If you’ve owned a home and paid off your mortgage over the years, you know that the first 10 years are almost all interest payments with very little principal.

There is nothing wrong with buying a home as long as you can qualify. That means a good down payment and a steady job. None of that nonsense with no money down. Buyer must be serious about monthly mortgage payments and have a good job. Banks are reviewing these days.

The financial community in the recent past has been forced to make mortgages to those who did not qualify with no money down and had no serious intention of paying if it became financially uncomfortable. It’s too easy to walk away.

The true cost of owning a home is not just the monthly mortgage payment. In a new home all appliances, plumbing, roof, pool equipment, window frames, etc., etc., all have an estimated life expectancy after which they need to be replaced.

Buying an old house means that all of the above will happen sooner. Replacing or repairing can be expensive.

The true cost of maintaining the house is the mortgage payment plus upkeep. Oh, and let’s not forget about taxes. Then there is a little thing called insurance that is required by the mortgage holder.

The industry calls it PITI = principle, interest, taxes and insurance. Depending on the length of the mortgage and whatever your down payment is, it typically comes out 10% per year of the sales price divided by 12 or 1% of the sales price each month.

If the house is $200,000, that’s about $2,000 or close to $2,000 per month.

If you are 55 years old, do you want to assume that obligation? Wouldn’t it be smarter to rent? If the same quality house can be rented for $1,200 per month, the renter could save the difference of $800 each month and in 10 years at retirement would have $96,000 plus interest. I can guarantee you wouldn’t have that in home equity if you bought the house when you were 55.

Plus, renters pay significantly less for renter’s insurance and have the ability to move to a new location at any time. Tenants don’t have to put on a new roof or replace an old water heater. No major out-of-pocket maintenance costs.

How about a 6 month rental in Canada for the summer and 6 months in Florida, Mexico or the Dominican Republic for the winter? The only extra would be travel expenses.

With so many rentals available, foreclosure prices are still not a great buy. If a person wants to buy, there are still about 4,000,000 more distressed properties to come on the market in the next 2 years. The prices will be even lower than the current ones.

Do the numbers before you buy.