Quote:
Originally Posted by TheGrimm
I don't get why anyone would want to do a 30/35/40 year mortgage in the first place. If you need to stretch yourself THAT much to get approval or feel comfortable with your monthly payments you should simply be buying a lower cost home or condo etc.
I really don't think this will impact the market a ton, if anything it will hurt the mini mansion buyers with mid-income levels. All these $750-900's 3000 sq foot homes on the edge of the city will be a harder sell. They will be the first to get hit if there is a "correction" anyway.
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Longer amortizations make sense if you are renting the place out. The interest portion is a write off, while the capital portion is not. It makes sense to stretch the mortgage out as long as possible. There's also nothing stoping you from paying extra money towards the capital and de facto turning it into a shorter amortization. You basically have more flexibility.
This move should delay the increase in interest rates.