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Thanks for you thoughts. The challenge we're facing is whether the Mrs will do stay-at-home while the baby is young or not. If it is just my income, I know we'l

by tostitos1979 11y ago

Thanks for you thoughts. The challenge we're facing is whether the Mrs will do stay-at-home while the baby is young or not. If it is just my income, I know we'll have to stretch for a house we want. If we have both incomes, net of childcare, we should be okay. Canada has 5 year mortgage terms. That is distressing me to no end. If interest rates go to 5% in 5 years, we might have huge isues. If I had a 3.75%, 25 year US mortgage, I'd take it in a heart beat. I don't think a US lender will be willing to lend against Canadian property due to exchange rate risks (among other reasons).

jpollock 11y ago
It sort of depends on how long you intend to live in a house. For mortgages that are on 5yr terms, look at longer term averages. For example, New Zealand (another market I'm familiar with) is currently running at 4%/yr for a 2yr mortgage and 5.5% for a 5yr. However, for budgeting purposes, most people will budget at 8%/yr, since that's the long-term average. Just to completely freak you out, during the GFC, I hit 12% annual interest. My parents hit 20% during the Canadian inflation crisis of '81. :) Go for the high end, don't be afraid of a smaller house, build up the equity and then move. However, be aware that closing costs are significant, so it's best to amortize them over several years - that's why housing calculators ask how long you will live in a house. Frankly? If you're afraid of 5%, you probably don't want to own a house, or at least, you don't want to own _that_ house.