Today the 30 yr fixed Today the 30 yr fixed conforming is 4.36% and I keep wondering, just how low will mortgage rates fall. So, what will be the bottom rate in the next two years?
enron_by_the_sea
August 26, 2010 @
12:04 PM
I am of the opinion that the I am of the opinion that the bottom on 30-year fixed is about ~3.75% with ~$3000 cost. This is for the primest of the prime conforming mortgage. The cost would include actual costs like escrow/appraisal etc and not things like prepaid interest. Of course you can get a lower rate by paying more upfront and vice versa.
Today such a loan for similar cost maybe obtained for 4.125% So I think we can fall another 0.375%.
Why?
10-year treasury is now at ~2.5%. The absolute lowest it has ever been was 2%, which happened in ~1936 and then again for a brief period in late-2008. It is hard for me to believe that times today are anywhere near as worse as 1936, so the bond investors will not be happy with anything less than 2%.
So the 10-year may fall another 0.5%.
The spread of 30-year over 10-year bond is now about ~1.625% for the said loan. IMO it is about as low as it can possibly get. Chances are that if 10-year drops anymore it will be accompanies by some panic – and the spread will actually rise, like what happened in late-2008.
So at best 0.5% drop in 10-year accompanied by some increase in the spread, will mean maybe 0.375% real drop in 30-year fixed rate (if we ever get there).
edit: From what I remember reading, mortgage rates were ~7% even during the great depression, implying spreads of ~5%+ as a result of tight monetary policy.
stockstradr
August 26, 2010 @
12:45 PM
I’m voting for less than 2.5% I’m voting for less than 2.5% on the 30-year fixed, paying no points.
My personal rule is this: NEVER forget the underlying fundamentals and always identify the conspiracies.
We are in a deflationary environment, where most mortgages are insured by our tax dollars.
So that which is insane, meaning 2% rates, can and probably will be seen before it is all over.
Let’s talk about the conspiracies.
Think about what is feared most by Those in Power (with decision making power over the economy, banking, financial markets)
They fear the tipping point, a point of no return when average home values have declined so much that most homeowners with underwater mortgages not only walk away – but also walk aways gain popular widespread momentum, making it a self-reinforcing snowball-rolling-downhill kind of thing. As more walk away, housing prices drop more, causing more to walk away.
They know and fear that the tipping point must be reached if housing prices decline much more (10%? 20%? nobody knows at what point it occurs)
I believe it is inevitable the tipping point will be reached, creating panic in our country’s decision makers, who in their twisted deluded minds will launch completely insane degrees of additional government intervention.
Many insightful blogs have written on the existing conspiracy already happening between the Treasury dept, the Fed, our nation’s banks, congress, and the FDIC (and numerous other political entities)
And many Americans are such dumb sheep they are not even aware of that conspiracy, one that will have radical impact upon their lives.
The conspiracy starts with keeping secret the fact that many of our largest banks are already insolvent, when properly audited from a mark-to-REALITY basis. I’m talking about really big banks, like Wells Fargo.
Next the conspiracy stands upon our congress having allowed mark-to-FANTASY accounting, which magically turns insolvent banks into being “solvent and strong.”
The FDIC is in on it because the DIF at the FDIC is already bankrupt, and the FDIC knows it doesn’t have either the bandwidth to process the true number of already failed banks, nor the balls to ask the congress for the amount of money required for the DIF to handle the actual number of banks insolvent on a mark-to-REALITY basis.
So the FDIC wants to control (redefine) the bank failures to only be a “trickle” they can handle.
So the conspiracy is to use mark-to-fantasy and then *cross their fingers* HOPING TO GOD the housing market and economic turnaround reverses mortgage failures thus floating the failed banks back up into true solvency. And the conspiracy includes multiple forms of intervention to keep housing prices from falling further.
(of course much of this applies to both commercial real estate mortgages and mortgages for private homes)
The conspiracy also involves the financial institutions (holding large amounts of Option-ARMs) to use various nonsense tactics to DELAY the resets by many years, because they know the resets will cause mortgage failures, which are difficult to hide even with mark-to-fantasy accounting.
Look at how Wells Fargo is delaying resets on the $120 billion of crap Option-ARMs it got when it acquired Wachovia.
And the conspiracy further involves financial institutions holding back their inventory foreclosed homes (that’s your shadow inventory) and merely trickling them into the market to try and avoid further pricing declines.
(I’m sure I’m also forgetting here multiple other aspects of this overall conspiracy. You can do your own detective work/brainstorming to think of them.)
