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This is true, but - if you buy with a lower price + higher interest rate, you can potentially refinance to a lower interest rate down the road. Nothing you can
by ppvfy 4y ago
This is true, but - if you buy with a lower price + higher interest rate, you can potentially refinance to a lower interest rate down the road. Nothing you can do after the fact about a high purchase price though.
Nothing's guaranteed of course, but I'd rather buy a home now than a year ago, even if the same monthly payment gets me the same house
- jeffbee 4y agoExactly this. Every boomer who whines about 15% interest rates in the 1980s - rates which existed only briefly - is leaving out the fact that they got low prices and continuous opportunities to refinance at lower rates for the rest of their lives.
- refurb 4y agoI mean super high rates lasted more than a decade, so if you add up all the interest paid, it was a horrible deal.
- jeffbee 4y agoSuper-high rates coincided with a low in the price-to-income ratio in the post-war era. It was > 6x in the 1950s, < 5x through the 80s, and now stands at > 8x. So why should I care if the bank took a higher share of a lower price? It was still a lower price.
- refurb 4y agoYou’d care because interest payments disappear while principle payments don’t. Back when interest rate were >6%, 80%+ of your first 5 years of payments went entirely to interest.