A 30-year fixed $240,000 loan at 3.8% pays $162,587.15 in interest over the life of the loan. That same loan for 40 years pays $227,235.72.
It's a gift to those holding mortgage-backed securities, not to homeowners. It's more predatory lending to financially illiterate people. You know what pays more interest than a 30-year loan? A 40-year loan.
Exactly. Its only making your problem worse. Best thing is to contibue paying as youre supposed to
With high inflation who gives a shit? I'll gladly take a 40 year loan. The interest is tax deductible too.
I bought a house 2 years ago for 700k. Now its valued at 1.1 million. 500k mortgage which I can pay off at any time.
Inflation isn't going anywhere so I don't see a massive collapse in home prices anytime soon.
Inflation isn't going anywhere so I don't see a massive collapse in home prices anytime soon.
Watch what happens when interest rates go up, which they must. All those potential buyers that can afford to buy your house at $1.1M today at 3.8% can only afford $815,000 at 6.5% - the payments are the same.
Pay will track inflation to some degree. Unemployment is still low.
If the world is as bad it may seem debt wont matter anyways. Everything will collapse and what you think you own will be taken.
So yea, don't fear the mortgage, especially if you have a high paying job and your local property taxes are low.
Yes, but financially illiterate people also do not realize that a mortgage at 3-5% is good debt, you can very easily make more on that using the money elsewhere.
Scenario #1 -> Man quickly pays off his mortgage in 10 years by saving every penny and putting it into early payments on his mortgage. He has peace of mind that he has no mortgage payment.
Scenario #2 -> Man leaves his mortgage as large as possible for as long as possible, and still saves every penny, but instead invests it in something else like his own business, stocks, crypto, more real estate, etc.
Both men have the same income for 25 years. Which man will be further ahead?
The math is clear that scenario #2 will provide that man with EXPONENTIALLY more success. The risk with scenario #2 is that simultaneously asset prices crash at the same time as mortgage rates skyrocket could leave the holder unable to service his debt could result in him losing everything, even if the prices return to normal in the next few years.
If however, you are in a financial position that you are able to wait out a price crash, OR if you secure FIXED rate debt, you will be fine and still be much better off (if historical metrics for the last 100 years hold true for the future)
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