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Topic: Interest rates lowest ever
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radiorahim
rabble-rouser
Babbler # 2777
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posted 21 February 2004 01:51 PM
quote:
Make sure you're not buying because you figure that you can sell for a higher price later. That's how housing bubbles start.
Yeah...buy because you need a place to live...not with the idea of making money. Understand Japan got into a real estate bubble that burst big time and they still haven't recovered from it. Of course we had a bubble here in the late 1980's too that burst. If prices spike really quick then sooner or later they're going to crash really quick.
From: a Micro$oft-free computer | Registered: Jun 2002
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Pimji
rabble-rouser
Babbler # 228
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posted 22 February 2004 11:01 PM
Just for fun I did some quick calculations.
If a person bought a house, south of Ottawa that cost $120,000 in 1997 with a mortgage rate of 7% amortized over 25 years the total interest paid at the end is $131,974 at $840.50/mo.The same house in 2004 is assessed at 200,000. If it was a fresh start with a mortgage rate of 4.5% with a 25 year amortization the total interest paid would be $131,980 at $1,106.95/mo. It would cost $79,935.00 or $266.45/mo more over 25 years if the house was bought in 2004 or about 2 years of work for the average income person. I had wondered before I did this calculation if the amount paid would have been the same due to the higher housing prices being offset by lower interest rates. The house is worth more and this will help if the home owner wants to dig the debt hole a little deeper later on, however the increased property value only feels good on paper, but in real life terms this requires more hours of work to pay the higher house price and the increased municipal taxes that accompany the higher assessment. I guess this can change depending if the mortgager has a steady salary, gets canned, or makes more money and decides to pay off the debt faster. I’d say take the time and look for a home not just a house, get a tool box, ladder and shovel, learn how to patch holes, solder pipes, run wires and paint. Make sure the structure is sound so spend the extra cash and get a home inspection done. Make sure the home inspector has references. The great thing about home repairs is that when the project is done you can admire the fine work as a monument to yourself.
From: South of Ottawa | Registered: Apr 2001
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ReeferMadness
rabble-rouser
Babbler # 2743
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posted 01 March 2004 11:56 PM
Well, Pimji, this is how most people think. Which is why real estate gets so overheated in the first place. Interest rates don't stay the same forever. The person who bought in 1997 would be renewing their mortgage in 2002 when interest rates were substantially lower. And by then, they'd be sitting on a property that have increased considerably in value. Meanwhile, the people who buy in 2004 will have to renew in 2009, probably at a higher rate. And it is likely they will will endure a couple of years of flat or perhaps negative change in value of their house. This is why it makes more sense to buy when interest rates are higher and prices lower.
From: Way out there | Registered: Jun 2002
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