Is it worth it to buy a house/apartment?
I have been renting an apartment for a couple of years now and I am considering moving to another one (for other reasons). Is it worth it to buy a home and get a mortgage for 20-30 years? I know, at least in a country where I come from, everybody used to buy houses. People prefered to own their own property. But is it still worth all the stress about potentially losing your job and being unable to pay for your mortgage, when you could just rent?
As far as I know, this varies a lot from country to country. Also, your personal situation (what is your current job, whether you have some family etc.) is important. Here in Central Europe it is very common to own your house/apartment, either by inheritance or by getting a mortgage. Renting a house/apartment is usually pretty expensive, especially in more developed regions. On the other hand, by getting a mortgage, you still pay some amount of money each month, but even in case you lose your job and cannot afford to pay (like you mentioned), you still get back some of the money you paid for the mortgage. In case of renting, you're losing your apartment AND also all of the money you paid.
This is how many of the people look at it here where I live. I think it is very same for Eastern European countries as well. On the other hand, in the "West", it is much more common to rent a house/apartment. I think it is cheaper to do so and also people tend to travel and change their workplace more often, so not being limited by owning a house/apartment is beneficial from this angle of view too.
So, as I said, it all comes down to what are the conditions in the country you live in and what is your personal situation. Speaking for my country and my region, it generally is worth it.
Here are a couple of pointers:
Make sure that your mortgage does not exceed your rent budget. A lot of people rent a studio but buy a 3-bedroom house with a backyard and a pool, and then complain that home-ownership is costly. Owning a home costs pretty much the same as renting that same home.
So consider all the costs: mortgage, property tax, insurance, and home warranty.
Choose a home that you actually like or at least account for the renovation cost x 2.
Choose a good, affordable home warranty ($300-$600) so that you don't freak out whenever something breaks.
A 30-year mortgage or not is your choice. I do advise you get a 30-year mortgage but pay off early. You should not wait to buy the house outright or pay a very large portion upfront. Why? Because you still pay rent in the meantime. Why pay your landlord's mortgage while you could pay your own. You could use the saving while renting to double your mortgage payments. That would bring your mortgage to 10-15 years. Also, when you file taxes, you get back 25% of the mortgage interests. This could be your maintenance budget for next year. Your landlord gives you back nothing.
Why is this a good time? Because the interest rates are low, and since we just came out of a market crash, the likelihood it will crash again is rare, but if you are a budget-conscious buyer, you still can get a bargain through short-sales and foreclosures.
If that still does not ease your mind, then buy a house with a basement or an in-law suite with a separate entrance. In the worst-case scenario, your tenant will pay most of the mortgage for you.
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