5 ms·
I was using the monthly cost of a 30 year mortgage. Monthly for 30 years a 500K mortgage at 6% is roughly 3K. Monthly for 30 years a 1000K mortgage at 2% is abo
by 542458 6y ago
I was using the monthly cost of a 30 year mortgage. Monthly for 30 years a 500K mortgage at 6% is roughly 3K. Monthly for 30 years a 1000K mortgage at 2% is about 3.7K.
So a 100% increase in sticker price with -4% interest change yields an actual cost increase of 25%.
- lotsofpulp 6y agoThis comparison of an increase in price and decrease in interest rate is not useful because if interest rates come down, mortgages can be refinanced at the lower interest rate. The 100% more expensive house actually costs 100% more (nominally).
- monktastic1 6y agoMonthly cost of a house tells you very little about the "true cost of ownership" (a concept that I wish were taught more widely). That includes things like taxes, opportunity cost of capital, maintenance, etc. Doubling the price of the house will not quite double the TCO (because maintenance may not increase by much depending on various factors, and taxes can take time to catch up), but it will not be a mere 25% increase either.