Yes, and it also has to be balanced against the expected profit from the resale of the home. Home-buying turned into a horrible prospect for folks, especially those on marginal-to-risky loans, because the houses they bought 2-5 years ago are now worth *less* than the original purchase price, never mind sum[(purchase price),(interest paid)]. This turn of events makes *any* rate of interest unappealing for a homebuyer.
OTOH, if one can reasonably expect to double the value of one's investment in 20 years, a 30-year loan that charges half the principal in interest may not be as dumb as it sounds, if the risk of default is low-to-moderate. One still gets a 50% profit, essentially splitting the profit 50-50 with the bank. But note that the bank sets up the amortization schedule such that it gets most of its share of the profit in the first 10-15 years. Whether this constitutes a reasonable service charge (and reasonable risk against potential profit) is at the borrower's discretion.
Like I said, it all depends on context and trade-offs.
no subject
OTOH, if one can reasonably expect to double the value of one's investment in 20 years, a 30-year loan that charges half the principal in interest may not be as dumb as it sounds, if the risk of default is low-to-moderate. One still gets a 50% profit, essentially splitting the profit 50-50 with the bank. But note that the bank sets up the amortization schedule such that it gets most of its share of the profit in the first 10-15 years. Whether this constitutes a reasonable service charge (and reasonable risk against potential profit) is at the borrower's discretion.
Like I said, it all depends on context and trade-offs.