[quote=peterb]If one was to act strictly within the letter of the law….getting a very low down payment loan that has a mortgage payment below comparable rents would make sense. You can write-off the interest payments and if the house doesnt hold it’s value, you can stop paying the mortgage. The only downside is ruining your FICO score for a while, losing your downpayment and having the IRS come after you for the portion of the debt that will be forgiven upon default.Could be an ok deal. Low down payment coupled with non-recourse loans is good upside wieghted risk, IMO. But I wouldnt take it in this market.
Our brilliant govt at work. Incenting, and in a way rewarding, risk.
But it’s still not “owning” the house. Just an investment vehicle that the govt has been nice enough to let the little guy still enjoy. To some extent.[/quote]
If you buy a stock, peterb, then you gain if it appreciates when you sell it, and you lose if it depreciates, and in the time before you sell it, you get to keep any benefits (e.g. dividends) it provides. You have to give up the use of the entire purchase price until you get it back (maybe) at sale, and you have to risk losing up to the entire purchase price.
If you “buy” a house using our modern system of govt-guaranteed low money-down loans, then you get to keep most of the gain if the price goes up when you sell it, and you don’t have to lose much if it goes down. And you get unencumbered use of the house until then. And you don’t have to give up alternative uses of the money until then, because you put down nothing or just a small fraction of the purchase price. And you can get all this by paying very low fully tax deductible interest and property taxes and nondeductible maintenance expenses instead of rent. I’d say that package is at least as good, overall, as the deal buyers of stocks get, or the buyers of almost any other assets. So I’d be hesitant to call the current govt-controlled way that people get to control housing assets less than “buying”. If anything, it’s better for the controlling parties (or “buyers”) than normal buying of other assets.
