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When you buy a home -- the largest single purchase one makes in the middle class -- you lock in the purchase price, but not the interest rate. Housing prices st
by 88913527 4y ago
When you buy a home -- the largest single purchase one makes in the middle class -- you lock in the purchase price, but not the interest rate. Housing prices still haven't recovered in Japan to their 1990 highs. So if you don't pay attention to the macro environment, you could be costing yourself a great deal. Fortunately, other asset purchases like mutual funds in retirement accounts are DCA'ed in by the paycheck, and not done all at once.
- jbay808 4y ago(This situation might not be familiar to US commenters, who can lock in an interest rate for their entire mortgage).
- 88913527 4y agoUS commenters hopefully know they can re-finance when rates go down. Locked in, with the option of re-fi'ing. Only possible when rates drop but we're yet to have a period of 30 years of continually rising rates.
- jbay808 4y agoYes, I didn't mean to imply that wasn't the case. I meant that in the US, homebuyers can fully protect themselves from the downside risk, an option that doesn't exist in many other countries (like Canada).
- hn_throwaway_99 4y agoThanks for the info. I was unaware fixed rate mortgages weren't available in other countries.
- Breza 4y agoWow, I just assumed that fixed rate mortgages were the norm everywhere. TIL.
- zrail 4y agoPersonally I locked in 30 years at 3.125% in May 2020 and I will be shocked if I ever have the opportunity to refinance lower again.
- legulere 4y agoAt least here in Germany rates are usually fixed for 10 to 30 years.