Quote:
Originally Posted by Isaac Zachary
Doing some quick math, it seems for every $100,000 of home you'll have total monthly payments of around $700, which at around 25% of income (still need more for maintenance and repairs, so could eat into 30% or more) you need about $22 per hour at a full time job.
The houses around here are now at $400k and up. So that's around $2,400 per month and about $88 per hour needed to pay for that...
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You know why that is? Because the banks are giving out loans for 30 years, at 2.5%, with only 3.5% down which I am assuming is just to cover closing cost. Inflation on housing or inflation in general is a lot more than 2.5% so I'm not sure how they are making money on mortgages in the long term. I assume the thinking is hardly anybody keeps the loan for the full 30 years, and it doesn't matter as long as the prices of homes keep going up and they keep getting refinanced by the new owner every couple of years. But change the loan terms where people can only buy what they can actually afford and those prices will come way down. Might crash the economy again. Change to 15 years, 20% down mandatory, and an actual apr rate ~ at least 5%. House prices would drop overnight. Same way with long boat loans, car loans, truck loans, college loans etc... Everything they touched got expensive. Its an upper hand at first until later when its not.
Also, my loan for 200k is about $1015/mo. Thats including all escrow and i don't have pmi.