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A Huge Number of Homeowners Have Mortgage Rates Too Good to Give Up (www.nytimes.com)
submitted 2 years ago by to c/news@lemmy.world
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[–] 7 points 2 years ago (7 children)

Don't you have to renew it every 5 years?

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  • [–] 29 points 2 years ago (2 children)

    Nope, US has 15 and 30 year fixed rates available. You can get an arm that has a variable rate, but they've been un popular after 2008, and with the low interest rates not worth it.

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  • [–] 11 points 2 years ago (2 children)

    Holy shit. We don't have that in Canada. I wish we did. A lot of people have lost their homes due to raising interest rates as they have to renew every 5 years or so. Real estate in Canada is so fucked up.

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  • [–] 1 point 2 years ago (1 child)

    Wow! I did not know that! You essentially refinance your home every 5 years? How does that work? With new closing costs and everything?

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  • [–] 3 points 2 years ago* (1 child)

    Not who you were talking to, but no, the closing costs are one time only. You basically just renew or get a new mortgage somewhere else. Ours is coming up in October, we’re a bit worried but hopeful it won’t be too bad. We’ve got wiggle room as we got a great deal on our house but it’s still going to suck. I have seen a 10 year fixed, might go for that if we can get a good enough rate.

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  • [–] 10 points 2 years ago (1 child)

    That’s not a thing in the US like it is in Canada. I can keep my sub 3% mortgage for the 25 years I have left on it.

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  • [–] 2 points 2 years ago

    There are Adjustable Rate Mortgages in the US too. My sister-in-law lost her house a while back where her rate went up. I think they lock you in at a low rate for the first 5 years and then they go up. It sounds like a good idea if you're confident that rates are going to stay low and your home will increase in value making it easy to refinance. But in reality, no one can predict the market 5 years out, so I wouldn't recommend it.

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  • [–] 8 points 2 years ago (2 children)

    I haven’t heard of having to renew mortgage interest rates. A fixed interest rate should be good for the life of the loan.

    I’m at 2.875% on a 25-year loan. I never plan on moving.

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  • [–] 3 points 2 years ago (1 child)

    Depends on where you live. Odds are most people reading this are in the US or Canada where fixed interest rates for life of the loan is common, though you can get an ARM. However in many other countries you cannot get those loans, and those people have to renew every few years.

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  • [–] 2 points 2 years ago (1 child)

    Not Canada. Highest I’ve seen is 10 year, most of the time it’s 5.

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  • [–] 4 points 2 years ago (1 child)

    In USA, refinance happens only when consumer wants to. Usually to get a better rate or cash in on some equity I think.

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  • [–] 3 points 2 years ago (2 children)

    In Canada, the mortgage has to be renewed every 5 years or less depending on your contract. They'll never let you have a 30 years mortgage on a 2% interest rate the whole time.

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  • [–] 3 points 2 years ago (1 child)

    So what happens if you go to renew and they’re like “screw you, 8%”, and you can’t afford that increase? Do they just foreclose your house?

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  • [–] 1 point 2 years ago

    Well if you can't afford it, you take a temporary mortgage with the objective to sell.

    Otherwise you add a lump sum to reimburse the capital to reduce your payments.

    Different banks will offer different rates as well so you can shop around and negotiate.

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  • [–] 3 points 2 years ago* (last edited 2 years ago)

    Nope :)

    I think you may be thinking of an ARM (adjustable rate mortgage) where the bank recalculates the interest rate every few years based on the current federal rate (I'm not a money-ologist, but I think that's the broad strokes of it).

    I pay 2.1% APR until it's paid off or I choose to refinance again (lol, right). The only thing that changes my monthly payment are the stuff paid from escrow (property taxes and homeowners insurance) since those can vary and the bank takes care of those by folding them into my payment amount.

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  • [–] 0 points 2 years ago (1 child)

    Not sure what makes you think this, but most mortgages are a contract for 15 to 30 years that lock you into a rate until the house is paid off. You may be thinking of some kind of variable rate mortgage but I though those renewed the rates way more often than 5 years but I'm not sure. It'll all depend on the mortgage terms.

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  • [–] 23 points 2 years ago (1 child)

    The U.S. is the only country in the world where the 30-year fixed rate mortgage is the most popular way that people buy houses. It’s the deliberate result of government policy—government-sponsored enterprises Fannie Mae and Freddie Mac buy mortgages from lenders, ensuring that they continue to offer such loans at little risk to themselves.

    https://www.investopedia.com/why-high-mortgage-rates-matter-less-in-the-u-s-than-in-other-countries-8384678

    All the non-Americans here can't get 30 year fixed mortgages, that's why a good part of the Lemmings here are confused

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  • [–] 4 points 2 years ago

    30 year fixed rate with a 30 year pay-back period is available in the Netherlands too, but most people take the 20 year fixed rate for a 30 year repay period, because it's lower interest, and after 20 years, the remaining principal is pretty low.

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  • [–] 0 points 2 years ago (2 children)

    No who told you that? If your interest is fixed you don't fuck with that

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  • [–] 8 points 2 years ago (2 children)

    In the UK it's quite unusual to have a fixed rate mortgage that goes that long. Normally you'd get a decent rate for 2-5 years, at which point the rate changes to whatever the current default is, and you get the opportunity to fix for another few years

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  • [–] 4 points 2 years ago

    Well mine isn't it fix 30 years. You can get one of those our a floating rate but goddamm I was told to only get a fixed 30 year mortgage. Correct that most people do refinance in 5 years but in today's market no fucking way.

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  • [–] 0 points 2 years ago (1 child)

    Somehow I think that would be great for un-fucking our "home investment" slave system in the US where landlords buy all these homes on credit, convert them to multifamily, and then use the labor of renters indefinitely while allowing the homes to get worse and worse.

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