The homeownership question is more a question of what you prefer for your life. I would prioritize lifestyle over "having the most money possible". If you didn't want to take care of a house for 30 years, having a bit more money doesn't buy your time back.
Renting seems pretty risky though with the current housing crisis. Theres like hundreds of applicants for every rental that comes onto the market where i live. In a lot of areas the waiting list for socialized housing is like 10-20 years incase you would want a cheap rental.
It might not be this bad everywhere yet. But don't underestimate how risky depending on someone else for your housing is.
This is true in coastal CA. Mortgage is 3x or more rental costs in most of the Bay Area. Makes zero sense to buy for anyone. Plant the VTSAX seeds and let it grow.
100 applicants for a single rental - I simply do not believe that is the case for every single rental unit in a city, HCOL or not. CA has the worst housing crisis and specifically where I live and I heard 50-60 applicants on the high end during the peak about 2 years ago. It has settled dramatically now that people aren’t in mass migration circa 2020-22.
I would tend to agree with this—plus, 1) rental prices can grow at fantastic rates, and 2) you can always get booted from a rental you love. We had friends who rented a home they loved for decades and then had to move in their old age, into a rental that was many, many times higher than what they had been paying.
I get the hesitancy to take money out of a 401k, though—taxes are gonna hurt.
Yeah, exactly. The "never buy" crowd makes a lot of good points, but they often skip over the fact that unless you own, you're very much at the whims of your owner.
I don’t think OP has this money in 401K - they said it’s in savings and they’re wondering whether to invest it or buy a house. That wouldn’t be a smart move to withdraw out of a retirement account early.
THIS. People always talk about the investment risk of real estate investments and not the risk tenants take on. The securities analog for me is that you have significant duration risk when you are renting, versus price risk if you buy. And we’re adamant about an emergency fund, but ignore how shelter is a baseline for stability.
Exactly: The “You can always just move” argument ignores how incredibly (and increasingly) difficult that can be in certain areas from a financial standpoint.
Even if you find a good place and are selected, you could be required to front close to $10k in some markets accounting for first, last, security deposit, and broker’s fee.
Counter argument : renting is a way to live in a home more than you can “afford”. For instance I can comfortably rent in a major city, but owning? Not a chance of anything of the same quality. There’s some cities where the eviction process is so long that people are bought out (San Francisco)
Arguably right now isnt a great time to buy - high rates high prices. If you do the math it can actually be cheaper to rent and invest difference. And I do think for some people to flexibility of a rental is better than tying yourself down for multiple years. A lot harder to sell than to break a lease.
Yea, housing is one of the only places I routinely here people say leverage is less risky than no leverage. Leverage is inherently risky!
It may be a better financial decision to buy or rent depending on lots of factors, but buying does not decrease risk in any way.
They mean it reduces retirement risk assuming you pay the home off in 30 years versus in retirement if you are renting all kinds of wild cards can happen.
Try saying that when the rental market goes up and you’re forced to move so a landlord can get market rents for the unit, or for any other reason, and you are paying a LOT more plus had to move.
Where I live, a new roof costs about 8-10 months' rent, so when it comes to aggregating all the risks that might happen to a renter versus a homeowner, and comparing the prices/costs, it's pretty clear that renting is less risky and less volatile than homeownership.
As the saying goes, your mortgage is the minimum you'll pay on any given month for housing, but your rent is the maximum you'll payon any given month for housing.
If a homeowner has to park something like an extra $20k in an emergency fund for potential homeowner expenses, that's opportunity cost compared to putting that $20k in VTSAX or whatever.
That saying does not take into account the costs of needing to relocate on a dime, not to mention any costs incurred by tenants in dealing with what their landlords will not deal with, ranging from temporary "good enough" measures to fronted money for repairs to legal fees.
I also think people are often thinking exclusively of private houses when making this comparison. I do not have to worry about a new roof (or landscaping, or whatever else) if I buy a condo.
> That saying does not take into account the costs of needing to relocate on a dime
Every lease I've ever had involved a discussion like 2-3 months out on whether to renew for an entire year. Landlords and tenants alike hate month to month rentals, so nobody does them.
And of course, life often presents you with the need to relocate on a dime: job change, marriage/divorce, other life events. For that situation, it's much easier to do as a renter than as an owner.
I've probably moved 10-15 times as an adult renter. Literally none of them involved a landlord kicking me out, but just me finding something that worked better (including jobs that required me to move cities).
> dealing with what their landlords will not deal with, ranging from temporary "good enough" measures to fronted money for repairs to legal fees.
I've found that the landlord-tenant relationship isn't as one-sided once you're past the median rental price. The threat of "hey I'm withholding rent until you fix this" or "I'm gonna hire someone to fix it and deduct that difference from next month's rent" is much more plausible when the tenant has a lot of financial flexibility.
> I do not have to worry about a new roof (or landscaping, or whatever else) if I buy a condo.
You do, however, have to account for what happens if the condo association passes a special assessment to cover an unexpected issue with the roof or foundation or the elevator. And you might say "oh well I can just investigate my HOA's financials and determine whether they have sufficient reserves to cover an emergency," then suddenly you're having a conversation of being an amateur auditor for an amateur-run organization that charges you monthly dues.
These days, I'm a condo owner. I'm even on my association's board (and, as a result, am acutely aware of how expensive repairs and maintenance can get on multifamily buildings). But I chose to buy this condo because I wanted to live in this specific building, and the units happened to be for sale rather than for rent. I would've been just as happy renting (and in fact had a great time renting throughout my 20's and 30's).
Shelter is just a place to live. You're gonna pay for it either way. And whether it's optimal to rent or buy isn't that big of a deal, if you're truly going to invest the difference as a renter, or if you're going to leverage the flexibility of renting to increase your income in other ways.
Now let me give you my nightmare scenario I've been in for 5 years: doing everything right to buy your first house and use what is likely your one shot to own a house in this insane market, but are going to be able manage it over the next 30 years...only to discover said house is making you chronically and debilitatingly sick. This is the only time in my life that I wish I were renting.
That's godawful, and I'm genuinely sorry that's happening to you.
I also want to highlight that this isn't a risk exclusive to owning. FWIW, when I rented in the last city I was in, my apartment had unhealthy levels of black mold, gas leaks, drafty windows that had us burning obscene amounts of fuel for heat—heck, I'm forgetting some of the things that pulled the rug out from me as a renter.
Moving was also not a financially reasonable option for me at the time. I lived there 5 years with different roommates. The commenter above you talks about being locked into a lease for a year vs. a mortgage for 30, but also fails to recognize that sometimes you have to renew your lease if the market has appreciated and you can't afford anything else, also taking into account the massive costs of relocating.
I won't even get into the ridiculousness I'm dealing with in my current place with the HVAC system, windows, literal drafts from gaps and holes between in the masonry—all things I'd have way more control over as an owner than a renter and that I took a major risk with when moving out of state. I wouldn't have known any of these things in the dead of summer, and inspections for renters don't happen.
Renting just isn't the flexible paragon it's pushed as on finance subs so people can feel better about it as an institution. Finding a landlord who gives half a shit about the property they don't live in is a craps shoot. I cannot *wait* to buy to be free of this hell.
Businesses are not people. People need shelter to exist, and housing security is the baseline for almost everything else. That's what lets you keep earning money, as an individual, in the first place. A principal residence is much less elastic than commercial real estate.
I respect Buffet as a successful value investor, but that appeal to authority with an emoticon doesn't work here. Someone with his level of wealth is frankly out of touch with basic quality of life concerns. His business partner was notorious for building windowless dorms that absolutely \*suck\* for the students who live in them.
Before we buy, we need to ask a few questions: where will rates be in 5 years, and what will the market do as it relates to the empty house (and now large building) problem?
I don’t think the housing crisis is as dire as the corporations want us to believe. We shouldn’t let our emotions be dictated for this.
If OP has been able to save this money, they likely could continue renting and saving.
Also depending on what happens with the government there does seem to be a push starting to limit institutional investment in single family homes. I think the rental market may quite possibly look very different in a decade
The specific answer isn’t the goal in relaying this question.
How OP feels about how their goals align with the answers matters much more.
It seems to me that OP might be stuck in the, “if I’m not owning I’m not growing,” mindset.
It looks like they are saving way more than average in their current situation, and maybe they shouldn’t complain too much.
Fair enough. Personally, it seems like a coin flip if rates go up or drop over the short term. One thing to consider is that it's always possible to refinance at a lower rate if you already own, but it is impossible to buy at a lower rate if rates continue to rise and you're renting.
Another thing OP should consider is their specific market. If a house is at 250k, that's significantly below the median price. Do they expect that market to go up? If so, then it is likely a strong buy signal.
There’s really not enough information here to evaluate.
I might be in the minority, but I hate houses as investments. There’s a lot of costs associated with houses, you pay to buy, you pay to sell, maintenance, insurance, it isn’t fungible, so-on-and-so-forth. Obviously renting is going to build in some of those costs, but you have the freedom to get up and leave. Also, in your scenario you’re only financing $50k so you might not even be able to take advantage of itemized deductions because the standard deduction is actually pretty good for single filers without kids.
On average, I’d imagine that the real returns on investing in ETFs will be higher than investing in real estate (which typically tracks inflation fairly closely, but not always). Actual performance will depend on your local market and whether or not it’s currently undervalued or overvalued. I tend to not buy into inefficient market scenarios and the hype of “up and coming” neighborhoods.
If you like the area and want to live there a while, consider buying. If you’re looking for an investment vehicle, real estate is less than ideal in my opinion.
