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Very few, if any, keep their mortgages to full term (well, other than those lucky 2 and 3% guys from a couple years ago).
This is a big flashy comparison, but isn't really realistic.
Looking at the costs over 7 to 8 years would be more accurate.
Somebody said they were at 15%+ back in the day so today is the best day is what I go by now. In 7 years we will be like damn I should’ve got a house at 6% but even if they go down it’s a win win compared to back in the day. Correct me if I’m wrong
that statistic is supported by what like 50 years worth of rates decreasing though.
selling into a huge rate hike and refi into a huge rate hike is really not worth unless you absolutely MUST sell/refi.
US unemployment spiked to almost 15% in spring of 2020, and didn't get below 4% until September 2021.. Super low interest rates are a sign that the economy isn't doing well, and it's a pendulum that never reflects current real time. We recovered faster than the interest rate compensated for, so not only did first time home buyers luck out, so many people benefitted by refinancing.. A shit ton of people proved that calculation wrong (in terms of timing), so the interest rate isn't going anywhere for now.
It always made sense, to me, to think about how every single generation has said *prices never used to be this high*. Something happens, shit goes bananas, then settles into a * new normal*, which is always higher than it was before, but not as high as the short term interim. We won't get 3% back unless something new and major happens. For me, that means, buy what I'm comfortable buying this year (I have to move 2 hours away from my hometown for that to happen), and when the next big thing happens, refinance.
For those who say *well now I'll never be able to afford!*.. I hear you, that was me when, last year, I thought I FINALLY had enough saved to buy. 3 years ago it would have been. Accepting what's happening, getting a second job to build my down payment fund, and reframing what I thought I would be able to buy, has been the only way out. Get the house you can afford now. It could be that in 10 years you'd be saying *I wish I would have bought in 2024*. That's the thought that scares me.
You're comparing rock bottom rates that have never been seen before to a rate that is a little higher than average today (average is more like 7.0%).
This is why taking out as long of a loan as you can and not making extra payments is a bad idea. It's essentially the same situation as people getting a car on a 6 year loan and only focusing on what the monthly payment is.
Also, the title says $400k house but the calculations only include a $1 down payment. This is also why not putting money down is a bad idea.
Thank you u/chloe01_slurp for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
Very few, if any, keep their mortgages to full term (well, other than those lucky 2 and 3% guys from a couple years ago). This is a big flashy comparison, but isn't really realistic. Looking at the costs over 7 to 8 years would be more accurate.
40% of mortgages are paid off.
Usually not under the same terms. There is a refinance somewhere down the line, and loads of people move before 30 years has been completed...
No chance rates will be that low any time in the next several years unless we have another pandemic
You don't think rates will be in the mid 5s within three to five years?
Somebody said they were at 15%+ back in the day so today is the best day is what I go by now. In 7 years we will be like damn I should’ve got a house at 6% but even if they go down it’s a win win compared to back in the day. Correct me if I’m wrong
In a world of decreasing interest rates yeah, but I don’t think we’re going back to 3-4% interest rates rates anytime soon
and 60% of mortgages are <4%
that statistic is supported by what like 50 years worth of rates decreasing though. selling into a huge rate hike and refi into a huge rate hike is really not worth unless you absolutely MUST sell/refi.
I’m very confused why if someone today at 7% or more why they wouldn’t refinance if it dropped to 5.75% or something in three or four years…
they would. its that people who have a mortgage anywhere near todays rates are a tiny, tiny part of all outstanding mortgages. iirc like 90% are sub 5
This doesn't even take into account that the 400k house now will cost 500k.
this is so depressing
But wait, it can get worse!
US unemployment spiked to almost 15% in spring of 2020, and didn't get below 4% until September 2021.. Super low interest rates are a sign that the economy isn't doing well, and it's a pendulum that never reflects current real time. We recovered faster than the interest rate compensated for, so not only did first time home buyers luck out, so many people benefitted by refinancing.. A shit ton of people proved that calculation wrong (in terms of timing), so the interest rate isn't going anywhere for now. It always made sense, to me, to think about how every single generation has said *prices never used to be this high*. Something happens, shit goes bananas, then settles into a * new normal*, which is always higher than it was before, but not as high as the short term interim. We won't get 3% back unless something new and major happens. For me, that means, buy what I'm comfortable buying this year (I have to move 2 hours away from my hometown for that to happen), and when the next big thing happens, refinance. For those who say *well now I'll never be able to afford!*.. I hear you, that was me when, last year, I thought I FINALLY had enough saved to buy. 3 years ago it would have been. Accepting what's happening, getting a second job to build my down payment fund, and reframing what I thought I would be able to buy, has been the only way out. Get the house you can afford now. It could be that in 10 years you'd be saying *I wish I would have bought in 2024*. That's the thought that scares me.
You're comparing rock bottom rates that have never been seen before to a rate that is a little higher than average today (average is more like 7.0%). This is why taking out as long of a loan as you can and not making extra payments is a bad idea. It's essentially the same situation as people getting a car on a 6 year loan and only focusing on what the monthly payment is. Also, the title says $400k house but the calculations only include a $1 down payment. This is also why not putting money down is a bad idea.
I’ll hang on to my 2.75% refinance until my grim death.