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Danes Get 20-Year 0% Mortgages

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Re: Danes Get 20-Year 0% Mortgages

#201

Post by tathougies »

lostmsu wrote: post #73
acwan93 wrote: post #42

Earlier 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?

I refinanced last year for a 0.125% better interest rate, and the bank paid me $1000 to do it. It was the easiest decision I ever made. Basically, there was $5000 in closing costs and the bank paid me $6000 in points. If I paid money I would have gotten a lower rate, but I already had a great rate.

Now, I'm refinancing again, but I'm paying some money. All in all, my net refinancing costs will be around $2000, but I have halved my interest rate almost, and will now be able to pay my home off about 10-15 years earlier (we just bought two years ago).

Re: Danes Get 20-Year 0% Mortgages

#202

Post by izacus »

ageitgey wrote: post #13

My friends in Geneva tell me that this has been a thing there for a long time. It has some pretty bizarre effects on the market (according to my friends): 1. House prices rise to the point where the down payment is essentially the price of the house. The house price itself becomes imaginary. What you are really worried about is the down payment. 2. Since house prices are now super high, only people who have saved up…

> My friends in Geneva tell me that this has been a thing there for a long time. It has some pretty bizarre effects on the market (according to my friends):

One important difference between Geneva and Denmark though - Genevas extremely expensive housing market (in both purchase and rent prices) is driven by its geographical location. It's surrounded by mountains on most sides and sitting on a lake. This means there's pretty much no space to build more buildings to accommodate the influx of people moving there to work in science and politics.

Geneva building prices were skyrocketing without those loans just because there was no way to build more.

Re: Danes Get 20-Year 0% Mortgages

#203

Post by tathougies »

mywittyname wrote: post #52
disown wrote: post #19

Do 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…

> One of the best tax deductions we get is the one on mortgage interest. Not anymore. The rise in the standard deduction combined with caps on SALT deductions has drastically curbed the value of mortgage tax deductions. As a result, the number of people in the bottom 90% of income who itemize their taxes has fallen precipitously. https://taxfoundation.org/standard-deduction-itemized-deduct... This is a good thing, be…

Yes, the increased standard deduction was one of the best things from the TCJA.

Re: Danes Get 20-Year 0% Mortgages

#204

Post by nemo44x »

matwood wrote: post #180
mason55 wrote: post #153

Earlier quoted context omitted.

Yeah we had a long-term plan to buy a house this summer and we stuck to our plan but it's definitely scary thinking about what will happen when interest rates rise, if we ever wanted to sell. I guess the counterpoint is that the whole market should move in lockstep, so if rates go up and the price of your house goes down, at least the rest of the market should be affected equally. It kills any idea of getting a real…

Yeah, the real return is the equity. The house can act as a small savings account over time. But even that is questionable unless you're prepared to move out at some point, which means transaction costs and buying something new. IMO, for primary residences you did the right thing (if you want a house of course).

I've come to terms with the fact that in most markets a home is not the best way to use your money in terms of return. However, you get to live in it and that's priceless. And like you said, it acts as a savings account over time and that generally works out as people will eventually downgrade after their kids have left.

Another nice thing about owning a home is you can improve it (additions, adding bathrooms, etc) and certain additions more or less pay for themselves in terms of "getting your money back" over enough time. Again, probably not going to outperform the market, but you get to live in it. So even if the market tanks for a few years, I still get the benefits of whatever I've invested in my home.

The trick is to not overspend on a home. Too many people use all their savings to make a downpayment and then use too much of their income to pay for it. This can not only get you in trouble but also puts you at a serious disadvantage in terms of accumulating wealth.

Re: Danes Get 20-Year 0% Mortgages

#205

Post by kzrdude »

supernova87a wrote: post #66

There is a more basic economic question that I am curious about. I don't know how / can't believe how in the 1980s we had the era of 15% interest rates, etc (ok, I have some idea, central bank policies, inflation, etc) -- but it seems now we're in a "forever-0%-interest" situation. The reason I think is that interest/mortgage/etc rates just reflect how much people/banks/etc are willing to receive in profit for parkin…

There is an important point missing. The bank can always lend for a better interest than it gives to its customers. In these cases, they lend for a negative interest rate! Thus the customer pays 0% but the bank still makes money on the loan from for example a government bond of -1% that it is linked to.

