I have this impression that it’s seen as a riskier decision to buy a home, knowing you won’t live in it long enough to pay off the mortgage and then sell it when you’re ready to move away, when compared to renting a home. Am I off base on that, and if so, why is this the case?
In: Economics
Borrowing a million dollars for 30 years will have you repay about 2-3 million to the bank (interest).
The bulk of what you pay in the first half of the 30 year term is the interest.
Then in the second half of those 30
years you pay out the principal, eg the money you actually owe.
If you check with the bank how much you still owe five years after making mortgage repayments, the figure you’ll get will be almost the same as the amount you borrowed. Those five years of paying out your loan won’t have shrunk it.
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