[quote=AN]There’s a lot of assumption in these calculation and it would change drastically if your assumption is different than mine. But things are not always black and white.[/quote]
Yes, nothing is black and white, but I was just explaining the fallacy of your “higher interest payment” math. You had characterized a specific component as costing you more when, as it turns out, it saves you money. Okay, on to the next fallacy–interim rent costing me dearly.
Thirty years have passed, we both sell the house in your example. For twenty seven of those years, we both paid the same amount, but for three, as a renter, I paid $200 bucks a month less than you did. Who comes out ahead again? It certainly doesn’t sound like a $90K difference in your favor.
That said, I know you’ll keep trying to tweak the variables until you “win”, but let’s just agree that it’s a wash like you said. If so, then I’d say the benefit of getting something for the lower price pretty much trumps, if for no other reason than the flexibility. Sure, you might not be able to re-fi, but if you do, it’s a win. If you sell before 30 years, it’s a win. Fundamentally, it’s a win. If you don’t believe me, then drop the purchase price to $120,000 and raise the interest rate to infinity. Lower price with same monthly payment = better.
So maybe we can put that to bed and I’ll grant you the only reasonable response to “well, gee sdcellar, why don’t we just wait for the price to come down when the interest rates go up?”
Becuase we don’t know if that’s going to happen. To wait (and speculate) is a risk. Do I still feel like there’s more downside to come? Yeah, I’m pretty sure I do, but I could be wrong. Do I feel like every dime I’m spending on rent is money down the drain? Nope, gotta pay to live somewhere. Am I gonna rent forever? Nope, unless I get priced out forever! And, I suppose that’s the risk I run.