Re: Danes Get 20-Year 0% Mortgages

#206

Post by frockington1 »

saberdancer wrote: post #175
acwan93 wrote: post #42

Earlier 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,…

I refinanced my loan once, it took me 5-6 trips to the bank and bunch of signed papers. My rate is low enough and loan short enough that I won't do this again but the whole process in one of EU member states was quite slow and annoying. Is this better in USA?

When I refinanced it was one phone call and then e-signed a document. And a week or two later someone drove to my house to get a wet signature to complete everything. It was with the same lender though so may have been streamlined because of that.

Re: Danes Get 20-Year 0% Mortgages

#207

Post by izacus »

jseliger wrote: post #162
patatino wrote: post #99

Earlier quoted context omitted.

Well, I can't talk about Geneva or Zurich because both cities are very expensive. But generally, prices are going up, the down payment is normally 20% of the price. This is one problem, another one is how they calculate the risk. The "law" is you have to be able to pay the mortgage at 5% and that 5% cannot be more than 1/3 of your income. So if you buy a 1.25m house and take a 1m mortgage 5% is of that is 50k, so you…

But generally, prices are going up This can be resolved any time cities want to build a lot more housing: https://www.theatlantic.com/ideas/archive/2021/01/anti-growt... . Outside of Tokyo: https://news.ycombinator.com/item?id=16704501 , no or very few cities in the Industrialized world have chosen to simply build lots of housing, which will tend to bring prices down towards the cost of construction.

Geneva is surrounded by mountains and a lake, it's hard to build more.

Similarly for Zurich, there are significant hills around and most flat space is already built up.

Re: Danes Get 20-Year 0% Mortgages

#208

Post by gen220 »

tathougies wrote: post #195
marvin wrote: post #115

Earlier quoted context omitted.

In Norway, personal bankruptcy requires an application to the debt enforcement office (a local government authority). If the application is accepted, the debtor gives up all their assets and submits to paying all of their earnings towards their debt, for five years. A politically determined subsistence sum is all they get to keep for themselves. After five years, the agreement ends and the debt is cleared. Each perso…

Yikes. As an American, I would have thought Norway would have a much more lenient form of debt relief based on everything I hear about Scandinavia from our local press. But what you're describing seems incredibly harsh. I wonder if this is why Norwegians tend to be more financially responsible. Only being able to declare bankruptcy once certainly would make people learn their lesson? Is that true? Does it work in pra…

In the US, bankruptcy is often used as an instrument of the wealthy, to escape earlier risky bets. And in some cases, to avoid taxes.

Having such a severe punishment is probably more of a deterrence against risky behavior in the upper 5% of society, rather than a burden on the impoverished.

Without knowing anything about it, I would assume that the politicially-negotiated subsistence amount is probably quite lenient to lower-income folks.

Re: Danes Get 20-Year 0% Mortgages

#209

Post by onion2k »

f6v wrote: post #186
matwood wrote: post #143

Earlier quoted context omitted.

> 1. House prices rise to the point where the down payment is essentially the price of the house. The house price itself becomes imaginary. What you are really worried about is the down payment. Yes and no. This is also true in all markets. No one really buys a house based on the price. They buy it based on the monthly payment (price - down payment and interest rate). The price alone is mostly irrelevant for the buye…

Some places a starter apartment is $25000, and you can work remotely as a developer earning, say, $4000 a month net. It's just hard to wrap my head around 20 year mortgage.

In that position you don't need a mortgage. That's quite simple.

On the other hand, where I live a reasonable small house is £150,000 and senior developer wages are about £30,000 (net). People need mortgages.

Re: Danes Get 20-Year 0% Mortgages

#210

Post by SebastianKumor »

vachi wrote: post #168

The key term here is Danes, not residents of Denmark, but individuals who are born or naturalized Danes, even many of the naturalized ones do not get the same rates. By default Danes get ~5% downpayment where none Danes get ~40%.... yay

Not true, my friend(who is not a danish citizen) bought a flat in copenhagen and got 5% downpayment
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