5 ms·

I think together my fiance and I had about 8% down. Thing was, to rent our current house would be about $1600/month. Even a shitty 2 bedroom was $1200, mortgage

I think together my fiance and I had about 8% down. Thing was, to rent our current house would be about $1600/month. Even a shitty 2 bedroom was $1200, mortgage with insurance and taxes is $1100. For some people it's not a matter of can we afford to, it's can we afford not to. Even if rent dropped 10% (that has never happened in my area, they were still going up in 2008-2009) it would be a better deal to have a mortgage.

jackcosgrove 10y ago
"can we afford not to" Bubble alert!
- cmdrfred 10y ago
  Rents have to fall a lot to put us in a situation were that's a bad thing (we aren't moving for a long time), and then at that point we can just let the bank foreclose and move into a $500 a month 2 bedroom.
mattmanser 10y ago
Your mortgage is temporarily low because interest rates are low. http://www.bankrate.com/finance/mortgage-rates-history-0112.aspx http://www.bankrate.com/finance/mortgage-rates-history-0112.... If your interest rate doubled, could you afford to? Do you know how much you'd have to pay?
- dragonwriter 10y ago
  If you get a fixed-rate loan, you don't have to worry about that.
  - toomuchtodo 10y ago
    Interest rates go up, your home value goes down.
    - dpark 10y ago
      Sure. That's a real risk. There are probably much bigger risks to worry about, like the market crashing again or losing your job. The risk of interest rates going high enough to significantly push home prices down seems really small for the next several years.
    - fulafel 10y ago
      Historically both real estate prices and interest rates are procyclical. Central banks raise rates when inflation becomes too fast (which is closely correlated to house price appreciation). But of course you can sometimes have a local economic decline while the currency area is experiencing overheating and high inflation.
      - toomuchtodo 10y ago
        Agree, but as long as Chinese money is seeking sanctuary as quickly as it is, I don't see any sign of SFBA real estate cooling off.
  - mattmanser 10y ago
    Fixed rate loans are only fixed for very short periods like 2-3 years, so how is this relevant? And they then usually turn into really bad interest rates when they expire, and you'd have to remortgage in a bad market. You have to pay lawyers fees, surveying fees, taxes, realtor fees, etc. when you buy a house, if you only have it for 2-3 years you have to factor all those into the monthly costs too.
    - dragonwriter 10y ago
      No, you can get fixed loans that are fixed for the life of the loan. And you usually should when interest rates are low, because ARMs in that case usually have little room to adjust down and a lot of room to adjust upward when indexes riser, which they are nearly certain to significantly when you buy near the historic bottom, so even with the premium on the starting interest rate, fixed rate loans are better in the long run.
    - hx87 10y ago
      Where do you live? 15-year and 30-year fixed rate mortgage loans are available pretty much everywhere in North America.
- cmdrfred 10y ago
  30 year fixed rate.

jackcosgrove 10y ago

"can we afford not to" Bubble alert!

cmdrfred 10y ago
Rents have to fall a lot to put us in a situation were that's a bad thing (we aren't moving for a long time), and then at that point we can just let the bank foreclose and move into a $500 a month 2 bedroom.

mattmanser 10y ago

Your mortgage is temporarily low because interest rates are low. http://www.bankrate.com/finance/mortgage-rates-history-0112.aspx http://www.bankrate.com/finance/mortgage-rates-history-0112.... If your interest rate doubled, could you afford to? Do you know how much you'd have to pay?

dragonwriter 10y ago
If you get a fixed-rate loan, you don't have to worry about that.
- toomuchtodo 10y ago
  Interest rates go up, your home value goes down.
  - dpark 10y ago
    Sure. That's a real risk. There are probably much bigger risks to worry about, like the market crashing again or losing your job. The risk of interest rates going high enough to significantly push home prices down seems really small for the next several years.
  - fulafel 10y ago
    Historically both real estate prices and interest rates are procyclical. Central banks raise rates when inflation becomes too fast (which is closely correlated to house price appreciation). But of course you can sometimes have a local economic decline while the currency area is experiencing overheating and high inflation.
    - toomuchtodo 10y ago
      Agree, but as long as Chinese money is seeking sanctuary as quickly as it is, I don't see any sign of SFBA real estate cooling off.
- mattmanser 10y ago
  Fixed rate loans are only fixed for very short periods like 2-3 years, so how is this relevant? And they then usually turn into really bad interest rates when they expire, and you'd have to remortgage in a bad market. You have to pay lawyers fees, surveying fees, taxes, realtor fees, etc. when you buy a house, if you only have it for 2-3 years you have to factor all those into the monthly costs too.
  - dragonwriter 10y ago
    No, you can get fixed loans that are fixed for the life of the loan. And you usually should when interest rates are low, because ARMs in that case usually have little room to adjust down and a lot of room to adjust upward when indexes riser, which they are nearly certain to significantly when you buy near the historic bottom, so even with the premium on the starting interest rate, fixed rate loans are better in the long run.
  - hx87 10y ago
    Where do you live? 15-year and 30-year fixed rate mortgage loans are available pretty much everywhere in North America.
cmdrfred 10y ago
30 year fixed rate.