Quote:
Originally Posted by Cowboy89
Presumably if you've done the rent vs. own thing properly the accumulated investments you have instead of paying mortgage principal will spin out a return that should at least matches inflation while your home equity pays you nothing.
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At the end of the period the investments will pay out some sort of interest/dividend/return. The home equity in a paid off house pays out in decreased living costs.
In round numbers, my house costs me $2500/month including mortgage P&I, taxes, insurance, etc. I could probably rent a similar house for $1800 per month.
But at the end of my mortgage, the home equity will allow me to live in that house for ~500/month of taxes/insurance/maintenance (current dollars). At the same time, the rental value is likely to have increased or stayed the same (current dollars)
I'll be collectinng a "housing dividend" from the paid off house.
It's quite a complicated mathematical model to determine which would be financially better, and there are a lot of assumptions that go into it.