There may be no more contentious argument in personal finance than rent vs. buy — and for those on one side of the fence, the case can seem very simple.
Buying home, advocates say, allows you to lock in a rate and build equity in a property that will theoretically appreciate. By comparison, forking over what could be a mortgage payment in the form of rent each month is akin to throwing money away.
It’s a line that Bernadette Joy, author of “Crush Your Money Goals,” has heard before. The self-made millionaire and financial coach gets pushback whenever she cautions against homeownership for homeownership’s sake.
“My favorite thing is to challenge people and say, ‘Show me your amortization table,’” she says. “Show me how much equity you’ve really built.”
Over the first several years of your mortgage, Joy points out, much of your payment goes toward interest rather than the principal. If you’re in a 30-year mortgage, she says, you may find yourself a half a decade in with little equity to show for it, which is why she typically recommends an alternative for clients.