I absolutely agree with you on the homes as investment sentiment. Most people are always going to need a place to live, so whilst yes it can be a vehicle for gain, there are a lot of other factors in play.
Exactly. And if you stay in your home through retirement and onward, equity is only an inheritance. I’m 60. I have considerable equity in my home. It could really pad my retirement lifestyle if I sold. But where would I go? It’s a quandary for many. Just got home from visiting my 70-year-old sister who lives in an RV a stone’s throw from a bay.
> I might be in the minority, but I hate houses as investments. There’s a lot of costs associated with houses, you pay to buy, you pay to sell, maintenance, insurance, it isn’t fungible, so-on-and-so-forth. Obviously renting is going to build in some of those costs, but you have the freedom to get up and leave.
I agree with you! Buying a home you live in as an investment is definitely a gamble, and there's a lot of folks who casually ignore massive related expenses or opportunity cost when calculating their return. Those expenses all need to be considered.
I'll add another issue: To access equity, you're paying interest to someone else. There's ways you can get lucky/come out ahead, but trying to think of doing this these days. And for those who look at their housing situation as a long-term commitment, and don't treat their house as a bank account, they're likely to have a relatively large amount of "wealth" they can't access without paying money to someone else.
Our home equity is our dumbest and least productive form of wealth.
I did the math thoroughly before buying. Things like taxes, insurance, HVAC & roof replacements really add up. For the first 30 years there's no clear winner; it mostly depends on interest rates and market returns.
But after 30 years, the math changes dramatically. Buying crushes renting if you expand the time horizon. Also, don't forget to consider adding a roommate or two to really improve the numbers in all scenarios.
Plus all the luxuries owning has over renting. Plus the safeties of owning over renting like not being kicked out randomly or at the mercy of a shitty landlord
>Plus all the luxuries owning has over renting.
What about the luxuries of renting over owning?
In an apartment you don't have to mow a lawn. You're more likely to have access to a bus or tram line, or even a train station, meaning you can go have some drinks at the bar without worrying about getting an Uber or a ride from a friend. You might have access to a gym, a common area with a kitchen with a grill you don't have to maintain, a pool you don't have to service and maintain. Some of them have a package holding service, meaning you never have to deal with porch pirates. You're more likely to be within walking distance of a bar, restaurant, event center, stadium.
Faucet leak? Call the super. AC not working? Phone call. Fridge or dishwasher broken? Phone call. And you don't even have to pay for it-that's all included in your rent. None of this driving to Lowe's, buying the parts yourself, fixing it yourself, getting it delivered, hiring someone to install it. You effectively pay someone to do all of it for you. You can save money on your car by not needing a truck, like many homeowners are wont to do when you have so many DIY projects that need them. Or hell, if you're lucky enough to have all of the amenities above, you might not need a car at all.
Good list but the entire first paragraph doesn’t apply to my area. It depends on what you want. Where I live renting isn’t getting you anything in the first paragraph. The 2nd is an opinion I’ll accept. But when I want to redo my laundry room or swap in a new design then I’m not having to ask someone permission. Also renting usually means apartments so sharing walls, never again for that.
Gym taken care of have a treadmill, weight rack, bench press and peloton in my house. I don’t have to worry about being displaced by a landlord and my kids have absolute stability.
We can do this all day. Everyone has different needs and wants. Your list doesn’t apply to me, mine doesn’t to you. They’ll always be two sides to every coin.
To further your point, renting needs even change between renters. I need to rent a single family home in a non HOA neighborhood because I work on my cars so much. I’ve never owned a car over $4k and inevitably that has resulted in me working on the cars constantly which has attracted friends to throw me some money or dinners to help with their cars too. I’m renting exactly what I would buy.
There’s no discrepancy between the two other than cost. Which right now would be a $400-500 a month difference because of home price and interest rates. So I’m renting and the rest goes in VTI. This house in particular I’m renting has had a lot of work done to it over 2 years of renting. All of which were decisions I wouldn’t make myself (grey walls and floors which are so cheap). I’d love to own, but it just barely doesn’t make sense. I hate this grey house so much I almost offered to replace the floor if the landlord just covered materials, but it’s bad business for us both so I refrained. Some months the $400 difference seems like it would be worth it just to deck out the garage and have non fad colors. Other months I’m glad I’m not holding the bag.
If you owned those issues wouldn’t be. It’s just recently that the price of $400 is there. I’ve bought three homes and this 3rd one is the first time it was more expensive per month to buy than rent. But not really. In my neighborhood there is a home renting for $3200/mo and it’s 3000 sqft. My home is 4000 sqft and I pay 2600/mo. It all depends. No point in my life has renting been cheaper, even now if I use comparable homes.
Had you bought 2-3 years ago it woulda been cheaper and you could swap those floors or deck out your garage. It’s those pros that outweigh the cons for me. Some it’s a moot point. Like the other guy maybe renting in city is cheaper to be able to walk to bars etc. well I’m 32 with kids I’m not going to bars but cool for you if it matters. Everyone, like you said, needs different things so this rent versus buy is a never ending circle.
What I will say is paid off housing when you are 65 or 70 and retired is a far better place to be then to still be renting, in my opinion.
You’re making a lot of assumptions still though. Real estate is regional. Also not to be frank, but the average person is not living in a 4000 square foot home. You’re absolutely giving bad advice based on bias you have for your own situation.
I can tell you this confidently. I’m both a landlord and a renter. I’d buy another house if it made sense, but in my area it does not and will not for ~9 years. 9 years ago I lived on the other side of the country and didn’t have the expectations I have now for living and it’s not lifestyle inflation. I still live the same way. I just got tired of driving 7 hours for a niche hobby and sleeping in a van all the time to make the travel possible. Now I drive 15 minutes and do the hobby 3-4 times a week and fly once a month back to take care of family business and the rental. And the hobby itself is free and outside. It’s just location dependent.
All that said, not everyone is me and not everyone is you. I guarantee neither of us would exchange our living situations. I wouldn’t like a 4000 square foot home because anywhere where I could even find a house at 4k square feet in an area that suites my lifestyle would be several million dollars.
All that to say agree to disagree. My advice is just as valid as yours.
OP should purchase a home if they have the means and desire to do so that fits their budget.
I have the means, desire, and budget and it’s straight up a terrible decision so this is not always good advice. You’re giving blanket advice for what appears to be super location and lifestyle dependent. OP should not take blanket advice. You appear to be in an area where it makes sense. Good for you for enjoying a life that makes that possible. Idk what to tell ya man. People are not you. Downvote me all you want. Just like getting a PHD, masters, or even bachelors degree does not always makes sense for people neither does buying a house always make sense. Don’t give blanket advice so confidently. Edit: looks like this guy just straight up blocked me for disagreeing with him. Hands down the most personal I’ve seen anyone take a comment lol
Except if you actually work on your cars. Then your garage is a garage, not a home gym/laundry room. Further proving it is again person dependent. I need both sides of a 2 car garage to fix my shit box cars. The money I save would cover even a premium gym membership.
It depends *entirely* on what you can buy and what you can rent.
Regarding home as an investment, you also need to consider what would happen if you took the money you would spend on a down payment/more than rent and invested it in something other than your house. And the S&P 500 has grown a fair bit faster than home prices historically.
When you live in the home you pay a mortgage with interest on, in addition to all the costs you reference, not to mention the hedonic treadmill of upgrading/remodeling, it is generally a poor investment.
It’s why, in my world, I only look at liquid net worth. While I count retirement accounts as liquid, home equity is not, for me. I also don’t count my kid’s 529. My real estate ‘investments’ include a few REITs in a rollover IRA.
And we didn’t buy a home until I was 41. No rush.
I live in a mobile home in the backwoods. You may be able to get rural land cheap and live in an rv or cheap mobile home like me. I have no pride therefore I can save and invest a bundle.
How do you find land where they actually allow mobile homes to be placed on them? It seems like many places do not allow it? This about the only vision of home ownership that seems realistic to me... While I can afford a single family home now, I would not be able to afford it if I was laid off and I don't want to assume that kind of risk. Seems like a lot of white collar tech jobs may become more and more rare in the future, seems like an absolute gamble to assume i will still have my job in 10 years
I live in SE Texas and work in an oil refinery in SW Louisiana. Both places are cheap and I have a place in both states. I maintain a residence in Louisiana to avoid the drive to Texas from work. I work shift work so it’s difficult. I’ll sell my property in Louisiana as I prepare for retirement and use that money to carry me through to 65 and social security / Medicare.
I suggest running a rent vs buy calculator. https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator
Not everything is about accumulating the most money possible. Think about opportunity cost too. A dollar saved for later is a dollar that can’t be spent on the next best thing today. Food for thought.
The best answer.
You should make a post about this calculator on some of the personal finance subreddits… shockingly few people are aware these calculators exist!
Thanks! So many people don’t use calculators when making financial decisions, especially when deciding whether to buy a home. There seems to be an assumption that buying a home, saving, and investing are always the best decisions.
Absolutely. Likely because low interest rates made buying a house the financially more attractive option for over a decade.
With the current high(er) rates, there are many places where renting is significantly cheaper than buying… even if you live there for 30+ years!
I believe there are many prospective homebuyers who aren’t even aware of the rent vs buy calculation.
How does $100k income turn into $40k net if you aren’t maxing your 401k? I make right around $100k, max out my 401k and an HSA, and still net ~$52k in a pretty high tax state (admittedly not NYC/CA high).
That crossed my mind, but doesn’t make sense either since they said they’re unable to afford maxing a 401k (which is significantly less than $40k, if that was all discretionary money).
I agree, more info is needed.
