> Can you imaging that my parents once payed 12% mortgage interest!
Yeah, it got up to around 17% in the US back in the 80s. It sounds crazy, but I've actually been told that it doesn't matter too much because the house prices would be lower to compensate for it (because people don't magically have more money to buy stuff, so if the rate goes up the house prices have to go down).
I've actually read that it's better to get a high percentage mortgage, especially if you know that mortgage rates are about to go on a downturn, because you can buy a house at a much cheaper sticker price than you would normally, and then you can refinance your mortgage once the percent goes down and get the lower mortgage rate on top of that!
It's actually supposed to be a lot worse to get a house with a low mortgage rate when they're about to start shooting up (which is right when we bought a house, four months ago, yay), because a) you won't want to refinance to a higher mortgage rate, and b) if you do decide to sell in a higher mortgage rate market, then the sticker price of your house is going to have to go down quite a bit to reflect that in order for the house to sell, so you might end up losing money on your house, or at least see much more reduced gains.
My real estate philosophy is "how much more can the next person borrow"? I think that once you adjust for inflation and borrowing power of interest rate changes, housing is a lot less attractive as an investment.
Yeah I don't personally see houses as investments, myself. We bought the house to live in, although I don't know if this house will last us for 30+ years (we've done a pretty good job filling it up already and we don't even have kids yet). So it would be nice if it at least kept its value for when we do end up selling it.
Yeah, it got up to around 17% in the US back in the 80s. It sounds crazy, but I've actually been told that it doesn't matter too much because the house prices would be lower to compensate for it (because people don't magically have more money to buy stuff, so if the rate goes up the house prices have to go down).
I've actually read that it's better to get a high percentage mortgage, especially if you know that mortgage rates are about to go on a downturn, because you can buy a house at a much cheaper sticker price than you would normally, and then you can refinance your mortgage once the percent goes down and get the lower mortgage rate on top of that!
It's actually supposed to be a lot worse to get a house with a low mortgage rate when they're about to start shooting up (which is right when we bought a house, four months ago, yay), because a) you won't want to refinance to a higher mortgage rate, and b) if you do decide to sell in a higher mortgage rate market, then the sticker price of your house is going to have to go down quite a bit to reflect that in order for the house to sell, so you might end up losing money on your house, or at least see much more reduced gains.