seneca on Farcaster

seneca pfp

This broke my brain a bit. Chart shows a typical $500K mortgage at 8% fixed. You’re mostly paying interest for decades. Equity only kicks in the last 7–10 years. Total paid: ~$1.2M. Interest alone: ~$700K. I get its pros but levering up into an illiquid asset in a post-ZIRP world .. ?? Pls help me make sense why this is sold as the safe and very normal thing to do.

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Erik pfp

most are desensitized to the risks and it doesn’t help that realtors are most times trained on only that single market, i don’t think the next 30 will be anywhere close to as easy as the last 30 in terms of real value appreciation can be a good *life* choice tho while potentially not being the optimized financial choice

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Zach pfp

Inflation was the first thought that comes to mind and it seems like it softens things quite a bit (TIL Fisher equation)

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Jacob pfp

most ppl alive today (excluding those who bought houses in or after 2022) have had a lot of opportunities to refinance for interest rates around 3-4% hope that time comes again! also, can't really think of a primary residence as an investment asset, it's relative to the cost of renting factoring in tax benefits

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Jonny Mack pfp

wdym equity only kicks in last 7-10yrs?

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Nicholas Charriere pfp

Nicholas Charriere

You gotta take into account that owning land or a roof is a very important part of life.

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Steve (ozFather) pfp

Steve (ozFather)

That’s basically my student loan debt balance and I don’t even have a house yet.

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BrightFutureGuy 🎩↑ pfp

BrightFutureGuy 🎩↑

why it is sold 1/ as safe = because you can't runaway with it 😃 2/ normal = a lot of people make a lot of money on you doing that

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Reeeny pfp

I am paying 2% for a flat for 20 years. If everything would have gone, like I thought it would (spoiler: it didn't) I could have had rent pay for interest and payback. Also no bank would give me 200k to gamble on stocks, but they have no problem giving you 200k for property. So maybe it is a leveraged play for the common man?

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Laminar pfp

If it’s possible, it doesn’t hurt to pay extra towards the principal every month. It can reduce the total interest cost and maybe even help pay off the house sooner. It is totally crazy, I remember how stunned I was when I first learned about this.

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Caygeon.degen.eth 🎩🏰🍖 pfp

Caygeon.degen.eth 🎩🏰🍖

You have to factor roof-over-head cost, at least when considering the investment angle. So even tho you are paying interest only, there is a utility. And while you’re living you’re exposed to price appreciation.

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kianga.eth pfp

Bankers are gangsters

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