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Danes Get 20-Year 0% Mortgages
71–80 of 331 posts
Re: Danes Get 20-Year 0% Mortgages
#72Earlier quoted context omitted.
Can Danes just walk away from their loans simply returning the home? I believe that's true in the US, but I don't think that's universal.
https://www.forbes.com/advisor/loans/recourse-loans-vs-non-r... Home mortages are recourse loans in all but 12 states (Alaska, Arizona, California, Connecticut, Idaho, Minnesota, North Carolina, North Dakota, Oregon, Texas, Utah and Washington).
This had a profound effect on house prices in Arizona back in 2009-2010. The Phoenix market, in particular, was flooded with borrowers who walked away when they had negative equity.
Re: Danes Get 20-Year 0% Mortgages
#73I just refinanced at 2.0% for 15 years in California and I was feeling like a champ for timing the bottom.
I went through 3 refinances last year (also in CA) all at little to no closing costs for a 30 year fixed (4.00% → 3.25% → 2.5%). The math made sense every single time when factoring in the lower monthly payments and negligible closing costs. At this point I don't know what the point of the loan is anymore. Is there really any realistic intention to ever pay it off? Every single time I thought I had timed the bottom,…
How come you had no closing costs? How much really they were?
Re: Danes Get 20-Year 0% Mortgages
#74Negative Mortgage rates would be a funny way to implement UBI. House prices go to infinity for the lifetime of the buyer.
How to kill social mobility 101.
Re: Danes Get 20-Year 0% Mortgages
#75Earlier quoted context omitted.
If that happens house prices will go apeshit.
What's the argument for negative interest rates having any impact on house prices? I would think it would be mostly linear compared to 2%, 1%, 0%, -1%, etc... For example - if I have a 20 year mortgage on a $240,000 house @ 0%, I have to pay $1,000/month. If the interest rate is -1% then I have to pay ~$900/month. I don't know if that extra $100/month really moves the market on home prices that much.
Psychology. Here in the UK the the lemming factor would kick in strongly - toilet paper, bicycles ... negative interest rate. The moment those words are uttered by the BBC you could expect the country to be covered with little puddles of excitement leading to the nearest bank. Some phrases trigger a threshold where reason loses strength - fomo? Panic?
Re: Danes Get 20-Year 0% Mortgages
#76But one forgets that even though the interest rate is 0% the COST of the loan is !=0, we still have to pay a "bidragsssats" which is an "administrative fee" to have the loan The interesting part is that that this rate can be changed over time to whatever the lone-shark wants it to be, thus - as always - you need to look at the TCO. ÅOP as it is in danish: "Årlig Omkostning i Procent" - aka the Yearly cost in percent.…
Yeah, that's what I figured. Which I why I was pleasantly surprised to learn (at least according to an HNer in the know) that, in the UK at least, rates must be expressed in a way that accounts for all fees -- so something like this couldn't be called 0%.
Re: Danes Get 20-Year 0% Mortgages
#77But one forgets that even though the interest rate is 0% the COST of the loan is !=0, we still have to pay a "bidragsssats" which is an "administrative fee" to have the loan The interesting part is that that this rate can be changed over time to whatever the lone-shark wants it to be, thus - as always - you need to look at the TCO. ÅOP as it is in danish: "Årlig Omkostning i Procent" - aka the Yearly cost in percent.…
In the US, this is basically why APR =/= APY.
Where APR is the effective rate including fees.
Re: Danes Get 20-Year 0% Mortgages
#78Do Danes get tax deductions on mortgage interest? One of the best tax deductions we get is the one on mortgage interest. Also this isn't really that great since lower interest means higher home prices. I'd rather have high interest and low home prices if I were a buyer and try to pay if off ASAP or refinance to lower interest when the rate drops. Buy when interest is high and home prices low and sell when interest is…
Danes can deduct around 25% of paid interests (and "contribution fees" on mortgages). A little more for paid interests below DKK 50000 yearly and a little less for paid interests above DKK 50000.
A typical home can sell for DKK 4M. With a 20 year 0% interest and 80% of the 4M mortgaged (the maximum allowed), the "contribution fee" would be set at 0,75%.
That would amount to interests (0%) and "contribution fee" (0.75%) yearly around DKK 24000 (1st year) of which 25% = DKK 6000 will be deductible.
To put that into perspective:
A. An average "medium level" worker will have an average income of DKK 466,660/year[1] and pay DKK 159,212 in taxes, leaving a post-taxes income of DKK 307,448.
B. An unemployed will receive DKK 225,894/year and pay DKK 58,952 in taxes, leaving a post-taxes income of DKK 166.942
So in reality the mortgage tax deduction does not amount to much. With those low interest rates it is around DKK 6000 or DKK 500/month for a typical family.
Compare DKK 6000/year or DKK 500/month to: - a pair of Levi's: DKK 660 - a 4G/5G plan with 50GB/month: DKK 160/month - iPhone 12: DKK 7000
[1] https://www.dst.dk/en/Statistik/emner/arbejde-indkomst-og-fo...
Re: Danes Get 20-Year 0% Mortgages
#79Earlier quoted context omitted.
I went through 3 refinances last year (also in CA) all at little to no closing costs for a 30 year fixed (4.00% → 3.25% → 2.5%). The math made sense every single time when factoring in the lower monthly payments and negligible closing costs. At this point I don't know what the point of the loan is anymore. Is there really any realistic intention to ever pay it off? Every single time I thought I had timed the bottom,…
How come you had no closing costs? How much really they were?
My broker said it was a standard $3K closing cost if at zero points, but I ended up taking some negative points as a credit towards closing costs.
Re: Danes Get 20-Year 0% Mortgages
#80Earlier quoted context omitted.
Can Danes just walk away from their loans simply returning the home? I believe that's true in the US, but I don't think that's universal.
No. You have to pay the loan back. You cannot just walk away. I know several people in Denmark that were “stuck” with the house they were in after the price drops from the 2008 crisis until prices rose above the mortgages again. You can probably make a deal with the bank somehow at higher interests, but they’ll want there money back. You can also declare bankruptcy, but that is not simple and not without long term co…
Bankruptcy has a 7 years bad credit sentence in US. You are good as new after that. Not sure that's the case with other countries.