Do You Believe in Usury?

[netmouse]

[Poll #1343192]

Comments

[sethb.livejournal.com]

A 30-year loan that charges half the principal in interest is 1.67%. Keep dreaming.

Are you forgetting that the borrower gets the use of the house?

[netmouse.livejournal.com]

So what, you're saying the borrower is responsible to pay not only interest on the capital loan, but also some sort of rent to the bank?

[sethb.livejournal.com]

No, I'm saying that a house isn't bought for profit but for living in. The bank charges rent (called "interest") for its money. Someone who views a house purely as a financial investment (and isn't planning on renting it out) will make bad decisions.

[yarram.livejournal.com]

"A 30-year loan that charges half the principal in interest is 1.67%."

According to here (http://mortgages.interest.com/content/calculators/mortgage_calculator.asp?unroundedPayment=536.82162301214&loanAmount=100000.00&nrOfYears=30&nrOfMonths=360&interestRate=5.00&startMonth=1&startDay=4&startYear=2009&monthlyPayment=536.82&monthlyAdditional=0&yearlyAdditional=0&yearlyAdditionalMonth=1&oneAdditional=0&oneAdditionalMonth=1&oneAdditionalYear=2009&paidOffDate=Feb+4%2C+2039&showAmort=Show+Amortization+Table), the total interest on $100,000 at 5% is ~$93k. At 2.5%, it comes to ~$42k, which is less than half, so either the amortization table is wrong or you are.

[sethb.livejournal.com]

I was ignoring the amortization. Getting a 2.5% mortgage isn't any more likely than 1.67%, though.

[yarram.livejournal.com]

Ah. That explains the discrepancy. You are correct about the fantasiacal nature of either interest rate...