this post was submitted on 13 Sep 2024
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In what reality is PMI close to a rent payment? It doesn't seem like you know what you're talking about.
I think you're dramatically overestimating how much it will add to a mortgage to use this strategy. For example, let's look at a $250,000 home - the average for my area.
If you put 20% down, your payment will be $1242/mo plus Property Taxes. Certainly cheaper than rent, but most folks don't have $50,000 sitting around.
So let's say you put $0 down and roll $9000 closing costs into your mortgage. Your monthly payment will be $1,843 of which only $214 is PMI. Still cheaper than the average rent in my area.
Even if you're buying a $1mil home with this strategy, the PMI would only be $850/mo. Where are you getting that PMI would be close to a mortgage payment?? You seem to be regurgitating bad faith advice that keeps people scared of homeownership when the reality is that it's an excellent move for many folks.
We live in very different places. Multiply most of those numbers by about 6 and you have my area. I'm not exaggerating - 3 bedroom attached house of 1.5million, mortgage of 6.5k, PMI of $2500. Average rent is 2-3k for a 1 bedroom.
I've lived it. If your average home is $250k, your situation is nothing like mine or half the country that lives in cities. Your advice only applies to rural areas with extremely low cost of living.
PMI would be $1200 in your example, not $2500.