Quote:
Originally Posted by Devil's Rule
Some good points in this thread. I am of the opinion that debt of any kind is bad and avoid it if you can, but that is just me.
Also are mortgages the only type of vehicle to finance a home? Nope, but you do need to have an X amount of pesos in order to by-pass mortgages, like many wealthy people do.
This is debatable...what if you bought a house in the US at it's peak, you would have a serious underwater mortgage situation, which is bad even after you have paid off the mortgage is many years of living there, the house may not be worth as much as you have paid for it + interest.
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Of course it wont be worth the money you paid for it if you include interest, especially factoring in inflation.
Just ran a quick calculation on RBC's website. A 5 year term, $300k mortgage at 5% interest over 25 years will cost roughly $600k. (someone correct me if I am wrong), which means you pay twice what your house is worth, not counting the fact that you renew it a few times during that 25 years, and end up paying more in actual dollars, due to inflation.
How much inflation will happen in 25 years? Can't say for sure, but between 1985 and 2010, inflation alone would have turned a $300k home into a $600k home.
(source).
So just on those calculations alone, it is pretty much impossible for a house to be worth more in inflation adjusted dollars once the mortgage is paid off. However, you did live in it (or rented it out) for those 25 years, so that is where the benefit comes in.
What do I know though, I am just a tech.