[oinopion]

What sense does it make? If you rent apartment(s) for 10 years, you give money out and you have nothing afterwards. Mortgage, on other hand, is more investment: you will have something valuable after paying it back.

Is renting everything a new way to be cool?

[philwelch]

If you get a mortgage, you have to pay rent on money instead of paying rent on housing. And then you have to pay for the housing on top of that. And then invest your spare time maintaining a house, which is a better hobby than TV but not for everyone. If you take all that time and money and commitment and invest it in something other than a house, then you can probably rent an apartment and still come out just as rich in the long run.

Also, if you rent apartments for 10 years you can spend 10 years moving around to follow opportunities. If you pay a mortgage for 10 years, you can look forward to spending the next 20 paying the same mortgage, and unless you want to pay for housing twice, living in the same place. Standard mortgages are 30 years! That's maybe half of your adult life you have to spend paying interest. That's a level of commitment comparable to having a damn kid, except instead of a living and thinking person it's a material possession.

[oinopion]

Most of my friends (in Poland) spend monthly less for mortgage than they would on rent. It seams that housing/mortgage market here is very different.

[gaius]

Same here in England. If you have the deposit and plan to stay for a few years, then buying makes economic sense.

Plus, owning your own home, even if there's a mortgage outstanding, feels very different to renting. Certainly for the English, home-ownership is a cultural value.

[philwelch]

It's a cultural value to Americans, too. That's how we got into a bubble and then a recession--it was such a cultural value people tried to become homeowners even if it made no financial sense at all.

[b3b0p]

The amount required as a down payment to achieve the equal can be too great to make it worth it. Especially so if you are a single hacker living in a 1 or 2 bedroom rental.

For example, to get my mortgage down to the cost of a 1 bedroom rental I can only take out about a $90,000 loan. So, if I want a modestly nice $150,000 to $200,000 home I have to save up to put down $60,000 to $110,000 down payment. That's alot of money and to see it all disappear in a near instant is intimidating and scary. I'd rather stick that kind of money in some sort of investments and watch it grow.

Owning also can come with some undesirables to me such as the location is not as good as my apartment (unless I can up my purchase price of a home to $300,000+ or want a higher mortgage), the house is not that nice (not nice enough to want to live in forever and needs upfront fixing), if it needs maintenance (roof, A/C, lawn, etc) I have to pay for it.

However, what I have noticed is if you need at least a 2 bedroom and preferably 3 (family of 3 to 4 perhaps), at least where I live, a small down payment and mortgage is so worth it. Renting would be stupid. The rent for a 3 bedroom is usually more, even for a 5%-10% down payment.

[dedward]

Well, a few years ago having the bank lend you a house and then let you pay it back for the next 30 years, but not worrying about that burden because you knew real estate markets always went up was the way to be cool. Consider also that people doing this generally rinse/repeat, rather than using the first couple of good trade-ups to set them selves up financially. Lots of people with big fat expensive homes got there this way and now can't afford to live there, or to sell them.

I know a whole bunch of people who bought houses 10 years ago and, today, if they sold their homes, would have lost several times what I've paid in rent during that same period. If they can hold out until the market returns they'll be okay, if not, who knows.... but now they're stuck with them.

The key is to just put some clarity around what mortgaging, or even buying a home outright, really is - and why you are doing it.

If you are doing it because you WANT to own a home and you think it's a magic, foolproof investment - that's foolish. Those are two different things.

If you're doing it because you WANT to own that particular home and raise your family there for the next 30 years, then some day retire to a smaller apartment, or even stay there until it's time for the funny-farm, and you are doing it on terms you can afford over that time, that's fine - but your primary reason in this case is not as an investment. You will have expenses along the way that are more or less the same as renting. and while it seems unlikely over a 30 years span, it's always possible that the home won't be worth much in terms of equity 30 years later when you want to sell it. (the dollar value may have gone way up, but the cost of living will have risen as well. I'm not saying there will be no equity, but it may not be the best investment you could have made, and it could easily turn out to be a bad one)

If you are into the real-estate business for investment purposes, then you should be studying various real-estate markets and looking for the best opportunities to buy/fix/hold/sell strategically. THese are typically not the types of houses you want to live in.

[kelnos]

Myth: http://www.getrichslowly.org/blog/2007/07/16/renting-vs-buyi...

Now, home prices have fallen a bit since that article was written, but you really need to examine all the costs that go into home ownership (including mortgage interest), and see if it really gives you a net positive. For a lot of people it may not.

[mtr]

Buying isn't always better than renting especially when you take into account interest payments, maintenance, closing and selling costs, taxes etc. So basically if the house doesn't increase in value enough to cover these costs than you are better off renting.

Check out this cool calculator for some more details: http://www.nytimes.com/interactive/business/buy-rent-calcula...

[dedward]

This depends on whether you are buying for investment reasons or other reasons.

We buy plenty of things for non-ivestnemtn reasons - a house COULD be one of those things, depending on your situation.

[binarymax]

Not always! I live in a space that is far more economical to rent. If I were to buy the space I am living in now, it would cost an extra X per month - and there is no guarantee the house I rent increasing in value. I take that extra X and invest it every month and get some decent compound interest off it and I am much better off in the long term.

[oinopion]

What magnitude of X are we talking about? Where I live (Central Europe), the difference is really small.

[binarymax]

Right now its about £400 per month difference (I live in South East UK)

[wanderful]

You are compounding interest in this financial market? How? :) Is it above inflation?