If you have a high interest loan but the same house payment as a lower interest rate loan several good things can happen. you can make extra principal payments which are the equivalent of investing money at the 12% rate. If Rates drop, you could refinance and have a far lower payment. Alternatively you could refi at the lower rate, make the same payments and have large principal paydown.
If you buy while rates are low and prices are high there is not much more good news to be had. If rate rise dramatically the market value of your home will drop. If rates do not fall, you will have a very large loan and will pay on it forever.
I cannot imagine a happy ending to a story that starts out: Once upon a time I bought a house when rates were at a record low and people were paying such high prices that their payments were at record levels relative to income. Then rates went up dramatically.
Remember that an increase in rates from 5% to 7% means a 40% increase in interest payment! It was not that long ago that 7% financing looked like the impossible dream.
