121–130 of 344 posts
Earlier quoted context omitted.
That’s just a mortgage with extra steps…
not the same - a mortgage require a deposit. Renting will be cheaper, because a deposit is basically a capital cost (that people comparing renting and buying don't take into account).
Mortgage loan officers (and also car salesmen) do all in their power to redirect people away from the fact that they're going to fork over e.g. $600k in total interest and principle for a $300k sticker-price house over 30 years. They do this by focusing on the monthly payment rather than the actual total spend. Convincing buyers that monthly out-of-pocket spend is somehow a proxy for the actual purchase price is a po…
House prices are determined to a large extent by interest rates [1]. People have a certain amount they are willing to spend on a mortgage payment each month. If rates are lower, that amount buys a bigger mortgage, so house prices are higher.
[1] https://www.bankofengland.co.uk/-/media/boe/files/working-pa...
Mortgage loan officers (and also car salesmen) do all in their power to redirect people away from the fact that they're going to fork over e.g. $600k in total interest and principle for a $300k sticker-price house over 30 years. They do this by focusing on the monthly payment rather than the actual total spend. Convincing buyers that monthly out-of-pocket spend is somehow a proxy for the actual purchase price is a po…
You’re forgetting about inflation here. Sure you’re paying 300k of interest for a 400k house at 5%, but your mortgage payement keeps decreasing in real terms.
Mortgage loan officers (and also car salesmen) do all in their power to redirect people away from the fact that they're going to fork over e.g. $600k in total interest and principle for a $300k sticker-price house over 30 years. They do this by focusing on the monthly payment rather than the actual total spend. Convincing buyers that monthly out-of-pocket spend is somehow a proxy for the actual purchase price is a po…
Mortgages let you pay 2052 dollars against 2022 prices and that’s under appreciated by the financially illiterate.
Ignoring what the value of a currency may be I wish buyers would reject bad prices. I really care about what the actual cost of a thing is from dirt to package. The companies that market, make and deliver products should make a profit but I'm not buying their Ferrari. Capitalism start with "No deal, not at that price."
Problem is the amount of money people will pay for a place to live is unlimited. If people would take 300 year mortgages that would put your kids into debt bondade if thry could
Mortgage loan officers (and also car salesmen) do all in their power to redirect people away from the fact that they're going to fork over e.g. $600k in total interest and principle for a $300k sticker-price house over 30 years. They do this by focusing on the monthly payment rather than the actual total spend. Convincing buyers that monthly out-of-pocket spend is somehow a proxy for the actual purchase price is a po…
* The government lets you deduct your mortgage interest from taxes * The house will appreciate in value over the term of a 30 year loan (almost certainly) * You are paying for your interest and payment in tomorrow's money
Also, what am I going to do instead, rent? My rent can go up $50 bucks a year where my mortgage payment is locked in. For most people, home ownership is the safest and best way to build a retirement nest egg and a tangible asset to borrow against in times of trouble.
Mortgage loan officers (and also car salesmen) do all in their power to redirect people away from the fact that they're going to fork over e.g. $600k in total interest and principle for a $300k sticker-price house over 30 years. They do this by focusing on the monthly payment rather than the actual total spend. Convincing buyers that monthly out-of-pocket spend is somehow a proxy for the actual purchase price is a po…
> But since the total lifetime spend on a house is absolutely lower if the interest rate over the life of the loan is lower, then it's true that lower interest rates make homes cheaper over their lifetimes. House prices are determined to a large extent by interest rates [1]. People have a certain amount they are willing to spend on a mortgage payment each month. If rates are lower, that amount buys a bigger mortgage,…
Mortgage loan officers (and also car salesmen) do all in their power to redirect people away from the fact that they're going to fork over e.g. $600k in total interest and principle for a $300k sticker-price house over 30 years. They do this by focusing on the monthly payment rather than the actual total spend. Convincing buyers that monthly out-of-pocket spend is somehow a proxy for the actual purchase price is a po…
These numbers are a bit high, but definitely in the ballpark [1]. BUT, I think that framing it as total interest + principal is also misleading. Let's say you locked in an interest rate of 2.75% in 2020-21. Your total interest payments on a 300k house (with 20% down) would be $112k, so total P&I would be $412k. Someone might look at this simplistically and think, wow, I'm overpaying by 37% if I take out a mortgage. But at a 2.75% rate, anyone who is financially savvy is going to recognize that as a steal. It's almost like free money, because it's being paid off over 30 years. Your $1500 monthly payment might seem like a lot now, but even with relatively low inflation, your payment in years 15-30 are going to seem like a bargain when they come around. But it's hard for many people to think in those terms.
[1] Mortgage rates right now are around 4.75% on a 30 year. Assuming 20% down on a 300k house (60k), you would take out a loan for $240k, and over 30 years you would pay $210k in interest, or a total of 510k in principal + interest. Your monthly P&I would be about $1,530.
Why did the BLS do this in the 1980's, no one is asking? Well, I will tell you, in a another simple chart:
https://www.macrotrends.net/2015/fed-funds-rate-historical-c...
Check out where the FED rate was in the 1980's.
TLDR, they did not want housing prices to be included in inflation since they knew they were going to go on this rate lowering binge which would increase the price of housing.
The folks in that article are trying to tell you housing prices are cheaper because you are paying less per month???? What???? HA! No, they are hiding inflation by using rent equivalent, which is not even close to the real rent prices. If you are paying more to own a house (if you still have a mortgage you do not own your house) then housing is no2 more affordable! Wow, the doublespeak!!!
Earlier quoted context omitted.
I think the “new” (now 39 years old) method is superior overall, but I think it’s entirely factually correct that they took home prices out of the index. They did not take housing expenses out, which is what many people whose sole exposure to economics is via memes seem to think/be encouraged to think.
The new methodology is clearly the better one. But headlines like this serve to reinforce the notion that somehow the "official" inflation figures are wrong. Which gives power to politicians who deliberately push this narrative; which is to day, dishonest ones. The fact is, lots people hear that "housing prices" aren't included in the CPI, and interpret that as housing costs are not included. There is no nuance for m…