Quote:
Originally Posted by Hockeyguy15
Honest question, would you rather spend $100,000 on a house with 19% interest or $400,000 at 4%? I know everyone gripes about how bad interest rates were back then but I think if I had the choice I would go with the 1980's option over today's option.
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The $100,000 house in the 1980s would likely get you a smaller house than the modern equivilent as average house sizes increased greatly over the 90's as the baby boomers advanced through their careers and credit started to become cheaper again.
Running the numbers, the difference of mortgage payments of a $100,000 mortgage at 19% and $400,000 mortgage at 4% is only about $560/month dollars amortized over 25 years. With the increase in wages between 1980 and now, the $400,000 mortgage is more affordable. This is all assuming that interest rates would stay consistant to these numbers over the long term, which is not a fair assumption to either case.