Sunday, February 19, 2006

Owning vs. Renting

David Bach's Automatic Millionaire Homeowner is getting very good reviews. Here, he gives five outstanding reasons why owning is better than renting, even in high-priced markets.

5. Homeowners Become Savers

Each time you make a mortgage payment, you're saving money. That's because with each payment you're reducing your loan balance a little -- and that, in turn, is building your equity. (This assumes you don't have an interest-only loan.) The longer you're in your home, the more equity you build, the more you save -- and the richer you get.

David's list is home economics 101, but well worth reminding yourself about. What he doesn't add to #5 above is, you don't have to buy all the house you can qualify for. It's true! You can just buy the home you need, and use the extra money that would've gone to the mortgage payment and invest it elsewhere (including buying another house).

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