Comparing rent directly against a monthly mortgage payment misleads home buyers. A complete housing comparison weighs unrecoverable costs on both sides of the transaction.
Rent is an unrecoverable cost, but homeownership carries significant unrecoverable expenses too. Mortgage interest, property taxes, HOA fees, maintenance, and buying or selling transaction costs represent unrecoverable outlays.
If monthly unrecoverable homeownership expenses exceed your monthly rent, renting allows you to invest the monthly cost difference in liquid assets.
Calculating total unrecoverable costs strips emotion from housing decisions.
How many years do you plan to stay in your current home?
(For educational purposes only. Not financial advice.)