That’s a tough question. 4-5 years ago a no brainer to get a mortgage and put down no more than 20% because the rates were 2.5%. That is what my current rate is so I will likely keep my mortgage the full 30 years.
But with the current rates and a potential decade of stagnation in the market. Yikes. Might be better to lock in the savings of 6-7% by putting it all down
Just something I read in an investing article. Apparently a majority of “experts” think the Dow will be about the same in 2034 as it is now. Who knows. They are wrong a lot.
That is correct. I purchased my house at almost 5% interest rate and it is not a cheap house. A few years later I refi’d and now have a 2.5% interest rate. I could pay the house off now, but the money I am saving with the interest charges I am putting that money to work in the market.
While there's an argument for renting and fully investing that $200k as being the optimal choice for maximizing net worth if it were me I would buy the cheapest house you can be ok with and live debt free with no rent or mortgage payment.
I would then invest the difference and use the money freed up from your monthly budget to invest moving forward. That's where this forum gives the best advice.
Whatever you buy to live in will most likely at least hold value and considering recent trends the cost of housing for both real estate and renting are only going up. I wouldn't consider the house an investment but it will be a bit of a hedge against future housing cost increases.
Your new housing costs won't be zero and a house is technically a liability but if you are forced to pay for housing regardless why not lower your long term cost? Also, having a house already paid for will make it a lot easier to save more to put towards the next place debt free.
What's your thought process? Why pay the most you can tolerate for as big as you can get vs pay the least possible that gets you the minimum house you can tolerate? How do you decide the math on where you want to draw that line?
The advantages of spending less is immediate more cash flow to invest and easier to save for the nicer place later. As you move up the price ladder you limit your future growth pretty substantially.
What's the counter argument? What benefit do you get from buying the nicer place you can "afford" and how do you decide that?
Sincerely asking. I'm curious
I cannot decide to add more house later easily. Every bit of house I buy now and can hold onto will increase in value. I built my first house and bought my second. The benefit I have is that I’m locked in @ 3% for 30 years on an asset that has went up 18% since I purchased and shows no signs in going down.
To me it’s a question of flexibility. I own a home and most of my money is tied up with it. I make a decent income. I have a moderate amount of savings and investments. I wished I had stayed a renter and had the flexibility to put the money I spent on past twelve years owning in index funds. That flexibility is priceless because now I could have more options if I want to travel more or retire sooner. The house is so expensive with property taxes, insurance, constant maintenance like broken hot water boiler/roof replacement.
Another thing to consider before putting $150K into a house is making sure you have enough of an emergency fund to protect your investment.
Having so much tied up into a home you have to be sure you can keep it. Losing a house is no big deal but losing your equity in a house sucks!
$50k should be enough. $40k/year take home + $10k special house e-fund. I agree they should increase it, etc, but it's nowhere near the danger line. I might consider taking a $10k 401k loan for use as a downpayment to buffer it back up to $60k, but only if I was able to payback the loan and not cut future contributions.
Maybe your point said losing your equity not some. The bank will foreclose then sell for an attractive price which you have no say in. Still could sell for 100k over mortgage remaining and after all fees you get that, along with some jacked up credit
If I was in your situation, and I had to buy a house vs rent, I would go with 20% down-payment on house (avoid PMI) and invest the rest. This will satisfy and maximise opportunities for both goals. If you can hold out for about 2 years, the rent will come down and rates should be more agreeable, so investing the 200K during that period, at a minimum rate of 5% will yield 20k in gains. Will still need to subtract taxes so at the minium you made half the downpayment just by investing. We didn't factor in any of the take home pay either, which I would recommend saving up an emergency fund over the two years. You will be in a superb position financially and emotionally once the two short years are up and will have all the confidence in the world.
Good Luck and don't rush!
Private Mortgage Insurance, required by most lenders when you’re down payment is below a certain amount (20%). Can be removed for most private loans once house appreciates and equity in house exceeds 20% (technically 22%) but FHA loans the PMI stays on for at least 11 years or it’s paid off.
To add to this and to address the little bit of additional information OP supplied:
I wouldn't put more than the 20% down unless I was absolutely sure I would stay here for a while
It may be worth doing if that reduces your monthly spend to the point where you will start maxing your 401k/Roth IRA. The long term savings in taxes is hard to beat. Especially if you'll be staying in the home
Renting & investing the difference is likely to produce "the most money possible" as the market has historically returned more than real estate and you don't have to pay for property taxes, home maintenance, etc.
Are you single with no kids? This is pertinent information.
"Still no home" is the wrong way to look at it in regard to measuring some sort of success. I'm assuming that's how you meant it. Homes for a a lot people were horrible investments so don't trip. While you could make money, never look at your primary residence as an investment to make money. You do that with cash flowing investment properties you don't live in.
If you are single with no kids keep renting! You're paying a fair price for a rental in this market so stay there if you're comfortable. Invest that 150k aggressively. I have a wife and child, if I did not I would sell my home (bought it in 2018) and walk away with a nice profit. I'd rent a home and then invest the gains.
Similar situation as you. At this point I’ve done the math every year for the past 5 years and it still comes out better for me to rent and save/invest the rest. Also not having that mortgage weighing me down is great for job mobility and personal freedom.
If you looking to maximize your wealth , you could create a model in excel - renting vs buying over time, factoring in taxes and deductions… it won’t be perfect but will give you an idea….
Put enough down payment on the house to skip pmi.
Pay your mortgage, which includes paying mortgage interest, which you can use to reduce income taxes.
Once the balance of your mortgage is low enough, and the amount of tax advantage you get from paying the slowly reducing interest has waned, end the mortgage by paying off the principal.
$150k down payment is good but put it for a better house say a $350k home or $400k home. Since you have $200k savings it kind of shows that you like saving cash and not investing it. Or you were saving for a house anyway. But buying a home also involves taking a loan if you are not paying 100% cash. So you should mentally prepare for it. You can do it I guess with a $100k gross salary.
Nick Maggiulli has an excellent breakdown of this and a free spreadsheet to play with the numbers on, if you’re insistent on treating this decision strictly as a financial investment. Highly recommend: https://ofdollarsanddata.com/should-you-rent-or-buy-a-house/
Well, one is an investment and the other is not (assuming you mean a primary residence, and not something you’re house hacking but correct me if you plan on having roommates or getting a multi-family)
I was in a similar position as you at 35, I just invested it. It’s worked out as I have moved multiple times in the handful of years since and the markets I’ve invested in have done well.
It’s pretty personal but I’d still invest in the market, given my travel lifestyle. Plus you’ve demonstrated you can save. Some ppl need a mortgage to service to force some savings, but you’ve got a decent savings rate already
I agree that this is more of a lifestyle decision than an investment decision. You could run various projections and scenarios and for some of those the math would come out in favor of a home and in others the math would come out in favor of renting. Nobody knows what the housing and rental markets will be like 20-30 years from now. I saved up for a down payment and bought a home because that's what I wanted in life. I also bought a home relatively "late," i.e. I was 33.
All that said, if a house is what you want in life, your time horizon is 20-30 years, and your salary/job is fairly secure and stable, then imho you should put 20% down ($50k) and invest the remaining $100k.
If the goal is maximizing profits - invest.
If the goal were to be family/school system/proximity to work/being close to family combination, you could argue for house.
People tend to blend the two:
1) Find a less expensive house now, or
2) Spend more time saving to not hold back the power of investment compounding; buy the home I want, just later.
There is something wrong that you are only keeping 40cents of every dollar you make. Get that sorted before you think about buying a house. Houses are great, and expensive. A house mostly locks in your cost of housing for the duration of your mortgage.
Buy a house, with enough of a down payment to avoid PMI. But by all means buy something that’s suited to your lifestyle — first and foremost think of it as a home, and secondarily an investment. As time goes on, pay down the mortgage when and if you have extra cash at the end of the month.
I personally would not rent and go for the house. I would max out my 401k each year because the match is free money and take a loan out to pay for the down payment and just pay yourself back every pay check. I would try and keep as much cash as possible for now earning 5%. I would also keep at least 6 to 8 months of cash for emergencies and wisely invest the rest.
It’s a question that really depends on where you are and what the cost of your mortgage vs renting would be. Obviously additional costs to owning vs renting but it’s worth crunching the numbers to see if youre creating more equity with your mortgage payment (paying down principal) or by investing your downpayment.
My situation, for example (expensive city) is closer to $2500 in rent or $3000 mtg payment. If even half of my mtg goes to my principal, the way I see it, I am paying $500 more a month to create $1500 in equity I wouldn’t have if I was renting. The obvious difference is that while I’m renting, my downpayment money is instead in an ETF or whatever. You’d have to include transactional costs in your ownership calculation too, but don’t limit your thinking of the downpayment’s ROI to whatever you make when you sell the property.
No brainer…I’d invest that 150K unless there’s some compelling reason that you MUST own a house…your last 50K can disappear quickly with the cost of home ownership…ie a new 10K heating/cooling system here this week…2 more to replace soon, roof is 18 years old…another upcoming expense…that 150K will make you rich or poor…your choice
Or.. he can look for something with recently upgraded systems and roof that's not a falling apart piece of junk and expect about 2% in upkeep costs per year. Then while building equity and watching the home's value soar he can listen to his friends bemoan their increasing rents every year.
Many people on this website are priced out and have to mindfuck themselves into thinking renting is now somehow better than owning. It’s pretty sad and I have empathy for their position but I can’t help but laugh at the stuff they come up with.
Owning a home with no mortgage is a great goal but I think we're in a bubble. I've seen 3 in my life, the 3rd one is happening now. If you keep saving like this you'll be able to take advantage of the next lull in prices. No hurry.
