The Sam Vimes “Boots” theory of socioeconomic unfairness, often called simply the boots theory, is an economic theory that people in poverty have to buy cheap and subpar products that need to be replaced repeatedly, proving more expensive in the long run than more expensive items.
Paying rent instead of a mortgage.
It depends on where you live. Take Florida for instance, with the insurance companies abandoning you or filing bankruptcy just before paying a claim. It gets more expensive and as you age, maintenance gets harder to do, much less replace big appliances without paying someone to do it.
If you’re young and strong and not working in an industry that breaks you, a mortgage may be smarter (and cheaper) than renting.
Both has pros and cons; one strong con is that if you have a mortgage, you become geo-locked to your land and when you get a job offer that moves you outside of reasonable commute range, you have the extra headache of fixing the property up for sale and having the split attention of working at your new job and keeping in touch with the sales leads.
If you’re older, renting may be better as if something breaks, the apartment manager takes care of it.
So there’s a hidden cost to owning a home versus renting. You can almost count on renting being a fixed cost each month (rent + utilities + insurance) whereas a mortgage, you cannot.
Big lol. My mortgage has been the same for five years; my rent went up every year, or worse just kicked us out, forcing us to pay moving expenses as well. Mortgage is much more stable than renting.
Lots of people thought 3.5% was too high and it would go back down. So they signed variable rate mortgages and their payments kept going up, especially if they didn’t pay extra off.
If they’re able to keep their house, they usually don’t understand that rent has still increased faster.
There were people getting variable rate mortgages when fixed rates were at record lows? I guess I’ve just never understood the appeal of variable rate, either. I don’t want my mortgage to fluctuate, makes it more difficult to budget.
Yep, you can always refinance at a lower rate if it actually does go down substantially.
You don’t even have to switch lenders, they know they’ll lose you if they dont
There’s zero reason for variable rate. Lock that shit down.
I believe their point was repairs and maintenance of ownership that goes with it. The mortgage is stable…but then the roof wears out. The water heater leaks, the stove goes out. The landlords problem for a renter…or yours as a homeowner.
The reality though is it sucks either way, rent goes up always on the one option, and repairs and maintenance hit hard sometimes on the other. Intermittently as a large sum, or as a monthly spending increase if you take loans or payment plans. The owners equivalent of the rent going up.
I do think the stability of the mortgage is preferable though. As long as you can meet the mortgage payments, you have somewhere to live. Even if the stove has to wait. But you can always budget yourself some “rent increases” money and set it aside for repairs if you want the best of both worlds. :)
I will take the ability to repair something myself over waiting weeks for the landlord to do it.
Adjustable rate mortgages change with interest rates. The ‘real’ value of a fixed mortgage changes with inflation.
Landlords are passing on costs in the same way that banks pass costs to them or mortgage holders.
The kind of people that get ARMs are already in trouble.