Considering the declining value of the dollar, it's probably cheaper to take the 40 year loan, then invest your money in commodities so that when the Dollar does eventually crash you can sell the commodities and pay off the loan in one payment.
You're not wrong. I'm paying off my house slower than initially planned because money printer go brrr has made my equity investments too attractive to justify ignoring or selling off to pay off the mortgage immediately.
Get a fixed interest loan and you got yourself a strategy. Nice econ insight.
Dollar crash means deflation spiral or runaway inflation?
Runaway inflation eventually. If you are invested in commodities before that time the value of them will go up to meet the relative value of the dollar. The Mortgage however will remain at the dollar amount contracted. So you can sell the commodities at the inflated price and pay off the mortgage at the fixed(ish) amount that was originally negotiated.
Oh I see, so the commodity will be more stable than the currency during inflationary period. So the value of the dollar goes down, the value of the commodity stays the same but the dollar value of commodity will go up by approximately the same amount as the inflation.
Wouldn't real estate itself be a good place to put your money too, as defense against inflation?
(post is archived)