Quote:
Originally Posted by SIGSEGV
Property taxes as a percentage are higher, but as value, not sure.
Anyway, assuming you had the extra $40k for a down payment and ~$600/month for a mortgage payment and you invest that with a 7% return, you end up with very roughly
40k*(1.07)^15 + (7.2k) * (1.07^14 + 1.07^13 + ...1) ~= $300k. Not too different a return and probably safer on average.
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This would be the calculation for a first-time buyer only. Existing homeowners (most people) would have greater equity for a more expensive property in a hotter market, meaning the down payment wouldn't be more burdensome.
And in a hot market, you can take the 30 yr (or longer) mortgage and let the equity work for you. In a stagnant market you're getting killed unless you keep the mortgage term short.