I have read that Americans have access to 30yr fixed rate mortgages.
Is that a full 30 years at the same rate, or is it, say, 5 years at the initial rate, and then you negotiate the next 5 year rate? The latter is how it works in Canada: 30 years to pay it off, but the rate is guaranteed for a much, much shorter period.
‘Cause if it’s the former, all y’all were nuts not to lock in a 30yr loan. Virtually any investment would pay better than the interest on the loan. Especially on a 30yr timeline.
Yeah, 30 year fixed mortgages are pretty common in the US. They're generally a bit higher than the equivalent variable rate.
And yes, they've been practically giving money away for so long that anybody needing a mortgage should have locked that rate in.
I suspect many didn't because at any given point, the variable rate loan will be cheaper. And with loan rates that low, re-financing would be a hassle without a clear short-term benefit. And that held up for well over a decade.
One saving grace: most variable mortgages are limited in how much they can go up (or down) in any year. So it will take a few years before they go up to their maximum potential rate. I'm not sure what mortgage rates will do between now and then. I'd love to see this as a temporary pendulum swing, but the "temporary" free money era lasted way long than I would ever have imagined.
Is that a full 30 years at the same rate, or is it, say, 5 years at the initial rate, and then you negotiate the next 5 year rate? The latter is how it works in Canada: 30 years to pay it off, but the rate is guaranteed for a much, much shorter period.
‘Cause if it’s the former, all y’all were nuts not to lock in a 30yr loan. Virtually any investment would pay better than the interest on the loan. Especially on a 30yr timeline.