My overall point is in order to start guessing how low mortgage rates will go, you gotta first dig really deep behind the lies to see all the conspiracies in place being applied to hide or delay impact of the true magnitude of the fundamental underlying problems (that will eventually hit the fan). Then knowing the true magnitude, you can run simulations in your head about how it will all play out (and affect mortgage rates) once it all hits the fan.
A second overall point is to myself as an investor. I try to remember that these conspiracies may have markets behaving in VERY odd ways for many years before we see the inevitable impact upon markets and economy. For example if the problems can be hidden and ignored for a few years, the stock markets and economy could see a “recovery” that might last another several years.
bubba99
August 26, 2010 @
1:21 PM
Your comments are dead on. Your comments are dead on. And unfortunately low rates is one of the paths to keeping people in their houses. If 30 year rates go to 1%, mortgage payments are on par with rents. And buying a house becomes a good investment because you are building equity (after a while) and it does not cost any more than rent.
No mark to market, the refis are performing – if you can get fantasy apprasials – or better yet, no apprasials – the loans are all insured by FNMA. Big five all get back their balance sheets, and the American tax payer foots the bill with interest rates below inflation.
You gotta love capitalism.
UCGal
August 26, 2010 @
1:53 PM
I’m waiting for the no cost I’m waiting for the no cost 3.5% to refi.
I refi’d last year at ‘historic lows’ last June with a 4.25/15 year. Same loan is around 3.75…
I have 4 coworkers talking to Sheldon this week. He’s got to be loving these low rates.
Huckleberry
August 26, 2010 @
4:40 PM
Personally, I feel the real Personally, I feel the real question for the RE market is, how long will rates stay down at the 3.5 to 4% level?
End of 2010? All the way through 2011? Thoughts?
My belief is, as long as yields keep getting pushed down, fence sitters will keep waiting. But, once they see rates start to continually creep up, everyone will rush in to purchase.
bearishgurl
August 26, 2010 @
5:19 PM
Huckleberry wrote:Personally, [quote=Huckleberry]Personally, I feel the real question for the RE market is, how long will rates stay down at the 3.5 to 4% level?
End of 2010? All the way through 2011? Thoughts?
My belief is, as long as yields keep getting pushed down, fence sitters will keep waiting. But, once they see rates start to continually creep up, everyone will rush in to purchase.[/quote]
Re: this “herding mentality,” I don’t think its wise to “rush to purchase” simply based upon how short-term interest rates move up or down. Within reason (up to 7%), I would focus on PRICE and LOCATION only and whether I NEEDED to buy RE at the time.
I would think a >6% mortgage interest-rate market would be MORE FAVORABLE to purchase in than the current market. Remember, you can ALWAYS refi (or sell) later, but can NEVER CHANGE THE PRICE YOU PAID.
sdrealtor
August 26, 2010 @
5:57 PM
LOL…Tell all the underwater LOL…Tell all the underwater homeowners that they can ALWAYS refi or sell later.
Veritas
August 26, 2010 @
7:01 PM
Well said stockstradr and Well said stockstradr and bearish. Between the placebo economy being sold to us by Washington under the guise of the “recovery” and fantasy accounting being done by CBO, I wonder if we are going Weimar republic in the near future. Precious metals are starting to make sense for survival.
bearishgurl
August 27, 2010 @
10:59 AM
sdrealtor wrote:LOL…Tell [quote=sdrealtor]LOL…Tell all the underwater homeowners that they can ALWAYS refi or sell later.[/quote]
You just bolstered my point here, sdr. Your UNDERWATER homeowners got that way because they PAID TOO MUCH for their property, no doubt during a FRENZY when the masses were RUSHING TO PURCHASE. They’re also UNDERWATER because they elected to REDUCE LITTLE TO NONE of their principal balance over their ownership period and/or because THEY ALREADY REMOVED THEIR EQUITY (and then some) from their properties.
IMO, the BEST TIME TO PURCHASE RE is when HARDLY ANYONE IS INTERESTED IN DOING SO, because the HERD is only interested in what their size of P&I is going to be, (or, if they’re smart, PITI + HOA) without regard to THE PRICE THEY PAID. PURCHASE PRICE and LOCATION are the MOST IMPORTANT considerations when purchasing RE. ALL OTHER CONDITIONS CAN BE FIXED . . . EVENTUALLY.
As an agent, I’d rather be slumming around trying to locate a doable up-leg for a Starker client who is unable to sell their building than working in the current govm’t-infused and “supervised short-sale” environment, rife with inexcusable delays all stemming from utter incompetence.
