I’m renting my house from BofA

I hear a lot about the wider world. I listen to NPR so religiously my son thinks that his phone number is 800-909-9287 (the pledge number for WBUR). I read the Economist over my Honey Nut Cheerios every morning. No day is complete without various other news sources as well.

In the last year or so, it is possible I might have heard one or two stories about home prices and the economy. Perhaps you’ve heard one or two too?

I have this bad habit of rethinking decisions that have been made. In October of 2007 we found a great house for $350k in a town I’m happy to live in. By December of 2007 we were moved in. At the time, I was proud of myself for not buying at the top and waiting until house prices had declined. The house had originally been offered for $409,000. A bargain, no? I keep wondering if buying then was the right thing to do.

But here’s another way of looking at the equation. House prices have stood up decently where we are. According to Zillow, our house is now worth $329,000. That’s not bad in this market. We’re still above water. But I’ve been thinking about that $21,000 difference. Between 2000 when we got married and 2007 when we moved, we rented. Our first apartment in Roslindale was $1200 a month. The lovely three bedroom place on Cliff street was $1500 a month. If we lived in Cliff Street for the 14 months we’ve lived in our current place, we would’ve spent $21,000 with no equity returned to us. We lived there for three years. 36 months times $1500 a month is $54,000 that we spent on housing, with no equity returned to us for our expense.

There is, of course, lots more complexity to it. Our mortgage payment is larger than our rent was. Rent didn’t include interest. Rent wasn’t federally tax deductible. (It is state income tax deductible here in MA.) I didn’t have to pay the water and sewer back then, nor did I pay real estate taxes.

But I don’t think we should regret our decision. Paying your mortgage while your house declines in value is a lot like paying rent. You may not get equity, but you do get a place to live. And hey, assuming you have a fixed rate mortgage, at least you won’t get any rent increases. How good the landlord is is entirely up to you.

Rent to own?
Rent to own?