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If you bought a house for $150,000 at 15% in early 80's, you likely refinanced as the interest rate continuously dropped from there. In 90's interest rate was
by llsf 7y ago
If you bought a house for $150,000 at 15% in early 80's, you likely refinanced as the interest rate continuously dropped from there. In 90's interest rate was below 10%, and around 7% in early 00's. Nobody would keep the 15% over 30 years.
- rukittenme 7y agoYes but refinancing is not a silver bullet. After 10 years you would have only paid off $7k in principal. So you'd re-fi at 10% at $143k and refi at 7% at $130k. Twenty years worth of payments for only $20k in principal. Your payments would total $375k over that period. $350k at 4% would total the same amount but with $200k in principal paid down. I'd much rather be in a situation with $200k in equity versus $20k in equity. And remember, both people have the same monthly payment amount!