Renting a house in USA? Why pay for someone else mortgage?

If you have some money to invest and you are living in rented premises, think of taking over the house you are living in,

in the present scenario, where the interest rates are really low and the housing deals available at bargain prices, may be with a bit of financial planning you can take over the house you are living in.

Traditionally, the rent of a property is about 5 to 7% of its market value. Of course, some special properties located at some premium spots can fetch better rentals. It means that if you are financing a property for 20 to 25 years of mortgage, than your rentals are almost equivalent to your mortgage, of course, interest element would be extra.

Rent paid is amount consumed. Nothing would come back. In such scenarios, if you get a house on mortgage, you are practically paying interest over and above the rental of the property. So once your requirements of the rented premises are over, you can dispose off the property and recover the principal back, off course leaving aside the interest paid on the property.

It's a practice that's becoming increasingly popular for young Canadians who have moved out of their parents' homes to attend school and haven't yet entered the full-time workforce.

However, while it could really build a financial base quickly, it can also devastate if stretched too far.

John Turner, director of mortgages at the Bank of Montreal, said young buyers should first weigh the "rent versus buy trade-off," which includes answering key questions like whether they've set aside a reasonable down payment.

Other basic factors, like the buyer's income as well as debts and repayment obligations, should also come under consideration.