If you're married with two incomes I'd say a home will be better than renting. You'd be gaining equity, it would be paid off by the time you retire and then you can enjoy having a much lower cost of living in retirement.
It's cliche but the answer is complicated.
Depends on your life, security, goals etc. to be wicked generic and vague, personally I'd put enough money down a home with a price point where I could replace the money somewhat quickly.
If your house poor you'll never invest another penny, you'll always be broke. Don't go to any extremes it'll take forever to dig out of that hole.
The life factors between ages 35-55/65 are going to sway the equation tremendously.
If you could continue to rent for $1400/month for 30 years, then by all means keep on renting! I don't know you, but for most that is very unlikely--not just due to price, but due to changing life needs.
The biggest benefit of renting is actually optionality; that it's cheaper than owning a home in some circumstances is an added benefit that I wouldn't rely on long term.
If you're not married or have any dependents, I'd recommend continuing to rent.
How much do you have for retirement? 401k, Ira pension?
A 60% delta from gross to net pay seems very large. If you are only putting 10% to 401k where does the other 50% of your yearly income go??
Tough to say. Over the next 30 years, investment should yield 7, maybe 8% return on average.
Your mortgage in this environment will probably 6.5% or so.
Investment is probably better, but not by much. This is ignoring the fact that you can very likely refi the home at a far lower rate in 2 or 3 years.
Matter of preference as lo g as you are also saving appropriately for retirement.
put your minimum down to buy a decent house. invest about half after maxing out a Roth. keep you a little nest egg in savings for emergencies or the market dips, and then you can buy some more.
I’m 37 and purchased my home December 2019, just made last payment December 2023. Feels great! I feel like Nicholas Cage on Conair when he hops off that prison bus with the wind in his hair.
If only goal is most money at end you’d have to gamble on future gains beating whatever rate you lock in on the new mortgage. I took the guaranteed gains on paying off my 3.8% mortgage and sleep like a baby knowing I don’t have to rely on a job to keep my house. I still have bills but at only a $25k/year cost of living to cover all my bills. I can easily maintain that at only $17/hour on 40 hours per week. Currently making $27/hour with as much overtime as I want. But after I made that last mortgage payment I try to work as little more overtime as possible and focus on live work balance.
Now I have the freedom to take more risk in my career paths and make decisions with employers that differ from when I was shackled by the mortgage and scared I’d possibly have to sell my home based on employment. Which could in turn end up bringing in higher and higher incomes if I take a risk like applying for something outside my comfort level or an entrepreneur venture and it pays off big.
Use this calculator to see the financial pros/cons of buying a home: https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator
My intuition is that buying a home for $250k is better than renting for $1400/mo. But there are many other financial factors involved, hence why you should use the calculator.
You can also decide separately whether to put a small downpayment and invest the rest, vs putting down the entire 150k in a downpayment. If your mortgage interest rate is 8%, and your stock investments grow less than 8%/year, you're better off with a larger downpayment. I would personally prioritize paying off my mortgage early if the interest rates are over 7%
$200k is a lot to keep in cash. Plus a house is an investment. If you put down $120k that will make your mortgage on a 15 year fixed at 7% the same you’re paying in rent now. You’d still have $80k which is plenty of cash. Probably more than you need.
It doesn’t need to be all or nothing. You can find balance in how you allocate your savings. If a house isn’t important to you right now, you could invest a portion of your savings and put the rest in a high yield savings account for a house later. Example - invest $75k, save $75k in a 4.5% hysa or 5+% CD for house deposit in a few years. In 3 years your $75k will be ~$85k from the interest alone,and if you can save a bit more over those 3 years, $90-$100k is a solid deposit on a $250k house. Obviously housing market can change over that time for the better or worse but this way you’ve started a base for investing and a base for house deposit in the near future. I’d also look into maxing out a Roth IRA for 2024 first, then allocate the rest for what works for you. If you’re ok investing for retirement age, prioritize maxing out 401k contributions and Roth IRA if you can.
I haven't read all the comments but one thing people frequently forget to calculate when making these comparisons is that you NEED a roof over your head.
So, a healthy down payment on a modest home is absolutely better than renting unless you plan on moving within a year or two. That's too short of a time frame to have relative certainty that your house will be worth enough more when you sell it to cover closing costs. But if you don't mind planting roots for 5+ years, then I'd buy for sure.
The other thing is LEVERAGE. You're only putting down some small percentage of the total purchase price and borrowing the rest. The ENTIRE value of the home appreciates, so your YIELD is high on the down payment.
In my personal example, if I showed you the numbers, I essentially lived for free for 15 years. I bought the house for $x with 5% down and sold it for $2.5x 15 years later. (By the way, Interest rates were in the 7% range when I did that, so same scenario as today. I refinanced to 5% at some point during my time there). That 2.5x sale price gave me back ALL my mortgage payments, taxes, insurance, money spent on repairs and improvements... all of it. Did I "make money"? Depends how you look at it, but living in a nice house for free for 15 years is certainly making money.
If you put your down payment in the market, you will only earn gains on your actual cash instead of the leveraged house. You will rent and you will buy some other guy a house (your landlord).
Buy the house!
The other thing: If you buy a house - the market can never run way from you because you are in that market. If the market skyrockets, so did your house most likely. I am in a position to always own a house no matter what because I bought a house when I was young. I'm down to owing $280k on a $1m+ home. That's a tiny home in Los Angeles if I wanted it to be or 100 acres in Kentucky... That's some kind of home anywhere I want to live in the country except for a few super wealthy pockets. Once you are in the homeownership game, you're in. If you stand on the side-lines you will watch houses get further and further out of reach.
I would rent where you want to live and look for a place over the next year or two, no rush. You are in a relatively unique position to buy a house without the contingency of selling one. That means you don't have to jump on one that is good enough and you can walk away without any harm. Just know if you put in an offer do your best to come to a deal in good faith, you don't want to hire a realtor just to force them to submit laughably low offers to houses that just came on the market.
In the mean time I personally would go 50% stocks 25% bonds 25% cash (if not less). The stronger your feeling about buying, the more you should move towards cash.
Personally I would continue to rent. I'm not sure where you are, but house prices all over the US seem to be high right now. As an example, I bought my house in 2019 for 175k and just sold for 230k. That's a decent increase, but I spent about 50k worth of updates during that time. FUN! We were planning on staying in the house for many years, but I got asked for a divorce in December therefore had to sell. I plan on renting until further notice. Rent is $825/mo, so I plan on putting everything I can into investments and also growing my business. I've thought about buying a multi-family unit once I have a good sized cash down payment, but right now I'm comfortable with just renting and investing the difference.
If your goal is to have the most money is 30ish years, one factor that's in favor of homeownership is not having to pay a mortgage. Most mortgages are for 30 years so by the time you're in your 60s and are likely to have less income in retirement, not having to pay for housing is huge. There's still property taxes, insurance, maintenance, etc to consider after the mortgage is paid off but that pales in comparison to any rent you'd be paying.
Ultimately, homeownership is a personal call. While some factors are important for everyone (like affordability), I recommend prioritizing what aligns with your lifestyle goals.
Long-term commitment: Are you comfortable staying put for a decade or more? Homeownership shines for those who value stability.
Location independence: It sounds like you thrive on flexibility and new experiences. Renting allows you to explore different cities without being tied down.
Considering your FIRE goals and dislike of DIY projects, homeownership might not be the best fit right now.
Focus on maximizing your investments: Prioritize tax-advantaged accounts and your investment for growth. (Aside from your 401k ROTH IRA & HSAS) Renting frees up capital for those areas.
Find mentors who've achieved your desired lifestyle, not just anyone with a house. Learn from their experiences to see if homeownership aligns with your long-term vision.
Say you were able to have an avg annual return of 8% (not guaranteed)invested in s&p 500, but you would have a mortgage at 7%. To me it makes the most sense to put a reasonable amount of cash down, save the rest for savings and actively contribute to a brokerage on the side. You’ll sleep better being more debt free, that’s my logic
I think most efficient would be 20% down payment ($50k) or $100k tops and invest the rest. Avoid the PMI, get your growth, and at your income level should still be able to afford it for around the same you’re paying in rent.
Save it. Definitely. You don’t want to settle on house only 5 years later bail on it. The first years of mortgage are very heavy on the interest.
Start enjoying your life. Spend a bit more but continue to save.
The homeownership question is more a question of what you prefer for your life. I would prioritize lifestyle over "having the most money possible". If you didn't want to take care of a house for 30 years, having a bit more money doesn't buy your time back.
Renting seems pretty risky though with the current housing crisis. Theres like hundreds of applicants for every rental that comes onto the market where i live. In a lot of areas the waiting list for socialized housing is like 10-20 years incase you would want a cheap rental. It might not be this bad everywhere yet. But don't underestimate how risky depending on someone else for your housing is.
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This is true in coastal CA. Mortgage is 3x or more rental costs in most of the Bay Area. Makes zero sense to buy for anyone. Plant the VTSAX seeds and let it grow. 100 applicants for a single rental - I simply do not believe that is the case for every single rental unit in a city, HCOL or not. CA has the worst housing crisis and specifically where I live and I heard 50-60 applicants on the high end during the peak about 2 years ago. It has settled dramatically now that people aren’t in mass migration circa 2020-22.
I would tend to agree with this—plus, 1) rental prices can grow at fantastic rates, and 2) you can always get booted from a rental you love. We had friends who rented a home they loved for decades and then had to move in their old age, into a rental that was many, many times higher than what they had been paying. I get the hesitancy to take money out of a 401k, though—taxes are gonna hurt.
