Re:U.S. mortgage interest rates jump to 7.16%, highest since...
by mminer237 on Wednesday October 26, 2022 @11:30AM
(#33345244)
If you buy a $225,000 house at 7%, you pay $45,000 down and $1,200/month. If things stay like that and you move after five years, you'll have about $169,500 left on your mortgage and thus get about $55,500 back out, $10,500 more than your down payment.
If you buy a $410,000 house at 2%, you pay $82,000 down and $1,200/month. If things stay like that and you move after five years, you'll have about $286,000 left on your mortgage and thus get about $124,000 back out, $42,000 more than your down payment.
Re:U.S. mortgage interest rates jump to 7.16%, highest since...
by lotsofpulp on Wednesday October 26, 2022 @11:59AM
(#33345662)
You would have to account for the difference in down payment and opportunity cost of investing the $37k difference in down payments for the same period.
So in the 7% scenario, you have $37k + investment return + $10.5k.
In the 2% scenario, you have $42k.
This is a separate calculation of how much one can sell their house for relative to purchase price, unrelated to preferring low interest rate/high purchase price or high interest rate/low purchase price.
But based on decades of interest rate history, it would seem prudent to bet the Fed will lower rates again in a few years and you can refinance to a lower interest rate.