Syndicate
Buying or Renting a House?
When we are trying to evaluate the pros and the cons of being an owner or a tenant is a very delicate issue, because it involves economically evaluating a decision that is often times very emotional. In issues concerning marriage and family we will have always left on the side the aspect of applying the solely economic criteria, leaving these only for office evaluations. From the doors of the house and inside there are no more decisions that bring about more happiness, even though they are not very financially profitable. Let us suppose that you bought a house around fifteen years ago through a credit mortgage and your house was appraised at $150,000, and for it the bank demanded 25 percent of the value of the house, in other words $37,500. If this capital had been placed in a savings account in a pension fund, at a rate of 1per month, average of the last fifteen years, the capital would have multiplied six times, in other words, the capital that person would have today would be of $225,000. if we estimate the added value of that property it would have had an increase of fifty percent in these last fifteen years, and the house today would be an equivalent to a value of $225,000. The incredible thing is that with the initially saved capital we would have been able to buy it in cash today. Obviously during the analyzed period we would have been paying a monthly lease that is equal to the dividend of a property of that category, which allows us to compare in a fair way this alternative. It is undeniable that the financial decision is extraordinary. But why are there so few people that decide to take this route? The explanation has a relation with the valuation that makes people feel like they are living “in their own place” which is an argument that is indisputable, respectable, and has its price. The pleasure of fixing something or modifying ones own house “cannot be paid”? The important thing is to make the decision, in one way or another, being aware of the meaning of the calculus. One of the most frequent mistakes that we are put to observe is that of people that pay to a mortgage debt in order to feel alive and like they are “living in their own place”, which does not produce any different in practice. Obviously paying more would make the debt be paid off quicker, and will possibly bring down the payments of some interests in some thousands, but what happens to the quality of these people’s lives, in the meanwhile, if we restrict it with that purpose? The answer is very personal and will depend on the needs of the family depending on what stage they are in.