Is Buying a Home or Renting Right for You?

Back to the Holistic Balance Sheet

Let’s look at basics and think about what happens to your holistic personal balance sheet when you buy a house. Most people finance the purchase of a home with debt, that is, a mortgage. In the good old (prudent) days, new home buyers would put down 20 percent of the value of the house and finance the remaining cost of the house with a long-term, 25- or 30-year fixed rate mortgage. Recently, people typically make a down payment of 2 percent or 1 percent or perhaps even zero, and finance the majority of the house with (volatile) floating rate debt that might take up to a century to pay off in full. In fact, according to the most recent U.S. Housing Survey, out of 70.2 million households, 9.4 percent reported ...