Reply to Why does it take 30 years to buy an old house for the typical family?

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Reply to "Why does it take 30 years to buy an old house for the typical family?"

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[quote=Anonymous][quote=Anonymous]Because most people either can't or don't want to lock themselves into a higher payment with shorter duration. Plus, the bank can charge a higher interest rate with a longer term. I mean if I were a bank and can charge 5% interest for 30y vs 4% interest for 15, guess which one I would prefer, even if paid off early. [/quote]

+1.  A friend of mine was in a situation where the 15-year mortgage backfired on her.  She and her husband bought a house in NW DC approximately 8 years ago.  They both had good jobs, and had 2 sons.  Their jobs were going well, and so they poured money into the house, making extra payments, with the goal of eventually paying off the house early.  Then, during the pandemic, her husband's earnings went promptly to 0, as he was in a job that depended on big in-person events.  It seems like they should have been able to get the PPP money, but I guess that wasn't enough.  If they had had a 30-year mortgage with low payments, and if they had not made extra payments, they could have made it through the pandemic.  Instead, they had to sell the house and move to a LCOL state, right when the boys were within 1-2 years of graduating from high school.  [/quote]

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