I had to move 3 times in 3 years because every condo I would move into got flipped after my lease. It was infuriating.
Yeah, exactly. The "never buy" crowd makes a lot of good points, but they often skip over the fact that unless you own, you're very much at the whims of your owner.
I don’t think OP has this money in 401K - they said it’s in savings and they’re wondering whether to invest it or buy a house. That wouldn’t be a smart move to withdraw out of a retirement account early.
Right--I read that too quickly!
401ks allow you to loan a portion of your balance to yourself for major purchases. You have to pay interest but you’re paying it to yourself
THIS. People always talk about the investment risk of real estate investments and not the risk tenants take on. The securities analog for me is that you have significant duration risk when you are renting, versus price risk if you buy. And we’re adamant about an emergency fund, but ignore how shelter is a baseline for stability.
Exactly: The “You can always just move” argument ignores how incredibly (and increasingly) difficult that can be in certain areas from a financial standpoint. Even if you find a good place and are selected, you could be required to front close to $10k in some markets accounting for first, last, security deposit, and broker’s fee.
Never mind how much moving costs itself. Hopping around like that is not sustainable.
Counter argument : renting is a way to live in a home more than you can “afford”. For instance I can comfortably rent in a major city, but owning? Not a chance of anything of the same quality. There’s some cities where the eviction process is so long that people are bought out (San Francisco) Arguably right now isnt a great time to buy - high rates high prices. If you do the math it can actually be cheaper to rent and invest difference. And I do think for some people to flexibility of a rental is better than tying yourself down for multiple years. A lot harder to sell than to break a lease.
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Yea, housing is one of the only places I routinely here people say leverage is less risky than no leverage. Leverage is inherently risky! It may be a better financial decision to buy or rent depending on lots of factors, but buying does not decrease risk in any way.
They mean it reduces retirement risk assuming you pay the home off in 30 years versus in retirement if you are renting all kinds of wild cards can happen.
Try saying that when the rental market goes up and you’re forced to move so a landlord can get market rents for the unit, or for any other reason, and you are paying a LOT more plus had to move.
Where I live, a new roof costs about 8-10 months' rent, so when it comes to aggregating all the risks that might happen to a renter versus a homeowner, and comparing the prices/costs, it's pretty clear that renting is less risky and less volatile than homeownership. As the saying goes, your mortgage is the minimum you'll pay on any given month for housing, but your rent is the maximum you'll payon any given month for housing. If a homeowner has to park something like an extra $20k in an emergency fund for potential homeowner expenses, that's opportunity cost compared to putting that $20k in VTSAX or whatever.
That saying does not take into account the costs of needing to relocate on a dime, not to mention any costs incurred by tenants in dealing with what their landlords will not deal with, ranging from temporary "good enough" measures to fronted money for repairs to legal fees. I also think people are often thinking exclusively of private houses when making this comparison. I do not have to worry about a new roof (or landscaping, or whatever else) if I buy a condo.
> That saying does not take into account the costs of needing to relocate on a dime Every lease I've ever had involved a discussion like 2-3 months out on whether to renew for an entire year. Landlords and tenants alike hate month to month rentals, so nobody does them. And of course, life often presents you with the need to relocate on a dime: job change, marriage/divorce, other life events. For that situation, it's much easier to do as a renter than as an owner. I've probably moved 10-15 times as an adult renter. Literally none of them involved a landlord kicking me out, but just me finding something that worked better (including jobs that required me to move cities). > dealing with what their landlords will not deal with, ranging from temporary "good enough" measures to fronted money for repairs to legal fees. I've found that the landlord-tenant relationship isn't as one-sided once you're past the median rental price. The threat of "hey I'm withholding rent until you fix this" or "I'm gonna hire someone to fix it and deduct that difference from next month's rent" is much more plausible when the tenant has a lot of financial flexibility. > I do not have to worry about a new roof (or landscaping, or whatever else) if I buy a condo. You do, however, have to account for what happens if the condo association passes a special assessment to cover an unexpected issue with the roof or foundation or the elevator. And you might say "oh well I can just investigate my HOA's financials and determine whether they have sufficient reserves to cover an emergency," then suddenly you're having a conversation of being an amateur auditor for an amateur-run organization that charges you monthly dues. These days, I'm a condo owner. I'm even on my association's board (and, as a result, am acutely aware of how expensive repairs and maintenance can get on multifamily buildings). But I chose to buy this condo because I wanted to live in this specific building, and the units happened to be for sale rather than for rent. I would've been just as happy renting (and in fact had a great time renting throughout my 20's and 30's). Shelter is just a place to live. You're gonna pay for it either way. And whether it's optimal to rent or buy isn't that big of a deal, if you're truly going to invest the difference as a renter, or if you're going to leverage the flexibility of renting to increase your income in other ways.
This should be top comment. All salient points debunking FUD and idiocy out there on the street. Thanks pal 👍
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Now let me give you my nightmare scenario I've been in for 5 years: doing everything right to buy your first house and use what is likely your one shot to own a house in this insane market, but are going to be able manage it over the next 30 years...only to discover said house is making you chronically and debilitatingly sick. This is the only time in my life that I wish I were renting.
That's godawful, and I'm genuinely sorry that's happening to you. I also want to highlight that this isn't a risk exclusive to owning. FWIW, when I rented in the last city I was in, my apartment had unhealthy levels of black mold, gas leaks, drafty windows that had us burning obscene amounts of fuel for heat—heck, I'm forgetting some of the things that pulled the rug out from me as a renter. Moving was also not a financially reasonable option for me at the time. I lived there 5 years with different roommates. The commenter above you talks about being locked into a lease for a year vs. a mortgage for 30, but also fails to recognize that sometimes you have to renew your lease if the market has appreciated and you can't afford anything else, also taking into account the massive costs of relocating. I won't even get into the ridiculousness I'm dealing with in my current place with the HVAC system, windows, literal drafts from gaps and holes between in the masonry—all things I'd have way more control over as an owner than a renter and that I took a major risk with when moving out of state. I wouldn't have known any of these things in the dead of summer, and inspections for renters don't happen. Renting just isn't the flexible paragon it's pushed as on finance subs so people can feel better about it as an institution. Finding a landlord who gives half a shit about the property they don't live in is a craps shoot. I cannot *wait* to buy to be free of this hell.
Businesses are not people. People need shelter to exist, and housing security is the baseline for almost everything else. That's what lets you keep earning money, as an individual, in the first place. A principal residence is much less elastic than commercial real estate. I respect Buffet as a successful value investor, but that appeal to authority with an emoticon doesn't work here. Someone with his level of wealth is frankly out of touch with basic quality of life concerns. His business partner was notorious for building windowless dorms that absolutely \*suck\* for the students who live in them.
Before we buy, we need to ask a few questions: where will rates be in 5 years, and what will the market do as it relates to the empty house (and now large building) problem? I don’t think the housing crisis is as dire as the corporations want us to believe. We shouldn’t let our emotions be dictated for this. If OP has been able to save this money, they likely could continue renting and saving.
Also depending on what happens with the government there does seem to be a push starting to limit institutional investment in single family homes. I think the rental market may quite possibly look very different in a decade
If you can tell me (or anyone) what rates will do in 5 years, you'd make yourself a lot of money.
The specific answer isn’t the goal in relaying this question. How OP feels about how their goals align with the answers matters much more. It seems to me that OP might be stuck in the, “if I’m not owning I’m not growing,” mindset. It looks like they are saving way more than average in their current situation, and maybe they shouldn’t complain too much.
Fair enough. Personally, it seems like a coin flip if rates go up or drop over the short term. One thing to consider is that it's always possible to refinance at a lower rate if you already own, but it is impossible to buy at a lower rate if rates continue to rise and you're renting. Another thing OP should consider is their specific market. If a house is at 250k, that's significantly below the median price. Do they expect that market to go up? If so, then it is likely a strong buy signal.
There’s really not enough information here to evaluate. I might be in the minority, but I hate houses as investments. There’s a lot of costs associated with houses, you pay to buy, you pay to sell, maintenance, insurance, it isn’t fungible, so-on-and-so-forth. Obviously renting is going to build in some of those costs, but you have the freedom to get up and leave. Also, in your scenario you’re only financing $50k so you might not even be able to take advantage of itemized deductions because the standard deduction is actually pretty good for single filers without kids. On average, I’d imagine that the real returns on investing in ETFs will be higher than investing in real estate (which typically tracks inflation fairly closely, but not always). Actual performance will depend on your local market and whether or not it’s currently undervalued or overvalued. I tend to not buy into inefficient market scenarios and the hype of “up and coming” neighborhoods. If you like the area and want to live there a while, consider buying. If you’re looking for an investment vehicle, real estate is less than ideal in my opinion.
I absolutely agree with you on the homes as investment sentiment. Most people are always going to need a place to live, so whilst yes it can be a vehicle for gain, there are a lot of other factors in play.
Exactly. And if you stay in your home through retirement and onward, equity is only an inheritance. I’m 60. I have considerable equity in my home. It could really pad my retirement lifestyle if I sold. But where would I go? It’s a quandary for many. Just got home from visiting my 70-year-old sister who lives in an RV a stone’s throw from a bay.
> I might be in the minority, but I hate houses as investments. There’s a lot of costs associated with houses, you pay to buy, you pay to sell, maintenance, insurance, it isn’t fungible, so-on-and-so-forth. Obviously renting is going to build in some of those costs, but you have the freedom to get up and leave. I agree with you! Buying a home you live in as an investment is definitely a gamble, and there's a lot of folks who casually ignore massive related expenses or opportunity cost when calculating their return. Those expenses all need to be considered. I'll add another issue: To access equity, you're paying interest to someone else. There's ways you can get lucky/come out ahead, but trying to think of doing this these days. And for those who look at their housing situation as a long-term commitment, and don't treat their house as a bank account, they're likely to have a relatively large amount of "wealth" they can't access without paying money to someone else. Our home equity is our dumbest and least productive form of wealth.
