3 ms·
Not if you get a fixed rate.
by zepto 5y ago
Not if you get a fixed rate.
- ed25519FUUU 5y agoWhen I checked out a 5/1 arm at around 2.25%, even the maximum interest rate was 7.5%, which is pretty good historically.
- hahajk 5y agoIf you try to sell your asset, buyers will be stuck with a higher interest rate, which pushes up the effective price of your home (and the extr money doesn’t go to you.)
- jjnoakes 5y agoI think you misunderstood the parent comment. Even with a fixed interest rate, you still owe the entirety of your borrowed amount on the $1m purchase to the lender, but your property value may drop if the interest rates go up because, assuming the market value is tied to the interest rate, new buyers won't be able or willing to borrow $1m to buy your place at a rate higher than what you borrowed your $1m at. For the same monthly payment as you have now, a new buyer may only be able to borrow enough to afford a $900k home. Someone with the same income and monthly expense limit as you wouldn't be able to afford your home, assuming rates went up, which is why the value might drop - fewer buyers.