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pivantun t1_irgeift wrote

Reply to comment by hmiamid in [OC] House price you can afford by paying 1000/month for 30 years vs. interest rate by hmiamid

That doesn't sound right for a standard 30-year-fixed-rate loan. They are designed to fully pay-off the principal at 30 years.

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hmiamid OP t1_irgksfl wrote

In terms of abstract maths, it's called a limit towards infinity. We can never realistically create an infinite interest rate, but if we do, we pay 1000/month to own nothing after 30 years (or any amount of time for that matter). The principal is simply 0. I mean the original question I think was more of a mathematical curiosity than anything realistic.

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pivantun t1_irglrby wrote

Oh, I think I understand what you're saying. That as the interest rate goes up and you limit the monthly payment to $1000 then you'll have a situation where the loan would not get paid-off. I don't think that's realistic, since the home would be repossessed if you didn't make the correct payment.

My point is that a standard 30-year loan could, in theory, have any interest rate, but it would still be paid off in 30 years. You just may have a payment that's more than $1000/month.

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