Quote:
Originally Posted by jammies
No, people who get a 25 year (or worse, 35 year) mortgage paying off 90% of a $350,000 - $450,000 house are the ones "pissing away" their money. For the bulk of that period, they are paying well over my $1200 a month total in interest payments every month, which makes the bank happy but is hardly fiscal prudence. If you are paying less on the principal than you can save by renting, you are NOT investing your money wisely.
You are better off renting and saving a considerable chunk of money towards a big downpayment when you do buy, as long as that is an option. First off, if you have a long-term view, and a big chunk of saved-up money, you can look for deals on houses and be in position of strength when bargaining. Second, you earn money on your savings instead of pay money on your principal.
Like I said, renting is still a good deal in Calgary considering the price of houses. That's why the prices are as high as they are - landlords can do the math, too, and higher priced houses means they can get higher rents because the alternative (ie -buying) is still more expensive.
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Your theory works if A, the person has enough money to sock away to make a meaningfull down payment later on and B, the price of housing doesn't continue to rise at an exponential rate. You could be saving for a long long time before you could make a meaning full down payment. And if you have the money to rent and save a bunch for a large down payment, why not buy and amorize over a much shorter period of time?
ADD: Also you can factor in the increase in your homes value as an offset to the interest costs.