With this math I just acquired a 10 year fixed for $1 more per month.
Comment on Bank Workers, Rejoice!
peoplebeproblems@midwest.social 10 hours ago
So I did the math. A 30 year fixed and a 50 year fixed have a monthly payment difference of $1.
What the absolute fuck.
DioramaOfShit@lemmy.world 3 hours ago
frank@sopuli.xyz 7 hours ago
What?
Some random numbers that are of course VERY variable, but I just ran the calcs with 400k, 5% down, 6% APR for 30 and 50 years
$2648 for 30 years $2369 for 50
Now that is of course not a great deal, presumably you’d also get a little better rate for the longer loan (more points) but it’s not a dollar.
buddascrayon@lemmy.world 6 hours ago
Don’t forget that on top of all of that you have to pay property taxes.
frank@sopuli.xyz 3 hours ago
The calc I used for that number put $3k property tax annually amortized, good call
Dozzi92@lemmy.world 6 hours ago
I just question if the 50 is getting the same rate as the 30. Obviously, all else equal, math is math. Banks see that $300 savings as a potential extra $150 a month.
dejected_warp_core@lemmy.world 7 hours ago
This raises questions about the opportunity cost of $300/mo. It’s not a huge amount of money, but for some budgets, it might make a car payment or groceries possible. Or, if saved or invested wisely, would it tip things in favor of the 50-year term?
MrEff@lemmy.world 4 hours ago
$300/month (at the beginning of the month) invested over 30 years, compounded annually at 6% = $198,290.40
If you kept that going for a full 50 years, the last 20 years of interest really starts to ramp up and gives you a final value of $1,084,402.22
If instead, you ONLY paid the mortgage for 30 years, then invest the full mortgage payment of $2,648 into the investment account for the next 20 years (a total of 50 years out. Same end point) you would have an investment account worth $1,215,042.49
So, even in your scenario it is still a loss to take a 50 year over the 30 year, and the 300$ difference is negligible. If $300 was the difference of someone being able to afford groceries or not for the month, then they should not have qualified for a $2,648/mo mortgage.
Korhaka@sopuli.xyz 7 hours ago
Why would anyone take one out in that case then? You can always overpay and pay it off sooner though.
kameecoding@lemmy.world 9 hours ago
Because for the first lot of years you are paying basically 0 principal
boaratio@lemmy.world 9 hours ago
I owned my first house for 19 years, which was purchased in the fall of 2006. We sold it for the exact same price as we paid for it, and barely came out ahead. I know it was poor timing, but the idea of leaving a home and using it as part of your retirement income is a lie. The banks are laughing all the way to the bank.
Taldan@lemmy.world 7 hours ago
Median home prices peaked at $216,000 in August 2006. The lowest they’ve been in 2025 is $414,000. You had some absolutely atrocious luck. You buy in Detroit or something?
Source: dqydj.com/historical-home-prices/
ElegantBiscuit@lemmy.zip 3 hours ago
Not who you responded to but it depends entirely on the location. In the northeast there is decent and consistent appreciation and there has been for decades because it has always been populated. But home appreciation over 20, 30, or 50 years will struggle to beat the S&P500. Factor in property taxes and upkeep and you may just barely keep up with inflation. Just from inflation $216k in 06 would be $358k in 2025. As an asset its primary function is being a store of wealth that happens to be the roof on your head, something you can refinance to borrow money, and something to sell basically to pay for whatever you downgrade to when you enter the stage of preparing for death, whether it’s a condo or a nursing home.
All the money to be made comes from buying in bulk and renting out to people who cannot afford because everyone bought to rent out, while local government restricts supply through zoning because it would lower property values of everyone who only had their house as retirement because wages have not kept up with productivity or inflation and pensions and unions have been gutted.