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Model A: Owning a home with a mortgage payment plus additional costs such as real estate taxes, maintenance, and utilities.
Model B: A fully paid-off home that only incurs property taxes, maintenance costs, and utilities.
The common assumption is that Model B is overwhelmingly beneficial due to the lack of a mortgage payment, providing more cash flow in retirement. However, the analysis becomes more complex when considering renting versus owning.
Taking into account current numbers, as of January 2024, the average three-bedroom home costs around $327,500, with mortgage interest rates typically between 3% and 4%. Additionally, when considering rental payments, the average cost for a similar property stands at about $2,218 annually.