[themartorana]

It does seem odd to me (in the US). Renting here is not without risk and slum lords and rising rents, but there is a minimum expectation of consumer protection, much in the same way there is with most transactions.

Either way, if you care to live anywhere near a city, housing prices are astronomical. We make a decent living, my wife and I, but still don't have what it takes to buy a two bedroom apartment in one of the cheaper cities in the country. We've been house poor before, and I'd rather not be again.

I mean I get it - fixed mortgage means in 10-15 years my mortgage may be less than rent of something similar, but that's a long time to be house poor.

[cthalupa]

Honest question: Is your credit bad?

Even adding in PMI, property taxes, a 30 year rate, etc, the mortgage of house should be about the same, and often less than the rent unless you just can't get a good rate. A landlord has to make money, including the costs of longterm upkeep, replacing things like the air conditioner, paying real estate agents their commission, etc.

If you can't make a 20% down payment I've seen PMI be enough to push it to a bit over what the rent would be at the house, but that certainly shouldn't take you 10-15 years to pay off and get out of PMI range.

The only thing I can figure is you have a significantly higher interest rate than people would get in the 'average credit' category

About the only places where I've ever seen this not be true is where rent control is in effect.

[themartorana]

Ha, no, my credit is stellar. But I live in a nice neighborhood of Philadelphia. My 1000 sq ft 2 br apartment costs $2300/m in rent. (I'm aware it's a lot cheaper in other neighborhoods, but I love living here.)

To buy my apartment (and this is just for the apples-to-apples comparison) would cost in the neighborhood of $485,000. If I put $97,000 down (about 20% to avoid PMI) I'm looking at around $2350 inclusive of taxes. However, there's HOA fees. Here they cover all (yes ALL) utilities, but they're $890/month for this apartment. Now I'm out $97,000 in liquid cash, my monthly payment is $3240 inclusive of HOA.

I can easily get the loan, but in the city, it's not always cheaper to buy.

[tobylane]

I'm not familiar with HOAs. You pay them, they pay your utilities? How much are the HOA and utilities worth when they are apart?

[ghaff]

I imagine the arrangements vary on whether utilities are included as part of homeowner dues. The cost of utilities will also vary a lot depending on the climate and your type of heat etc. In my case (house in Northeast without central air), oil/electricity/water/propane average out to the $300ish/month range.

[op00to]

You pay the HOA, they pay for maintenance of common areas.

[cthalupa]

Hmm. Gotcha. I didn't take into account utilities being paid for - that can certainly be a pretty massive difference.

[Overtonwindow]

I think the 20% number is a misnomer. It's a good number to have, but I think you can get away with less. I have good credit, not super great, but good. I have some student loan debt. I have some credit card debt. However I was still only required to put down $10,000 with an interest rate of 3% to get my home. For me, when I added up mortgage, interest, insurance, and basic bills, it was still less than living in An apartment.

[cthalupa]

20% is the number required to avoid having to pay PMI

[teamonkey]

> in 10-15 years

In many parts of the UK it's closer to 5-10 years. Which is great if you can afford the high price of entry.

Also great if you can afford a buy-to-let mortgage, because it means you can be profitable within a much shorter time, while containing the supply of purchasable housing and raising the average rental price...

[Overtonwindow]

I just bought a house for the first time last year. The value of my house is already more than what I paid for it. At the moment, I'm spending less including all of my bills and I ever did on the apartment. Furthermore, in five years, I can dispense with mortgage insurance (a requirement for the mortgage) and lower that monthly payment even more. I say all of this because I challenge your assumption that you cannot afford a mortgage. My house was $215,000, and I only had to put down about $10,000 to buy. I understand that everyone's financial situation is different, but I encourage you to speak to a mortgage company and find out precisely what it would take to get your own home.