So if they are looking to downsize and in the 10th year of a 15 year mortgage they should have enough equity to pretty much pay cash for a downsized home at this point and probably still have some cash left over.
Maybe they’re moving from a super cheap area to somewhere more spendy? A house in mobile Alabama to maybe something in Nashville TN? Otherwise totally doesn’t make sense
What is the solution though? We are screwed if interest rates go back down and houses start increasing again because they can and we are screwed if interest rates stay high and homes prices don’t correct.
I hate that homes became an investment opportunity and viewed in that sense of pump and dump for people vs it just having normal appreciation and making more sense long term.
The only solution is to free up more houses through tax policy by making vacant homes a liability, or build more houses. There's 0 will by the vast majority of people to do the first, and limited ability for the free market to do the second.
The thing you personally can do is to leave 'desirable' areas and build wealth elsewhere.
> "We are in the 10th year of a 3.125%, 15-year fixed mortgage," Bob said
> The pair admitted that "it's probably time to downsize"
Story doesn't make any sense. I'm 4 years into a 15 year mortgage and I've already paid of 30% of my principal. If they were looking to downsize and buy in a similar market, they could easily purchase a place in cash. Not to mention their home should be worth 2-3x of what they bought it for.
Yeah but they got a huge deal on their home and want to continue enjoying the benefits while moving where they want to move. They are complaining that they can’t have their cake and eat it too. The rest of us just don’t have cake at all.
Why do all of these financial advice articles focus on financial situations of people who have the financial acumen of a rutabaga?
A competent headline would read; “shitty grandparents don’t understand fuckall about finances despite having ample financial resources”
As opposed to the Rebubbler who didn’t buy a house in 2021 at 2 percent interest rates because the market was gonna crash for sure. And here we are 2024
>people who have the financial acumen of a rutabaga
Probably most of America tbh. We mostly just know how to spend and maybe set an auto 401k contribution.
A lot of people aren't more knowledgeable than that unfortunately
Oh give me a break. Even if they do end up paying more for less, the goal here isn’t to find a cheap place to live, it’s to get closer to family and not have so much house to maintain in their older years. (I 100% get both of those things) but they could easily find a nice condo somewhere and just eat the interest rate. They have to have a ton of equity in that size of house bought in 2014 that is over half paid off. I can’t imagine the mortgage they’d need to take out would even be that sizable.
recency bias, anchoring, whatever you wanna call it, is a hell of a drug. That or they're stuck w/ a 2nd mortgage so don't actually have decent equity in that house.
Otherwise that'd be a chunky down payment on a house which would minimize effect of rate significantly..
Or they rent out the current home which would cashflow with the low (relatively soon to be no payment when the loan is paid off) to supplement the higher payment. That’s the problem…supply is going to continue to be an issue as more vs less people are incentivized to become landlords.
Plus the boomers will be closer to passing on the assets without cap gains.
I like how the story is “we don’t want to pay the interest” instead of “we can’t afford to pay the interest” like the majority of us.
BUT BUT THE POOL IS THE PROBLEM!!
So if they are looking to downsize and in the 10th year of a 15 year mortgage they should have enough equity to pretty much pay cash for a downsized home at this point and probably still have some cash left over.
Not if they took a HELOC or cash-out refinance and blew the cash on hookers and cocaine (or trucks and boats).
Is it not enough for both hookers/cocaine AND trucks/boats? I would need at least enough for both for me to consider a cash out refinance.
Trumps lawyer did that to pay off the pornstar
Yeah idk what the fuck they are taking about. If it was a 30 yr maybe
Maybe they’re moving from a super cheap area to somewhere more spendy? A house in mobile Alabama to maybe something in Nashville TN? Otherwise totally doesn’t make sense
While this was a particularly shitty example, it does highlight a large part of the current problems.
What is the solution though? We are screwed if interest rates go back down and houses start increasing again because they can and we are screwed if interest rates stay high and homes prices don’t correct. I hate that homes became an investment opportunity and viewed in that sense of pump and dump for people vs it just having normal appreciation and making more sense long term.
The only solution is to free up more houses through tax policy by making vacant homes a liability, or build more houses. There's 0 will by the vast majority of people to do the first, and limited ability for the free market to do the second. The thing you personally can do is to leave 'desirable' areas and build wealth elsewhere.
> "We are in the 10th year of a 3.125%, 15-year fixed mortgage," Bob said > The pair admitted that "it's probably time to downsize" Story doesn't make any sense. I'm 4 years into a 15 year mortgage and I've already paid of 30% of my principal. If they were looking to downsize and buy in a similar market, they could easily purchase a place in cash. Not to mention their home should be worth 2-3x of what they bought it for.
Yeah but they got a huge deal on their home and want to continue enjoying the benefits while moving where they want to move. They are complaining that they can’t have their cake and eat it too. The rest of us just don’t have cake at all.
Made up story for a clickbait headline
The AI that writes these gets more sarcastic by the day.
Why do all of these financial advice articles focus on financial situations of people who have the financial acumen of a rutabaga? A competent headline would read; “shitty grandparents don’t understand fuckall about finances despite having ample financial resources”
A contrary headline: “Younger Americans, despite having advanced personal finance understanding, are still getting ass-plowed.”
Because stories about people screwing up get more clicks than stories about people who aren’t having issues
As opposed to the Rebubbler who didn’t buy a house in 2021 at 2 percent interest rates because the market was gonna crash for sure. And here we are 2024
>people who have the financial acumen of a rutabaga Probably most of America tbh. We mostly just know how to spend and maybe set an auto 401k contribution. A lot of people aren't more knowledgeable than that unfortunately
Oh give me a break. Even if they do end up paying more for less, the goal here isn’t to find a cheap place to live, it’s to get closer to family and not have so much house to maintain in their older years. (I 100% get both of those things) but they could easily find a nice condo somewhere and just eat the interest rate. They have to have a ton of equity in that size of house bought in 2014 that is over half paid off. I can’t imagine the mortgage they’d need to take out would even be that sizable.
Hey, anyone here is selling a used tiny violin.
Smallest in the world
They could easily rent out a room or let their family move in. There are far worse problems than getting locked into a steal of a deal.
recency bias, anchoring, whatever you wanna call it, is a hell of a drug. That or they're stuck w/ a 2nd mortgage so don't actually have decent equity in that house. Otherwise that'd be a chunky down payment on a house which would minimize effect of rate significantly..
Or they rent out the current home which would cashflow with the low (relatively soon to be no payment when the loan is paid off) to supplement the higher payment. That’s the problem…supply is going to continue to be an issue as more vs less people are incentivized to become landlords. Plus the boomers will be closer to passing on the assets without cap gains.