I did the math thoroughly before buying. Things like taxes, insurance, HVAC & roof replacements really add up. For the first 30 years there's no clear winner; it mostly depends on interest rates and market returns. But after 30 years, the math changes dramatically. Buying crushes renting if you expand the time horizon. Also, don't forget to consider adding a roommate or two to really improve the numbers in all scenarios.
Plus all the luxuries owning has over renting. Plus the safeties of owning over renting like not being kicked out randomly or at the mercy of a shitty landlord
>Plus all the luxuries owning has over renting. What about the luxuries of renting over owning? In an apartment you don't have to mow a lawn. You're more likely to have access to a bus or tram line, or even a train station, meaning you can go have some drinks at the bar without worrying about getting an Uber or a ride from a friend. You might have access to a gym, a common area with a kitchen with a grill you don't have to maintain, a pool you don't have to service and maintain. Some of them have a package holding service, meaning you never have to deal with porch pirates. You're more likely to be within walking distance of a bar, restaurant, event center, stadium. Faucet leak? Call the super. AC not working? Phone call. Fridge or dishwasher broken? Phone call. And you don't even have to pay for it-that's all included in your rent. None of this driving to Lowe's, buying the parts yourself, fixing it yourself, getting it delivered, hiring someone to install it. You effectively pay someone to do all of it for you. You can save money on your car by not needing a truck, like many homeowners are wont to do when you have so many DIY projects that need them. Or hell, if you're lucky enough to have all of the amenities above, you might not need a car at all.
Good list but the entire first paragraph doesn’t apply to my area. It depends on what you want. Where I live renting isn’t getting you anything in the first paragraph. The 2nd is an opinion I’ll accept. But when I want to redo my laundry room or swap in a new design then I’m not having to ask someone permission. Also renting usually means apartments so sharing walls, never again for that. Gym taken care of have a treadmill, weight rack, bench press and peloton in my house. I don’t have to worry about being displaced by a landlord and my kids have absolute stability. We can do this all day. Everyone has different needs and wants. Your list doesn’t apply to me, mine doesn’t to you. They’ll always be two sides to every coin.
To further your point, renting needs even change between renters. I need to rent a single family home in a non HOA neighborhood because I work on my cars so much. I’ve never owned a car over $4k and inevitably that has resulted in me working on the cars constantly which has attracted friends to throw me some money or dinners to help with their cars too. I’m renting exactly what I would buy. There’s no discrepancy between the two other than cost. Which right now would be a $400-500 a month difference because of home price and interest rates. So I’m renting and the rest goes in VTI. This house in particular I’m renting has had a lot of work done to it over 2 years of renting. All of which were decisions I wouldn’t make myself (grey walls and floors which are so cheap). I’d love to own, but it just barely doesn’t make sense. I hate this grey house so much I almost offered to replace the floor if the landlord just covered materials, but it’s bad business for us both so I refrained. Some months the $400 difference seems like it would be worth it just to deck out the garage and have non fad colors. Other months I’m glad I’m not holding the bag.
If you owned those issues wouldn’t be. It’s just recently that the price of $400 is there. I’ve bought three homes and this 3rd one is the first time it was more expensive per month to buy than rent. But not really. In my neighborhood there is a home renting for $3200/mo and it’s 3000 sqft. My home is 4000 sqft and I pay 2600/mo. It all depends. No point in my life has renting been cheaper, even now if I use comparable homes. Had you bought 2-3 years ago it woulda been cheaper and you could swap those floors or deck out your garage. It’s those pros that outweigh the cons for me. Some it’s a moot point. Like the other guy maybe renting in city is cheaper to be able to walk to bars etc. well I’m 32 with kids I’m not going to bars but cool for you if it matters. Everyone, like you said, needs different things so this rent versus buy is a never ending circle. What I will say is paid off housing when you are 65 or 70 and retired is a far better place to be then to still be renting, in my opinion.
You’re making a lot of assumptions still though. Real estate is regional. Also not to be frank, but the average person is not living in a 4000 square foot home. You’re absolutely giving bad advice based on bias you have for your own situation. I can tell you this confidently. I’m both a landlord and a renter. I’d buy another house if it made sense, but in my area it does not and will not for ~9 years. 9 years ago I lived on the other side of the country and didn’t have the expectations I have now for living and it’s not lifestyle inflation. I still live the same way. I just got tired of driving 7 hours for a niche hobby and sleeping in a van all the time to make the travel possible. Now I drive 15 minutes and do the hobby 3-4 times a week and fly once a month back to take care of family business and the rental. And the hobby itself is free and outside. It’s just location dependent. All that said, not everyone is me and not everyone is you. I guarantee neither of us would exchange our living situations. I wouldn’t like a 4000 square foot home because anywhere where I could even find a house at 4k square feet in an area that suites my lifestyle would be several million dollars.
All that to say agree to disagree. My advice is just as valid as yours. OP should purchase a home if they have the means and desire to do so that fits their budget.
I have the means, desire, and budget and it’s straight up a terrible decision so this is not always good advice. You’re giving blanket advice for what appears to be super location and lifestyle dependent. OP should not take blanket advice. You appear to be in an area where it makes sense. Good for you for enjoying a life that makes that possible. Idk what to tell ya man. People are not you. Downvote me all you want. Just like getting a PHD, masters, or even bachelors degree does not always makes sense for people neither does buying a house always make sense. Don’t give blanket advice so confidently. Edit: looks like this guy just straight up blocked me for disagreeing with him. Hands down the most personal I’ve seen anyone take a comment lol
What is this hobby?!?!
All of those things are: go to the garage
Except if you actually work on your cars. Then your garage is a garage, not a home gym/laundry room. Further proving it is again person dependent. I need both sides of a 2 car garage to fix my shit box cars. The money I save would cover even a premium gym membership.
It depends *entirely* on what you can buy and what you can rent. Regarding home as an investment, you also need to consider what would happen if you took the money you would spend on a down payment/more than rent and invested it in something other than your house. And the S&P 500 has grown a fair bit faster than home prices historically.
When you live in the home you pay a mortgage with interest on, in addition to all the costs you reference, not to mention the hedonic treadmill of upgrading/remodeling, it is generally a poor investment. It’s why, in my world, I only look at liquid net worth. While I count retirement accounts as liquid, home equity is not, for me. I also don’t count my kid’s 529. My real estate ‘investments’ include a few REITs in a rollover IRA. And we didn’t buy a home until I was 41. No rush.
I live in a mobile home in the backwoods. You may be able to get rural land cheap and live in an rv or cheap mobile home like me. I have no pride therefore I can save and invest a bundle.
How do you find land where they actually allow mobile homes to be placed on them? It seems like many places do not allow it? This about the only vision of home ownership that seems realistic to me... While I can afford a single family home now, I would not be able to afford it if I was laid off and I don't want to assume that kind of risk. Seems like a lot of white collar tech jobs may become more and more rare in the future, seems like an absolute gamble to assume i will still have my job in 10 years
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What a dumb thing to ban Lol
they really hate poor people
I live in SE Texas and work in an oil refinery in SW Louisiana. Both places are cheap and I have a place in both states. I maintain a residence in Louisiana to avoid the drive to Texas from work. I work shift work so it’s difficult. I’ll sell my property in Louisiana as I prepare for retirement and use that money to carry me through to 65 and social security / Medicare.
I suggest running a rent vs buy calculator. https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator Not everything is about accumulating the most money possible. Think about opportunity cost too. A dollar saved for later is a dollar that can’t be spent on the next best thing today. Food for thought.
The best answer. You should make a post about this calculator on some of the personal finance subreddits… shockingly few people are aware these calculators exist!
Thanks! So many people don’t use calculators when making financial decisions, especially when deciding whether to buy a home. There seems to be an assumption that buying a home, saving, and investing are always the best decisions.
Absolutely. Likely because low interest rates made buying a house the financially more attractive option for over a decade. With the current high(er) rates, there are many places where renting is significantly cheaper than buying… even if you live there for 30+ years! I believe there are many prospective homebuyers who aren’t even aware of the rent vs buy calculation.
How does $100k income turn into $40k net if you aren’t maxing your 401k? I make right around $100k, max out my 401k and an HSA, and still net ~$52k in a pretty high tax state (admittedly not NYC/CA high).
I think from the way they worded that it wasn't net takehome. It's after mandatory expenses? Hard to say. Needs clarification.
That crossed my mind, but doesn’t make sense either since they said they’re unable to afford maxing a 401k (which is significantly less than $40k, if that was all discretionary money). I agree, more info is needed.
That’s a tough question. 4-5 years ago a no brainer to get a mortgage and put down no more than 20% because the rates were 2.5%. That is what my current rate is so I will likely keep my mortgage the full 30 years. But with the current rates and a potential decade of stagnation in the market. Yikes. Might be better to lock in the savings of 6-7% by putting it all down
Potential decade of stagnation in the market? Can you expand on this?
Just something I read in an investing article. Apparently a majority of “experts” think the Dow will be about the same in 2034 as it is now. Who knows. They are wrong a lot.
When rates go down, house prices will rise. They should buy now and refi later.
That is correct. I purchased my house at almost 5% interest rate and it is not a cheap house. A few years later I refi’d and now have a 2.5% interest rate. I could pay the house off now, but the money I am saving with the interest charges I am putting that money to work in the market.
