Turn the lesson into action. Run these against your own numbers — that is where it becomes real.
Goes to interest, month one$1,633
Actually pays down your loan$230
On a $280,000 mortgage at 7%, the payment is $1,863. In month one, 88% of it is rent paid to the bank.
You borrow$280,000After 20% down
You repay$670,000Over 30 years
Interest alone$390,000More than the loan itself
Property tax$105,000$3,500/yr over 30 years
Insurance$1,500–3,000Per year
Maintenance$3,500–7,000Per year, 1–2% of value
Builds equityNone of itThis is the price of ownership
NeverProperty taxes do not stop when the mortgage is paid off. A home owned free and clear still costs thousands a year to keep.
Reilly — home equity after 30 years$849,000
Astrid — investment portfolio$1,680,000
Reilly paid $1,008,000 in total housing costs. Astrid paid $648,000 in rent and invested the difference. Her position is roughly double, and liquid.
Reilly paid out$1,008,000Mortgage, tax, insurance, upkeep
Astrid paid out$648,000Rent over 30 years
Reilly ends with$849,000Illiquid, in one asset
Astrid ends with$1,680,000Liquid, diversified
- Run your real monthly cost: mortgage + property taxes + insurance + maintenance.
- What would renting the same home cost — and what could you invest of the difference?
- Is this a financial decision, a lifestyle decision, or both? Name it honestly.
Put it into practiceRun your own numbers with the Basis Points Rent vs. Buy Calculator, then come back and finish your plan above.