Quote:
Originally Posted by Flash Walken
because if you default on your payments, they get 500k to cover their losses instead of 12,500.
...I don't understand why this is so complicated.
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I get that.
But in my mind the risk/benefit in having 12,500 versus having 50,000 down on a 250K property is not worth the 31,200 I throw away in two years of rent for living in a comparable (or most likely worse for that price in the current market) property. Add to the fact that renting cuts extremely deep into the amount I can save (which in turn increases what I spend on rent) and that 37,500 of extra down payment doesn't seem like much of safety net.
ESPECIALLY if this prediction is wrong and the market keeps increasing in price mid to long term and I get priced out of the market by waiting.
Oh and that 31,200 is based on 1300 a month. Basically the price of getting out of a basement suite if you don't want to live on the wrong side of 8 mile.
Quote:
Originally Posted by peter12
It really does amaze me how people are willing to take the huge long-term risk of a mortgage with such a tiny down payment on the basis that throwing money at rent is a waste. Your house is not a long-term investment, it is a consumption good. If you pay less rent than you would a mortgage payment, save it for a down payment, or invest it. Simple as that.
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Well to start, it's only a "HUGE" risk if you plan on either living in it short term or you take on more than you can comfortably afford.
Now, have you looked at rents in this city? Most rents are higher than the comparable mortgages and those that aren't, you'd only save maybe 100 or 200 bucks a month on rent. That $1200-$3000 (if we're being REALLY generous) a year is nothing.