- Mar 4, 2011
This seems ridiculous to me. 10% is like a moderate credit card APR rate. Was housing actually cheaper to offset it?
This is one of the reasons that I've been advised to ALWAYS get a 30 year mortgage.Your graph answered your question.
Lets take 1986 for example. Median house price: ~$75,000, interest rate ~10%. 30 year mortgage monthly payment: $658.18 plus escrow.
Lets take now for example: Median house price: ~$270,000, interest rate ~3%. 30 year mortgage monthly payment: $1138.33 plus escrow.
The median house payment is almost double now, even though interest rates are lower. The houses are bigger but we are paying for it. The problem with using your inflation adjusted graph is that only works if wages went up with inflation. Income went up, but barely in the last few decades. Income has not increased with inflation. Housing prices have increased far more than wages.
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I recommend 15 year if you can swing it. But I like cash in full if you have the money.This is one of the reasons that I've been advised to ALWAYS get a 30 year mortgage.
$400k today is not worth $400k 30 years from now, so the more you delay payments the less you effectively are paying.
She has some large credit card debt she wants to get rid of and couple expensive home renovations she wants to do. She's doing way larger cash out refi than she probably needs but will redeposit most of the money and pay down the new mortgage when she's sure she doesn't need the extra money. And she'll make extra monthly payments equaling what she was paying on her previous 15 year on this new loan. So my guess is she'll probably pay off this new 30 year loan in about 6 years. About double the 3 years she had left on her previous 15 year old loan. I think her previous 15 year loan was at 4.675% or little higher.Why? for the minimal tax write-off? She's paying about 97% principal and 3% interest with her payments by now.
I sometimes wonder if I should have gotten a 15 year myself. At the rate I'm paying it will be paid off in about 5 years, which is almost 15 years total. I think with a 15 you get a way lower interest rate right?I recommend 15 year if you can swing it. But I like cash in full if you have the money.
I can only hope after all this COVID shit that both Companies... and ESPECIALLY PEOPLE... Realize that you don't need to live in the middle of a fucking shithole metro-area in order to work a job that earns 6+ figs.My first home purchase was in 2004. 30 year fixed rate was 6.5% then....I jumped on a 5/1 ARM for 5%.
To answer your question. Houses that went for $190k in the Bay Area(SF) were selling for $1.2M by 2009....other examples, but yes....every time the economy drops and recovers, housing gets inflated.
Right now, my neighborhood is booming and prices are rising fast. It's pretty crazy, but I suppose everyone is jumping on low interest, location, and the moderate prices here (which are climbing rapidly).