paying their taxes with a reverse mortgage.
Huh? Why would you need to do something so drastic to cover a measly $3600/year property tax bill? Just pay it out of your savings, or set a little aside each month from your pension, social security, investment income, or whatever.
If a retiree can't afford $300/month for property taxes, they can downsize to a smaller home, and move to a region with lower taxes. If property taxes are still too high for them, then they've got bigger money problems than the "rent/buy" conundrum. They've been mismanaging their finances for decades, and likely would have had to resort to a reverse mortgage anyway.
beforewisdom wrote:So, why buy a home. You still send large amounts of money out each month and you don't gain the security of having a guaranteed place to live?
You buy a home as an inflation hedge.
You have to live somewhere. I'd rather live in a place where my only required expense is property taxes, than live somewhere where the monthly expense (rent) is 4x higher, plus goes up with inflation every year.
Ask any retiree what their biggest challenge is in retirement. 9 out of 10 will say "inflation." Owning your home protects you from inflation. Renting ensures that your single biggest monthly expense will continue to rise with inflation. That's disasterous.