2 ms·
Because ARMS were in the 2.x% range. I talked a number of people out of ARMs in '21 and '22 by explaining 2008 to them (they were 7-8 years old at the time, so
by dmitrygr 4y ago
Because ARMS were in the 2.x% range.
I talked a number of people out of ARMs in '21 and '22 by explaining 2008 to them (they were 7-8 years old at the time, so do not remember). It is scary how bad most people are at understanding exponential growth and just how much worse 5% is than 3%
- bgirard 4y agoIt's not exponential. And even though 5% is 66% higher than 3%, the monthly payment is $5,368 instead of $4,216 on 1m which is 27% higher. Sure you pay twice as much interest over 30 years.
- NovemberWhiskey 4y agoIt's absolutely exponential - it's just that the base is barely over one and the exponents involved are not very large.
- brewdad 4y agoDo you think a typical homebuyer stretching themselves in the heated market of the past 2 years can easily absorb a 27% increase in their payment? I have my doubts.
- sokoloff 4y agoHow is a compounding loan (such as a mortgage) not exponential?
- karpierz 4y agoBecause you're paying it off faster than it grows. It would be exponential if you were allowed to simply let it sit without paying it down, but that would break the contract and get you foreclosed.