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Comment by polka_haunts_us | Hacker News Reader

This is where I'm at. I want very little more than to than to buy some permanent property that I can remodel to my taste at my leisure, but mortgage rates just keep going up. Why spend 3.6k+ a month on mortgage when I can spend 2.1k a month to stall. I really can't imagine going in on a house right now without at least a 20% down payment to skip out on PMI (and lowering the amount of the mortgage overall)

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In my area, some homebuilder companies are offering owner financing on the homes they build at rates 2-3% lower than what you can get from the bank.

Mind sharing what area you're in?

Rocky Mountain West

Because at the end of the year your assets line for home will be -$25,200. In the mortgage case it'd be -$36,000 for payments but probably like +$25,000 for home equity bought so if cash flow isn't a problem you're better off.

If your mortgage payment is $3100/mo let’s say that’s a $450k loan for 30yr at 7.5%, you are not looking at anywhere close to that much added equity after a year. Just about $4k after the first year. Less if the payment was to include taxes and insurance.

No one who's considering buying a house is only intending to stay there for 1 year.

Using this timeline for equity comparison makes 0 sense. This is more of a reply to the GP, than your post.

PMI IS a waste of money, but it's relatively negligible. if it helps you get your house years earlier, that could easily be worth it, not only financially but also happiness (if owning is emotionally important).

i paid 5% down on my house and my PMI is only 4% of my all in monthly payment (mortgage, PMI, prop tax, insurance). if i had to wait until i had saved 20% i'd probably still be saving & renting. instead i've already paid down another 5% of my mortgage plus getting the interest tax breaks each year.

The mortgage itself is a waste of money if you don't pay if off early. I wish people understood this better. There is almost no situation where owning a home makes sense if you don't pay it off before the term and we aren't in some wacky pandemic or financial bubble.

Would you pay it off early if you have a 2.5% interest rate and could get a guaranteed 5+% on a CD?

Depends... It would depend on the price to service the mortgage. I would do a quick model to see the timeline to "break even" on paying in full verses the total amount of interest paid to service the loan for duration of the term.

I'm in this situation with my car right now, I have the money to pay it off but why bother when I can make the monthly payment with savings account interest.

Presumably that £3.6K ish is repayment, not interest only.

Try working out how much you need to save over 30 years (while renting) to buy a home. Don't forget to account for inflation in any assumed investment return.

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