example
$250,000 house, with $25,000 (10%) down payment 6% interest, 30 year loan
Mortgage Repayment Summary
$1,609.41 Monthly Payment
$579,385.93 Total of 360 Payments
$252,385.93 Total Interest Paid
Jan, 2041 Pay-off Date
now, same house at just 3% more (9% rate)
$2,070.82 Monthly Payment
$745,494.32 Total of 360 Payments
$415,213.07 Total Interest Paid
Jan, 2041 Pay-off Date
you are paying $160,000 (almost 2/3rd's) more in interest with just a 3% move
now, make the rate 12% (rates were around 20% in the late 70's-early 1980's)
$2,574.80 Monthly Payment
$926,926.20 Total of 360 Payments
$593,269.95 Total Interest Paid
Jan, 2041 Pay-off Date
now you are paying almost $600,000 in interest alone
total payments of $926,000 for a $250,000 house
interest rates matter, and that house will will have to increase in value 4.5% EVERY year (on average) for those 30 years just to break even when if it was sold in 2041
the average US house has lost close to 30% of its value in just the last 3 years, so those people will probbly never recoup if they make all the payments
http://www.bloomberg.com/news/2011-02-09/home-price-decline-leaves-27-of-u-s-owners-underwater-on-loans.html27% and climbing of all US mortgages are underwater, in many areas, it is well over 50%