I want to show you how screwed you are by buying a median house in America at a 6-7 pct mortgage rate at these prices. You will build no equity for years. See the attached pic for a 5y horizon analysis. You will pay 35% of the homes value in interest in the first 5 years. It’s a death trap, even assuming 3-4% hpa. #mortgage #housing
sale within 5 years with these rates is probably not going to end well
You’re bad in math 320 * 7% * 5 years = 112
Thx fixed
This is still not fixed. This was the case of no principal part. You also don’t include many other things like save on rent or fees and commissions on sell (9%)
Just FYI , 7%+ rates were the norm before we saw the government handing out free money to banks. And regardless of the rate, for the first 5 years, you will pay mostly interest.
And prices were 3-4x median income. So we can say at 7pct interest, prices are historically 275k.
Your “employer” is literally “investment management firm.” Presumably no one wants to invest with you because they are too busy building wealth with their home and real estate. It’s well-documented that investment firms often unload their worst, about to collapse stock and bond investments onto their unsuspecting clients, and the salespeople who can unload the most junk get huge bonuses.
I’m literally saying that a 7 pct mortgage rate is a wealth killer
You literally showed that your knowledge of math, economics and life are sucks. That’s it I have had the mortgage with 12.5% and this was profitable to me
I want to show you how to take a screenshot. Cmd shift 4 on Mac or snipping tool on windows.
What do you want by person, who doesn’t know how percentage works PS Win shift S on Windows
Yes there’s clearly no option to pay down the principle. And doing that doesn’t decrease the interest paid. /s
Sure, but is the median income buyer prepaying the mortgage at all?
Home prices and salaries vary like crazy across the US so you need to be more specific with numbers. What median salary number? What median mortgage? If you’re stupid signing up for a mortgage, expect stupid results. Banks give you the freedom to screw yourself over financially.
Your spreadsheet is fucked.
What, explicitly, is wrong with it?
Mostly it’s just hard to understand, because you’re doing this analysis in a non-standard way 1. You haven’t correctly calculated amortization, so your interest and principal lines are wrong 2. Your downpayment lines don’t match 3. The “interest, fees, and taxes” line doesn’t match any of your figures above…no idea where it came from 4. Magically, your economic loss suffered is exactly the same as the line above it, which is a tell that a spreadsheet is probably being massaged somewhere. 5. Your labels don’t make sense. 6. You’re not taking a lot of things into account, like transaction costs (both buying and selling), how rents changed during those 5 years, opportunity cost of having that downpayment tied up for years, tax implications, and more. All that said, your overall analysis isn’t completely wrong, it’s just sloppy and incomplete. RE has high transaction costs, so you generally have to hold a certain amount of time before you breakeven. That’s not a new insight though. Go look at the New York Times rent vs buy calculator, it takes everything you can imagine into account, and it’s very clear: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Markets are fucked rn. My rent is 3k. Buying a comparable home would be 6k/month. Better off putting the difference in stocks/bonds
10 years after your rent may be $9k while the mortgage will be same $6k or lower if you would refinance
Rents are falling right now in many locations. Lots of places offering 2 months free on 12 month lease. Close to 20 percent off.
Land might be limited, but our utilization will improve as we build up instead of out.
Get a 15 year mortgage
Good idea, but can the median income support a 15 year am