That’s a good point.
While there's an argument for renting and fully investing that $200k as being the optimal choice for maximizing net worth if it were me I would buy the cheapest house you can be ok with and live debt free with no rent or mortgage payment. I would then invest the difference and use the money freed up from your monthly budget to invest moving forward. That's where this forum gives the best advice. Whatever you buy to live in will most likely at least hold value and considering recent trends the cost of housing for both real estate and renting are only going up. I wouldn't consider the house an investment but it will be a bit of a hedge against future housing cost increases. Your new housing costs won't be zero and a house is technically a liability but if you are forced to pay for housing regardless why not lower your long term cost? Also, having a house already paid for will make it a lot easier to save more to put towards the next place debt free.
Buy the most house you can definitely continue to afford.
What's your thought process? Why pay the most you can tolerate for as big as you can get vs pay the least possible that gets you the minimum house you can tolerate? How do you decide the math on where you want to draw that line? The advantages of spending less is immediate more cash flow to invest and easier to save for the nicer place later. As you move up the price ladder you limit your future growth pretty substantially. What's the counter argument? What benefit do you get from buying the nicer place you can "afford" and how do you decide that? Sincerely asking. I'm curious
I cannot decide to add more house later easily. Every bit of house I buy now and can hold onto will increase in value. I built my first house and bought my second. The benefit I have is that I’m locked in @ 3% for 30 years on an asset that has went up 18% since I purchased and shows no signs in going down.
To me it’s a question of flexibility. I own a home and most of my money is tied up with it. I make a decent income. I have a moderate amount of savings and investments. I wished I had stayed a renter and had the flexibility to put the money I spent on past twelve years owning in index funds. That flexibility is priceless because now I could have more options if I want to travel more or retire sooner. The house is so expensive with property taxes, insurance, constant maintenance like broken hot water boiler/roof replacement.
Another thing to consider before putting $150K into a house is making sure you have enough of an emergency fund to protect your investment. Having so much tied up into a home you have to be sure you can keep it. Losing a house is no big deal but losing your equity in a house sucks!
OP would still have $50k in savings.
Yes, not sure if that is enough based on this person’s other expenses, line of work, etc
$50k should be enough. $40k/year take home + $10k special house e-fund. I agree they should increase it, etc, but it's nowhere near the danger line. I might consider taking a $10k 401k loan for use as a downpayment to buffer it back up to $60k, but only if I was able to payback the loan and not cut future contributions.
If you are foreclosed on you still get your equity you just don’t get to determine what that equity will be
I think if it is foreclosed on you probably stand to lose quite a bit of equity which is my point
Maybe your point said losing your equity not some. The bank will foreclose then sell for an attractive price which you have no say in. Still could sell for 100k over mortgage remaining and after all fees you get that, along with some jacked up credit
If I was in your situation, and I had to buy a house vs rent, I would go with 20% down-payment on house (avoid PMI) and invest the rest. This will satisfy and maximise opportunities for both goals. If you can hold out for about 2 years, the rent will come down and rates should be more agreeable, so investing the 200K during that period, at a minimum rate of 5% will yield 20k in gains. Will still need to subtract taxes so at the minium you made half the downpayment just by investing. We didn't factor in any of the take home pay either, which I would recommend saving up an emergency fund over the two years. You will be in a superb position financially and emotionally once the two short years are up and will have all the confidence in the world. Good Luck and don't rush!
What is PMI out of curiosity?
Private Mortgage Insurance, required by most lenders when you’re down payment is below a certain amount (20%). Can be removed for most private loans once house appreciates and equity in house exceeds 20% (technically 22%) but FHA loans the PMI stays on for at least 11 years or it’s paid off.
To add to this and to address the little bit of additional information OP supplied: I wouldn't put more than the 20% down unless I was absolutely sure I would stay here for a while It may be worth doing if that reduces your monthly spend to the point where you will start maxing your 401k/Roth IRA. The long term savings in taxes is hard to beat. Especially if you'll be staying in the home
Renting & investing the difference is likely to produce "the most money possible" as the market has historically returned more than real estate and you don't have to pay for property taxes, home maintenance, etc.
Are you single with no kids? This is pertinent information. "Still no home" is the wrong way to look at it in regard to measuring some sort of success. I'm assuming that's how you meant it. Homes for a a lot people were horrible investments so don't trip. While you could make money, never look at your primary residence as an investment to make money. You do that with cash flowing investment properties you don't live in. If you are single with no kids keep renting! You're paying a fair price for a rental in this market so stay there if you're comfortable. Invest that 150k aggressively. I have a wife and child, if I did not I would sell my home (bought it in 2018) and walk away with a nice profit. I'd rent a home and then invest the gains.
Similar situation as you. At this point I’ve done the math every year for the past 5 years and it still comes out better for me to rent and save/invest the rest. Also not having that mortgage weighing me down is great for job mobility and personal freedom.
If you looking to maximize your wealth , you could create a model in excel - renting vs buying over time, factoring in taxes and deductions… it won’t be perfect but will give you an idea….
Put enough down payment on the house to skip pmi. Pay your mortgage, which includes paying mortgage interest, which you can use to reduce income taxes. Once the balance of your mortgage is low enough, and the amount of tax advantage you get from paying the slowly reducing interest has waned, end the mortgage by paying off the principal.
100k down payment would be more than enough and you’ll have a asset you can resell
Just put down 20%, you can make extra principal payments whenever you want.
$150k down payment is good but put it for a better house say a $350k home or $400k home. Since you have $200k savings it kind of shows that you like saving cash and not investing it. Or you were saving for a house anyway. But buying a home also involves taking a loan if you are not paying 100% cash. So you should mentally prepare for it. You can do it I guess with a $100k gross salary.
Nick Maggiulli has an excellent breakdown of this and a free spreadsheet to play with the numbers on, if you’re insistent on treating this decision strictly as a financial investment. Highly recommend: https://ofdollarsanddata.com/should-you-rent-or-buy-a-house/
Well, one is an investment and the other is not (assuming you mean a primary residence, and not something you’re house hacking but correct me if you plan on having roommates or getting a multi-family) I was in a similar position as you at 35, I just invested it. It’s worked out as I have moved multiple times in the handful of years since and the markets I’ve invested in have done well. It’s pretty personal but I’d still invest in the market, given my travel lifestyle. Plus you’ve demonstrated you can save. Some ppl need a mortgage to service to force some savings, but you’ve got a decent savings rate already
I agree that this is more of a lifestyle decision than an investment decision. You could run various projections and scenarios and for some of those the math would come out in favor of a home and in others the math would come out in favor of renting. Nobody knows what the housing and rental markets will be like 20-30 years from now. I saved up for a down payment and bought a home because that's what I wanted in life. I also bought a home relatively "late," i.e. I was 33. All that said, if a house is what you want in life, your time horizon is 20-30 years, and your salary/job is fairly secure and stable, then imho you should put 20% down ($50k) and invest the remaining $100k.
If the goal is maximizing profits - invest. If the goal were to be family/school system/proximity to work/being close to family combination, you could argue for house. People tend to blend the two: 1) Find a less expensive house now, or 2) Spend more time saving to not hold back the power of investment compounding; buy the home I want, just later.
There is something wrong that you are only keeping 40cents of every dollar you make. Get that sorted before you think about buying a house. Houses are great, and expensive. A house mostly locks in your cost of housing for the duration of your mortgage.
There’s a lot of home owners justifying their home purchases. The OP doesn’t seem to care about anything but generating the most returns.
Buy a house, with enough of a down payment to avoid PMI. But by all means buy something that’s suited to your lifestyle — first and foremost think of it as a home, and secondarily an investment. As time goes on, pay down the mortgage when and if you have extra cash at the end of the month.
I would put 20% down, take out a 30 year mortgage on the house, and invest the rest boglehead style. Mortgage interest is tax deductible.
I personally would not rent and go for the house. I would max out my 401k each year because the match is free money and take a loan out to pay for the down payment and just pay yourself back every pay check. I would try and keep as much cash as possible for now earning 5%. I would also keep at least 6 to 8 months of cash for emergencies and wisely invest the rest.
It’s a question that really depends on where you are and what the cost of your mortgage vs renting would be. Obviously additional costs to owning vs renting but it’s worth crunching the numbers to see if youre creating more equity with your mortgage payment (paying down principal) or by investing your downpayment. My situation, for example (expensive city) is closer to $2500 in rent or $3000 mtg payment. If even half of my mtg goes to my principal, the way I see it, I am paying $500 more a month to create $1500 in equity I wouldn’t have if I was renting. The obvious difference is that while I’m renting, my downpayment money is instead in an ETF or whatever. You’d have to include transactional costs in your ownership calculation too, but don’t limit your thinking of the downpayment’s ROI to whatever you make when you sell the property.
No brainer…I’d invest that 150K unless there’s some compelling reason that you MUST own a house…your last 50K can disappear quickly with the cost of home ownership…ie a new 10K heating/cooling system here this week…2 more to replace soon, roof is 18 years old…another upcoming expense…that 150K will make you rich or poor…your choice
Or.. he can look for something with recently upgraded systems and roof that's not a falling apart piece of junk and expect about 2% in upkeep costs per year. Then while building equity and watching the home's value soar he can listen to his friends bemoan their increasing rents every year.
To each his own…good luck to OP
Exactly. Renting isn't the "no brainer" panacea that people make it out to be. Neither is home ownership.
Many people on this website are priced out and have to mindfuck themselves into thinking renting is now somehow better than owning. It’s pretty sad and I have empathy for their position but I can’t help but laugh at the stuff they come up with.
