Wednesday, February 4, 2009

Investing in a house 1

If you are a renter, it must have crossed your mind whether you should be investing that money by putting off all that hard-earned cash into a mortgage rather then your landlord's pocket.

Its an equation that seems so simple. It is obviously better to buy a house then to rent an appartment.

But what if I told you its not that simple.

First you need the downpayment (and there's no way you can get one of those zero down payment houses today becasue of the subprime mortgage mess in the states). Then you need to make sure you can actually pay off the mortgage each month.

Since renting almost always means a cheaper monthly bill, you can use the extra money that you would have spent paying off a mortgage, and invest it in a mutual fund. And the difference between renting and mortgag-ing (yes I know that's not a real word) can be so great that in 20 years, you can have enough money to pay off the house nearly in full without having to make all those interest payments.

Stay tuned for more details to come in the coming weeks...

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