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Netherlands here: I had no idea the US has 30 year fixed rates. That is insane. Our housing market is fucked and rates are only locked for 10 to 15 years these days.
It's awesome knowing my payment won't change aside from maybe a bit more each year due to any potential tax increase!
How do you not panic realizing interest rates are rocketing and you'll be priced out of your own home and you can see it coming and there's nothing you can do???
What a shit system that must feel like.
Part of your house is paid off in that time. All mortgages are structured so that in 30 years they are paid in full. So if in 10 or 15 years you need to refinance somehow it will be cheaper than financing 100% of a residence.
That doesn't mean shit if your rate goes from 3% to 8 % and your payment doubles.
Dit he math. Even if u buy a 300000 house and pay off a full third in 3 years which is absurd.
What's 200k at 3% vs 200k at 8%?
Go ahead, I'll wait.
Not sure why the aggression...
Also insurance increases.
Incidentally, my taxes and insurance are more than half of my total mortgage payment, and are responsible for it increasing something like 30% over a decade.
Imagine being 10 or 20 years into your mortgage and suddenly you can't afford your payments anymore due to a rate increase. You have to sell the house and then try to find another one at the inflated rate and then start back from square one.
You'd have to be wildly irresponsible to have that happen. Theoretically you've paid off well over half of your house after 15 years.
Canadian here. It's 5 years for us!
Most people can't afford the real cost of a home and instead end up paying something like 2.5 times the value in interest over those 30 years. Those who can will always go for a 15 year loan and try to pay it off somewhere in the 10 - 12 year range, the rest just pay interest for decades.
In Canada the typical amortization is 25, but you renew at market rates every 3-5 years.
Some people are gonna be fucked raw next renewal period after this rate run but the government instituted a stress test rate you would have to meet to qualify for mortgage which should help keep things stable. Should.
You can also get 15 year loans with fixed rates here in the states. They’re usually .1% better on the interest rate compared to a 30 year, so for most people it doesn’t make sense to go with a 15 year when you can pay substantially less on a 30. Plus homes here are very much a very safe investment. When you own the home you only pay property tax generally after you pay the mortgage and in states like California that can mean an incredibly cheap place to live once paid (I’m talking 100s of dollars a year, though that will go up over time).
People bitch about housing here in the states, and it’s definitely not as good as it once was, but it’s also not as bad as many other places. I travel to Canada regularly and their shit is fucked. 😅
This is actually a significant cause of California's housing crisis.
Are you saying that people living in the homes that they own are causing the housing crisis? Or what?
Love the fact you ignored maintenance cost, incidental repairs, house insurance, and all that. Then you proceeded to sneak in that bullshit at the end.
It’s still quite a bit better than renting. Rents around here cost more than many mortgages.
Home insurance isn't required in all states. Usually it is the lender that requires. Of course it's still a good idea to have it.
You can choose to have a lower term mortgage if you want to.