FICO to incorporate buy-now-pay-later loans into credit scores

Often, a mortgage is either used to make money (from rising house prices) or save money (when the mortgage is cheaper than rent).

Often, houses are depreciating assets that are expensive to maintain, but people take mortgage and buy them anyway. Often, renting is cheaper than buying, but people buy anyway, because they like the idea of owning their home. Often, people buy a home, because suitable homes are not available to rent.

Money is only a means to an end. It has no inherent value. And very often, the subjective value of a thing is essentially unrelated to the monetary value.

In addition, you get countries like the UK where renting is very precarious. You might be forced to move every year, after a year your landlord can turf you out with only a few months' notice, you aren't allowed to modify the house in any way even putting a picture-hook into the wall or redecorating a room, etc. Since most people cannot afford to buy a house outright, a mortgage is necessary to avoid this.

You can believe that if you like of course, but I am definitely not teaching my children that.

Renting cheaper than owning sounds like a very short-term view.

My dad explained to me the nice thing about a 30 year fixed mortgage in simple terms: 10, 20, up to 30 years later ... your "rent" is the same.

It's a simple experiment to see what a person's rent was going for 30 years ago in your community and then see what a person with a typical 30-year mortgage would have paid each month 30 years ago. Because one of those two is still paying the same monthly amount today and about to have an asset they can pass along to their kids or spouse (or cash-out if they want to retire to live in a trailer in Eloy, Arizona).

There are maintenance requirements to home ownership, absolutely. And some are not cheap.

But there is absolutely a segment on HN who will act like home ownership is nothing more than pulling out a card for the next four digit expense every month or more.

“What are you going to do when (not if) you hot water dies? And then you need a roof? Oops your house needs painting and new appliances and now the AC is gone too, what about pest control, and hopefully your sewer line doesn’t collapse? Can’t handle all that happening to you? Can you realllly afford a house then?”

There are plenty of places where many people can afford market-rate rentals, while there is nothing they can afford to buy. That includes some major cities, where land is inherently scarce, as well as other desirable locations, where the locals have chosen to ban sufficient housing.

Rents are ultimately based on what people can afford to pay. Home prices, on the other hand, also reflect the viability of the home as an investment. If the market believes that housing will not become more affordable in the foreseeable future, homes in that area are low-risk investments, and investors will accept lower returns for their money. Home prices grow very high relative to rents. Taking a mortgage to buy then becomes the financial equivalent of taking a loan and putting the money in a savings account.

The city where I live in California is one of those places. Before Covid, home prices were high but tolerable. Then the prices jumped due to WFH, while rents grew at a much slower pace. And then interest rates went up without making a dent in home prices, making homes too expensive for those poor enough to need a substantial mortgage.

NYTimes publishes a fantastic calculator [0] to help make this kind of rent vs. buy decision. It's not always that clear cut.

[0] https://www.nytimes.com/interactive/2024/upshot/buy-rent-cal...

> Renting cheaper than owning sounds like a very short-term view.

That highly depends on where you live. In some countries/cities, buying really makes no sense both short and long term. In others, it absolutely might.