With the housing market in the shape it’s been in lately, sometimes not mortgaging a home is better than buying a dwelling for more than it’s worth. Martin C. had made some wise real estate investments over the years, but used caution during the late-2000s housing bust, pulling out last minute from signing a mortgage that could have cost him hundreds of thousands of dollars.
He took a practical, financially literate approach to the situation and made his money work for him, saving enough to buy another home down the road. Here’s his story:
I was lucky…when I first came over here in 2004 I had a house in the U.K. which I sold and made a decent profit on (I’d flipped three houses in six years). In 2005, I literally had put $30,000 down on a 2-bedroom new condo in Irvine, CA, which was almost at the peak of the housing boom. Luckily for me, personal circumstances made me pull out of the house, I got my deposit back and never bought.
The house I was buying was on the market for $620,000; a similar house now is selling for around $420,000!
So I figure even with paying rent for the last eight years at around $2,000 a month, I’m about $300,000 better off. However, the ex got all that I saved (I’d have paid double to get rid of her), so it was a wash, but it could have been way, way worse if I had bought a house.
I’m now looking to buy a place and hopefully will be able to get the same house in a decent neighborhood for way less … and then buy another as an investment, as rent per square foot is due to keep rising in the Southland.
This article is part of the Go Banking Rates Financial Literacy Movement, helping Americans get smarter and grow richer. Take our mortgage quiz to test how knowledgeable you are!