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But, again, you're using purchase price which is not how people buy homes. For $100,000 borrowed that's $422 a month at 3% and and $1,264 at 15%. Mortgage pay

by treis 5y ago

But, again, you're using purchase price which is not how people buy homes. For $100,000 borrowed that's $422 a month at 3% and and $1,264 at 15%. Mortgage payments as a % of income are at historic lows: https://fred.stlouisfed.org/series/MDSP https://fred.stlouisfed.org/series/MDSP This is an unusually good time to be a home owner. You can borrow at near 0 or even slightly negative real interest rates and buy an asset that is almost guaranteed to hold/increase in value.

PaulDavisThe1st 5y ago
But again, you're missing the point. People live in homes for their entire lives. If they decide to be owners rather than renters, over the course of their life (actually, typically somewhat less than their whole lives) they will end up mortgage free. This is an important component of most people's retirement planning, in fact. What's the cost to get to that point? It used to 2x annual salary, it's now nearly 6x annual salary. That's 4 full years of earnings which vanish into owning a home. If you do not reverse mortgage or sell during retirement, you effectively "lose" this money.
- treis 5y ago
  >What's the cost to get to that point? It used to 2x annual salary, it's now nearly 6x annual salary. It's just not. You're not accounting for the interest paid over 30 years of a mortgage.
  - PaulDavisThe1st 5y ago
    No, I'm assuming best case: zero interest. You might be arguing that 1970's cost-as-multiple-of-earnings plus 1970-accumulated-interest exceeds 2020's equivalent. Is that your point?
    - TheCoelacanth 5y ago
      That "best-case" is unrealistically favorable to the 1970s buyer. In 2020, you can almost get that zero interest mortgage. In the 1970s, you are going to be paying at least 10% on top of that.
deleted 5y ago
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sleepdreamy 5y ago
Come on. I just purchased my first home in my late 20s and I am one of the very few in my circle to do it. To suggest anyone has a 400 dollar mortgage payment is just ridiculous and untrue. MY rate is 2.78%. I pay $1000 and thats on the very cheap side for where I live. Average is 1700 and up(I live in an isolated area, but an extremely dense/populated state) Your comment seems disingenuous. You're also discounting the fact that you need a large downpayment (10,000+) to even get a mortgage in the first place. Do you not live in the USA? Housing prices are a real problem for my generation.

by treis 5y ago

PaulDavisThe1st 5y ago

But again, you're missing the point. People live in homes for their entire lives. If they decide to be owners rather than renters, over the course of their life (actually, typically somewhat less than their whole lives) they will end up mortgage free. This is an important component of most people's retirement planning, in fact. What's the cost to get to that point? It used to 2x annual salary, it's now nearly 6x annual salary. That's 4 full years of earnings which vanish into owning a home. If you do not reverse mortgage or sell during retirement, you effectively "lose" this money.

treis 5y ago
>What's the cost to get to that point? It used to 2x annual salary, it's now nearly 6x annual salary. It's just not. You're not accounting for the interest paid over 30 years of a mortgage.
- PaulDavisThe1st 5y ago
  No, I'm assuming best case: zero interest. You might be arguing that 1970's cost-as-multiple-of-earnings plus 1970-accumulated-interest exceeds 2020's equivalent. Is that your point?
  - TheCoelacanth 5y ago
    That "best-case" is unrealistically favorable to the 1970s buyer. In 2020, you can almost get that zero interest mortgage. In the 1970s, you are going to be paying at least 10% on top of that.

deleted 5y ago

[deleted]

sleepdreamy 5y ago

Come on. I just purchased my first home in my late 20s and I am one of the very few in my circle to do it. To suggest anyone has a 400 dollar mortgage payment is just ridiculous and untrue. MY rate is 2.78%. I pay $1000 and thats on the very cheap side for where I live. Average is 1700 and up(I live in an isolated area, but an extremely dense/populated state) Your comment seems disingenuous. You're also discounting the fact that you need a large downpayment (10,000+) to even get a mortgage in the first place. Do you not live in the USA? Housing prices are a real problem for my generation.