Quote:
Originally Posted by polak
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.
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.
|
I kind of see what you're saying, saving a higher down payment vs buying sooner with less down. And I'm sure you know this, but when you compare your mortgage payment with rent, you're missing a huge cost factor by not including other costs of ownership....condo fees, taxes, utilities, insurance, repair and maintenance. Also important in your calculation are costs associated with selling...commissions, legal fees. And finally, if you do have a larger down payment, the return you could achieve with that money must also be factored in. Money has been worth at least 6% for the last several years. Even a 12k down payment is worth $60 a month.
I think the old philosophy of "why pay somone else's mortgage" is almost dead and gone. You can do very well renting especially when the real state market isn't going up rapidly. I agree with you that for the buyer, less money down is better when rates are low.