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Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million.

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Renting Is Not Throwing Money Away!





Yes, this post is right on point. Homeownership actually means "throwing" more money away.

From Michael Bluejay:

A big myth is that it's better to buy because buy owning you're not "throwing your money away on rent". But when you buy a home you will still throw money away on things that don't build any equity. These include:

• Closing costs
• Interest on your mortgage
• Property taxes
• Property Insurance
• Private Mortgage Insurance (if your down payment is less than 20%)
• Maintenance

In fact, these "throwaway" expenses are more than you'd likely spend on rent. If the only financial advantage to buying a home were building equity, it wouldn't be enough to offset these expenses, and it would be better to rent. The reason that buying is usually better than renting is not because you avoid throwing money away, it's because:

• You lock in your monthly payment for 15 or 30 years. (If you kept renting you'd pay more each year.)
• Your house gets more valuable over time.

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