Hey, I was wondering if someone needs credit to buy things. People in my family have said I wouldn’t be able to buy a car or a house without credit. But if I’m saving up cash to pay for things outright, do I really need credit?
Note: I’m sorry if this is the wrong place to ask.
Your points are good, but you’ve overstated the equity building of a mortgage. You aren’t likely to find a 10yr mortgage that is the same as rent. In a more typical situation, after 10 years on a 30 year mortgage you’ll have 20% equity. Or after 10 years with a 15yr mortgage you’ll have 65% equity.
One of the biggest advantages of mortgages, at least in the US, is in getting a fixed rate. Rents can easily double in the time before you finish paying off a mortgage, but a fixed rate mortgage wont go up. Property tax and insurance can go up, but those costs would be rolled into rent anyway.
Fair point; I was throwing around off-the-cuff numbers. You’re right that 15 or 30 year mortgages are the time frames to calculate around.
The inflation adjustment is valid too. If rates drop refinance options are available at the mortgage holder’s convenience (assuming their terms allow it, but most do); but taking advantage of decreasing rent often requires a move; not nearly as easy as a purely paperwork based refinance.
My mindset is still stuck in the 2010s; when inflation was mild & rates were at historic lows for nearly the entire decade.