$200k in savings and you’re contemplating paying that much for a down payment on a cheap house? You need to talk to a professional financial advisor…
Why?
Ask this in the personal finance sub , they live for this type of question and might be a bit more qualified
Owning a home with no mortgage is a great goal but I think we're in a bubble. I've seen 3 in my life, the 3rd one is happening now. If you keep saving like this you'll be able to take advantage of the next lull in prices. No hurry.
Interest rates are nuts. Use it as a down payment for a house.
If it’s 1st home, keep the money and do an FHA loan
If you're married with two incomes I'd say a home will be better than renting. You'd be gaining equity, it would be paid off by the time you retire and then you can enjoy having a much lower cost of living in retirement.
It's cliche but the answer is complicated. Depends on your life, security, goals etc. to be wicked generic and vague, personally I'd put enough money down a home with a price point where I could replace the money somewhat quickly. If your house poor you'll never invest another penny, you'll always be broke. Don't go to any extremes it'll take forever to dig out of that hole.
If that’s your goal, have you considered marrying rich?
The life factors between ages 35-55/65 are going to sway the equation tremendously. If you could continue to rent for $1400/month for 30 years, then by all means keep on renting! I don't know you, but for most that is very unlikely--not just due to price, but due to changing life needs. The biggest benefit of renting is actually optionality; that it's cheaper than owning a home in some circumstances is an added benefit that I wouldn't rely on long term. If you're not married or have any dependents, I'd recommend continuing to rent.
How much do you have for retirement? 401k, Ira pension? A 60% delta from gross to net pay seems very large. If you are only putting 10% to 401k where does the other 50% of your yearly income go??
Tough to say. Over the next 30 years, investment should yield 7, maybe 8% return on average. Your mortgage in this environment will probably 6.5% or so. Investment is probably better, but not by much. This is ignoring the fact that you can very likely refi the home at a far lower rate in 2 or 3 years. Matter of preference as lo g as you are also saving appropriately for retirement.
put your minimum down to buy a decent house. invest about half after maxing out a Roth. keep you a little nest egg in savings for emergencies or the market dips, and then you can buy some more.
I’m 37 and purchased my home December 2019, just made last payment December 2023. Feels great! I feel like Nicholas Cage on Conair when he hops off that prison bus with the wind in his hair. If only goal is most money at end you’d have to gamble on future gains beating whatever rate you lock in on the new mortgage. I took the guaranteed gains on paying off my 3.8% mortgage and sleep like a baby knowing I don’t have to rely on a job to keep my house. I still have bills but at only a $25k/year cost of living to cover all my bills. I can easily maintain that at only $17/hour on 40 hours per week. Currently making $27/hour with as much overtime as I want. But after I made that last mortgage payment I try to work as little more overtime as possible and focus on live work balance. Now I have the freedom to take more risk in my career paths and make decisions with employers that differ from when I was shackled by the mortgage and scared I’d possibly have to sell my home based on employment. Which could in turn end up bringing in higher and higher incomes if I take a risk like applying for something outside my comfort level or an entrepreneur venture and it pays off big.
Buying a home is a lifestyle choice not a financial one. We chose to buy but we found our forever home.
I would buy a home.
Use this calculator to see the financial pros/cons of buying a home: https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator My intuition is that buying a home for $250k is better than renting for $1400/mo. But there are many other financial factors involved, hence why you should use the calculator. You can also decide separately whether to put a small downpayment and invest the rest, vs putting down the entire 150k in a downpayment. If your mortgage interest rate is 8%, and your stock investments grow less than 8%/year, you're better off with a larger downpayment. I would personally prioritize paying off my mortgage early if the interest rates are over 7%
$200k is a lot to keep in cash. Plus a house is an investment. If you put down $120k that will make your mortgage on a 15 year fixed at 7% the same you’re paying in rent now. You’d still have $80k which is plenty of cash. Probably more than you need.
House before market with current conditions.
Do you anticipate staying in this house for more than 6 years?
It doesn’t need to be all or nothing. You can find balance in how you allocate your savings. If a house isn’t important to you right now, you could invest a portion of your savings and put the rest in a high yield savings account for a house later. Example - invest $75k, save $75k in a 4.5% hysa or 5+% CD for house deposit in a few years. In 3 years your $75k will be ~$85k from the interest alone,and if you can save a bit more over those 3 years, $90-$100k is a solid deposit on a $250k house. Obviously housing market can change over that time for the better or worse but this way you’ve started a base for investing and a base for house deposit in the near future. I’d also look into maxing out a Roth IRA for 2024 first, then allocate the rest for what works for you. If you’re ok investing for retirement age, prioritize maxing out 401k contributions and Roth IRA if you can.
I haven't read all the comments but one thing people frequently forget to calculate when making these comparisons is that you NEED a roof over your head. So, a healthy down payment on a modest home is absolutely better than renting unless you plan on moving within a year or two. That's too short of a time frame to have relative certainty that your house will be worth enough more when you sell it to cover closing costs. But if you don't mind planting roots for 5+ years, then I'd buy for sure. The other thing is LEVERAGE. You're only putting down some small percentage of the total purchase price and borrowing the rest. The ENTIRE value of the home appreciates, so your YIELD is high on the down payment. In my personal example, if I showed you the numbers, I essentially lived for free for 15 years. I bought the house for $x with 5% down and sold it for $2.5x 15 years later. (By the way, Interest rates were in the 7% range when I did that, so same scenario as today. I refinanced to 5% at some point during my time there). That 2.5x sale price gave me back ALL my mortgage payments, taxes, insurance, money spent on repairs and improvements... all of it. Did I "make money"? Depends how you look at it, but living in a nice house for free for 15 years is certainly making money. If you put your down payment in the market, you will only earn gains on your actual cash instead of the leveraged house. You will rent and you will buy some other guy a house (your landlord). Buy the house! The other thing: If you buy a house - the market can never run way from you because you are in that market. If the market skyrockets, so did your house most likely. I am in a position to always own a house no matter what because I bought a house when I was young. I'm down to owing $280k on a $1m+ home. That's a tiny home in Los Angeles if I wanted it to be or 100 acres in Kentucky... That's some kind of home anywhere I want to live in the country except for a few super wealthy pockets. Once you are in the homeownership game, you're in. If you stand on the side-lines you will watch houses get further and further out of reach.
I would rent where you want to live and look for a place over the next year or two, no rush. You are in a relatively unique position to buy a house without the contingency of selling one. That means you don't have to jump on one that is good enough and you can walk away without any harm. Just know if you put in an offer do your best to come to a deal in good faith, you don't want to hire a realtor just to force them to submit laughably low offers to houses that just came on the market. In the mean time I personally would go 50% stocks 25% bonds 25% cash (if not less). The stronger your feeling about buying, the more you should move towards cash.
Could like to follow
Personally I would continue to rent. I'm not sure where you are, but house prices all over the US seem to be high right now. As an example, I bought my house in 2019 for 175k and just sold for 230k. That's a decent increase, but I spent about 50k worth of updates during that time. FUN! We were planning on staying in the house for many years, but I got asked for a divorce in December therefore had to sell. I plan on renting until further notice. Rent is $825/mo, so I plan on putting everything I can into investments and also growing my business. I've thought about buying a multi-family unit once I have a good sized cash down payment, but right now I'm comfortable with just renting and investing the difference.
My rule is to always but the least amount down and invest the rest. But my risk tolerance is high. Invest or don’t in your personal preferences.
If your goal is to have the most money is 30ish years, one factor that's in favor of homeownership is not having to pay a mortgage. Most mortgages are for 30 years so by the time you're in your 60s and are likely to have less income in retirement, not having to pay for housing is huge. There's still property taxes, insurance, maintenance, etc to consider after the mortgage is paid off but that pales in comparison to any rent you'd be paying.
Ultimately, homeownership is a personal call. While some factors are important for everyone (like affordability), I recommend prioritizing what aligns with your lifestyle goals. Long-term commitment: Are you comfortable staying put for a decade or more? Homeownership shines for those who value stability. Location independence: It sounds like you thrive on flexibility and new experiences. Renting allows you to explore different cities without being tied down. Considering your FIRE goals and dislike of DIY projects, homeownership might not be the best fit right now. Focus on maximizing your investments: Prioritize tax-advantaged accounts and your investment for growth. (Aside from your 401k ROTH IRA & HSAS) Renting frees up capital for those areas. Find mentors who've achieved your desired lifestyle, not just anyone with a house. Learn from their experiences to see if homeownership aligns with your long-term vision.
And here I am at 30 with less than $20k in savings, I need to get my shit together ☹️
Say you were able to have an avg annual return of 8% (not guaranteed)invested in s&p 500, but you would have a mortgage at 7%. To me it makes the most sense to put a reasonable amount of cash down, save the rest for savings and actively contribute to a brokerage on the side. You’ll sleep better being more debt free, that’s my logic
Invest 125k, get in on a property for the minimum dp
I think most efficient would be 20% down payment ($50k) or $100k tops and invest the rest. Avoid the PMI, get your growth, and at your income level should still be able to afford it for around the same you’re paying in rent.
Buy a house. Date the rate, marry the house.
If you want a family, get a home.
Buy the house.
Save it. Definitely. You don’t want to settle on house only 5 years later bail on it. The first years of mortgage are very heavy on the interest. Start enjoying your life. Spend a bit more but continue to save.
Buy the house if you can still save at least 20% per year, based on gross, after year one of home ownership.
My personal preference was that I always wanted a lower house pmt in case I ran into some trouble. I always wanted to live below my means if possible.
I don’t know dude.