$625k home 20% down-payment $500k mortgage With a 6% interest rate and a 30-year term, you are paying $579,190.95 in interest. The $625,000 house cost you $1,204,190.95. This is equal to a $3,345 monthly rental payment, plus you pay for maintenance and repairs. Houses cost so much because people can borrow money that's created with the press of a button to buy them. If everyone had to pay in cash for their home, prices would drop significantly. Most people think mortgages are designed to help them. But NO. Mortgages are designed to earn profits for banks.
@rajatsonifnance Who pays there mortgage in 30 years or more. Paying your home asset off should be a main goal along with other necessary expenses. Try to pay off your mortgage in 15 years or less. Give up luxury in the present to live rent free in the future. Your older self will thank you.
@rajatsonifnance lol people get angry when you post basic math
Others have called out your first error on time value of money. You also increases in rent over that time. People have to live somewhere. And mortgage interest rate deductions. The other flaw is you ignore alternatives. If I’m paying 6% to buy an asset versus making 8% on investments, I’m best off prioritizing the higher interest rate. And at the end of the day I still have an asset of a home.
IMPORTANT DETAIL: Mortgages are also built to concentrate wealth as the debt evaporates with inverse inflation and your asset appreciates. At 6% inflation over 30 years your purchasing power becomes almost 600%. If the interest rate is lower than real inflation, you gain not only from the acceleration of your asset appreciating, but from the debt being easier to pay off in the future. It’s like the Cantillon effect, but for people a little further away from the money printer.
@rajatsonifnance Your home becomes your prison x.com/NickCalabs/sta…
@rajatsonifnance Your home becomes your prison x.com/NickCalabs/sta…