Why do people buy houses they don’t plan to pay off? Most people don’t spend their entire lives paying off one house, so what is the financial benefit of getting a “starter home”? I’m new to the economics of real estate and I’ll take any wisdom offered.
In: Economics
Because you own the equity you’ve already paid into it.
If you buy a $500,000 house and take out a 30 year mortgage, but after 5 years you need to move. Even if you sel the house for $500,000, you get back the principle you already paid. So say $20,000 (or whatever) so the interest payments you can consider as “rent” also, if the house is now worth $800,000 then you only have to pay the bank back whatever is owed on the mortgage and pocket the profit.
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