$100,000 mortgage at 5% for 30 years is $536.83 per month.

$100,000 mortgage at 6% for 30 years is $599.55 per month.

The mortgage payment at 6% is 11.683% more than the payment at 5%.

How am I wrong?





"Joe Parsons" wrote in message
...
On Sat, 06 Sep 2003 19:34:53 GMT, "NOYB" wrote:


"Gould 0738" wrote in message
...

Remember that when 5% mortgages go to 6%, the interest rate has gone up
only 1%
but the cost of money has increased by a factor of 20%....(6 being a
number
120% as large as 5).

Just when it seems that you do indeed *have* a brain, you post something
like this. If a mortgage rate goes up from 5% to 6%, the monthly payment
on
a 30 year mortgage goes up by a little under 12%...not 20%.

Actually, you're *both* wrong--although you are closer with respect to the
15
year mortgage.

Joe Parsons


For a 15 year mortgage, the change is just a little bit under 7%.

NOYB wrote:

$100,000 mortgage at 5% for 30 years is $536.83 per month.

$100,000 mortgage at 6% for 30 years is $599.55 per month.

Using your numbers:

$536.83 x 360 pmts = $193258

Cost of 5% money in your example is $93,258.

$599.55 x 360 pmts = $215838

Cost of money in your 6% example is $115, 838

Here's an interesting observation: The 20% cost differentiation only applies
when working the numbers from the top down!
It's *greater* when working the numbers from the bottom up.

$93,258 divided by $115,838 equals .80 (so there's the 20% I've been talking
about)

However, expressed as a percentage of increase the number is somehow larger
than 20%! Proof: 93258 x 1.2 = 111,909,
a few grand short of the actual new cost number at $115,838.

(Again, I'm just taking your figures at face value without checking them.)

From that perspective, 6% money can be shown to even *more* than 120% the cost
of 5% money, not less.

The mortgage payment at 6% is 11.683% more than the payment at 5%.

How am I wrong?

You're not "wrong" exactly, you're just using an increase in total payment to
argue that *interest costs* don't increase as much as I have claimed.

There is no number of 11.683% or even 12% that comes anywhere close to
expressing the increased cost of the money when borrowing at 6% vs 5%.

I feel that the total payment (P+I) indicates the true "cost" of living in a
house. That's why I'm saying that a jump in the rate from 5% to 6% "only"
increases the cost of ownership by a little less than 12%. Of course, I'm
looking at this from the perspective of someone that won't be in their house
for anywhere near the full term of the loan. In that case, I ask myself
"how much will this house *cost* me per month"?

I think most people think that way when buying a house.
"What's my note?"


"Gould 0738" wrote in message
...
NOYB wrote:

$100,000 mortgage at 5% for 30 years is $536.83 per month.

$100,000 mortgage at 6% for 30 years is $599.55 per month.

Using your numbers:

$536.83 x 360 pmts = $193258

Cost of 5% money in your example is $93,258.

$599.55 x 360 pmts = $215838

Cost of money in your 6% example is $115, 838

Here's an interesting observation: The 20% cost differentiation only
applies
when working the numbers from the top down!
It's *greater* when working the numbers from the bottom up.

$93,258 divided by $115,838 equals .80 (so there's the 20% I've been
talking
about)

However, expressed as a percentage of increase the number is somehow
larger
than 20%! Proof: 93258 x 1.2 = 111,909,
a few grand short of the actual new cost number at $115,838.

(Again, I'm just taking your figures at face value without checking them.)

From that perspective, 6% money can be shown to even *more* than 120% the
cost
of 5% money, not less.

The mortgage payment at 6% is 11.683% more than the payment at 5%.

How am I wrong?

You're not "wrong" exactly, you're just using an increase in total payment
to
argue that *interest costs* don't increase as much as I have claimed.

There is no number of 11.683% or even 12% that comes anywhere close to
expressing the increased cost of the money when borrowing at 6% vs 5%.

I feel that the total payment (P+I) indicates the true "cost" of living in a
house. That's why I'm saying that a jump in the rate from 5% to 6% "only"
increases the cost of ownership by a little less than 12%.

Fair enough. Most people are "payment buyers" when it comes to a home.

But, don't forget you're talking a 12% increase in what is, for most people, a
relatively major chunk of the household budget. The example you used in a
previous post examined a $100,000 mortgage and the payment went up over $60 a
month. Most people are going to have a mortgage 2, 3, or more times that amount
these days. Not all potential buyers are in a position to absorb 60, 120, or
180 additional dollars a month and will want some help via a larger discount in
the selling price.

"Gould 0738" wrote in message
...
I feel that the total payment (P+I) indicates the true "cost" of living
in a
house. That's why I'm saying that a jump in the rate from 5% to 6%
"only"
increases the cost of ownership by a little less than 12%.

Fair enough. Most people are "payment buyers" when it comes to a home.

But, don't forget you're talking a 12% increase in what is, for most
people, a
relatively major chunk of the household budget. The example you used in a
previous post examined a $100,000 mortgage and the payment went up over
$60 a
month. Most people are going to have a mortgage 2, 3, or more times that
amount
these days. Not all potential buyers are in a position to absorb 60, 120,
or
180 additional dollars a month and will want some help via a larger
discount in
the selling price.


How about a $250, 500, or $750 increase when their 4% 3-year ARM hits 8% in
5 years?

On Sun, 07 Sep 2003 01:59:26 GMT, "NOYB" wrote:

$100,000 mortgage at 5% for 30 years is $536.83 per month.

$100,000 mortgage at 6% for 30 years is $599.55 per month.

The mortgage payment at 6% is 11.683% more than the payment at 5%.

How am I wrong?

Actually, you're not, and I sit corrected.

Joe Parsons






"Joe Parsons" wrote in message
.. .
On Sat, 06 Sep 2003 19:34:53 GMT, "NOYB" wrote:


"Gould 0738" wrote in message
...

Remember that when 5% mortgages go to 6%, the interest rate has gone up
only 1%
but the cost of money has increased by a factor of 20%....(6 being a
number
120% as large as 5).

Just when it seems that you do indeed *have* a brain, you post something
like this. If a mortgage rate goes up from 5% to 6%, the monthly payment
on
a 30 year mortgage goes up by a little under 12%...not 20%.

Actually, you're *both* wrong--although you are closer with respect to the
15
year mortgage.

Joe Parsons


For a 15 year mortgage, the change is just a little bit under 7%.

Thanks Joe.


"Joe Parsons" wrote in message
...
On Sun, 07 Sep 2003 01:59:26 GMT, "NOYB" wrote:

$100,000 mortgage at 5% for 30 years is $536.83 per month.

$100,000 mortgage at 6% for 30 years is $599.55 per month.

The mortgage payment at 6% is 11.683% more than the payment at 5%.

How am I wrong?

Actually, you're not, and I sit corrected.

Joe Parsons






"Joe Parsons" wrote in message
.. .
On Sat, 06 Sep 2003 19:34:53 GMT, "NOYB" wrote:


"Gould 0738" wrote in message
...

Remember that when 5% mortgages go to 6%, the interest rate has gone
up
only 1%
but the cost of money has increased by a factor of 20%....(6 being
a
number
120% as large as 5).

Just when it seems that you do indeed *have* a brain, you post
something
like this. If a mortgage rate goes up from 5% to 6%, the monthly
payment
on
a 30 year mortgage goes up by a little under 12%...not 20%.

Actually, you're *both* wrong--although you are closer with respect to
the
15
year mortgage.

Joe Parsons


For a 15 year mortgage, the change is just a little bit under 7%.