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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Tradelite who wrote (1324)1/10/2002 5:16:06 PM
From: GraceZRead Replies (1) of 306849
 
You know you are making a classic mistake which is that you are using your mortgage payment from a house you bought years ago and comparing it to rent you'd be paying today and in the future. Say you paid $100,000 20 years ago with a 30 year mortgage at the rates then which I think were quite high 1982 (hard to find higher ones). Ouch on the total interest paid for that mortgage it almost triples the cost of the house over thirty years. Your rent would have been lower than your mortgage payment for almost five years because the rate of inflation dropped if I remember correctly, severely in fact. Lets assume the house appreciation and the rent were subject to the same rate of inflation and with the renting scenario there would have been no down payment or transaction cost and no maintenance or improvement costs, no opportunity cost on that money (picture the down payment and transaction costs put in an index fund 1982 and left for 20 years!). To make your scenario accurate take the rental cost and mortgage cost from the date you bought your house and factor in everything you spent on your house and the difference between your standard and itemized deduction. You didn't make out nearly as well as you think.
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