No. of Recommendations: 6
If I buy a house with a 10 year mortgage and live in it the entire 10 years - at the end of that time I have a house that's paid in full, no monthly housing expense, and the ability to sell it and recoup at least some, all, or more than what I paid out.

You still have some monthly housing expenses. You may not owe a mortgage, but you still need to pay property taxes, utilities, repair and upkeep costs, etc, etc.

If I rent for those 10 years, at the end I month's rent due. Since you can in essence "get back" some of the money spend on buying a house - how can rent be a "Foolish" option?

Because buying a house generally costs more than renting the same thing. This is particularly noticable when it comes to upfront costs, where you might have to make a 20% downpayment, pay closing costs, points, etc. When you buy a house, you are paying for use of the property plus the right to sell and realize a profit. When you rent, you are paying for use of the property, but someone else is keeping the possible profit.

The "ownership-premium" that you are spend to own a house is money you are not investing elsewhere. This is particularly noticable when you are talking about upfront costs in the $10's of thousands, plus high transaction costs when you do sell.

That's not to say that you shouldn't own, but my opinion (and, I think, the Foolish consensus (if such a thing is possible)) is that you should buy a house because you want to, not for purely financial reasons.

Print the post  


Useful Resources
Our Home Center has all you need to make buying and owning a home a great experience. Get or refinance a mortgage and much more!
Buying/Selling a Home FAQ

Mortgage Professor
Offsite resource for mortgage questions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.