As a buyer, I’d rather slum around with a high FICO score and low income in a >7% mortgage-rate market and stumble upon a FANTASTIC BUY in one of my coveted areas where I can work out an owner-carryback on the seller’s kitchen table and/or assume their current mortgage (however low) WITH NO COMPETITION than deal with all the fake frenzied crapola going on in the market right now. Lay it on me . . . balloons, straight notes . . . h@ll, I’ll draw them up myself! I’ve got the templates. Let’s get it on . . . bring back 1983 . . . lol.
Paying too much for RE (ESP in the wrong location) is a recipe for financial ruin. I don’t care if your mtg interest rate is 1%.
sdrealtor
August 27, 2010 @
11:03 AM
BG
Its still sunny out there. BG
Its still sunny out there. How about those heartwarming stories? Still waiting for some to make me smile.
Aecetia
August 27, 2010 @
11:45 AM
Have you heard the discussion Have you heard the discussion about getting rid of the mortgage deduction? I guess that would really drive the final nail in the coffin of real estate! Just wondering what you insiders think the chance of that happening or might they just lower the percentage of deductions for houses at a certain level, say 1 million. Your thoughts… We all know the federal government is a hungry beast that constantly needs to be fed.
andymajumder
August 27, 2010 @
12:21 PM
Aecetia wrote:Have you heard [quote=Aecetia]Have you heard the discussion about getting rid of the mortgage deduction? I guess that would really drive the final nail in the coffin of real estate! Just wondering what you insiders think the chance of that happening or might they just lower the percentage of deductions for houses at a certain level, say 1 million. Your thoughts… We all know the federal government is a hungry beast that constantly needs to be fed.[/quote]
Not going to happen anytime soon. I think the homebuilders, banks and housing industry in general have enough lobbying power to stop something like that from happening. Also, its not like interest deduction matters during the entire duration of the loan…its only the first 10 yrs of your loan that you benefit from it, one’s pricipal become the sizable portion of you monthly payment you might be better off taking the standard deduction (of course depends on what other deductions you qualify for).
UCGal
August 28, 2010 @
7:05 AM
Aecetia wrote:Have you heard [quote=Aecetia]Have you heard the discussion about getting rid of the mortgage deduction? I guess that would really drive the final nail in the coffin of real estate! Just wondering what you insiders think the chance of that happening or might they just lower the percentage of deductions for houses at a certain level, say 1 million. Your thoughts… We all know the federal government is a hungry beast that constantly needs to be fed.[/quote]
With the lower interest rates – everyone refi’ing w/out cash out is reducing their tax deduction (as well as their payment).
My goal is to personally eliminate my mortgage interest rate deduction… by paying off my mortgage early.
Scarlett
August 26, 2010 @
7:04 PM
Huckleberry wrote:My belief [quote=Huckleberry]My belief is, as long as yields keep getting pushed down, fence sitters will keep waiting. But, once they see rates start to continually creep up, everyone will rush in to purchase.[/quote]
That’s what I said earlier too…They should try pushing the rate up a bit, let’s say for 6 months, a half point, and watch what happens!
Aecetia
August 26, 2010 @
7:12 PM
All eyes on Ben:
“The All eyes on Ben:
“The so-called quantitative easing announced in August involves the Fed replacing its maturing mortgage securities with Treasury securities, which in essence keeps the Fed balance sheet stable. In theory, it also could prevents a passive tightening.
The Fed also left the door open to further easing, which some in the market believe could ultimately be multiple trillions in Treasury purchases. The expected outcome would be that the Fed’s purchases would help force down rates, helping to spur lending. Traders have been gaming how and when the Fed might act.”
stockstradr wrote: . . . The [quote=stockstradr] . . . The conspiracy also involves the financial institutions (holding large amounts of Option-ARMs) to use various nonsense tactics to DELAY the resets by many years, because they know the resets will cause mortgage failures, which are difficult to hide even with mark-to-fantasy accounting.
Look at how Wells Fargo is delaying resets on the $120 billion of crap Option-ARMs it got when it acquired Wachovia.
Thank you for drawing my attention to this blog, stockstradr, as this is one of the areas on my retirement “short-list” 🙂 I’m actually gratified right now to see it depreciating at the moment and that 60% of the properties in Sonoma County have changed hands in recent years.
IMO, it doesn’t matter if WF delays these (neg-am affected) “Option-ARM” mortgages it inherited from Golden West. Already, the ten years that these affected borrowers are receiving until their first contractual or 125% recast is generous as most banks only allowed five years on similar programs. The end result is the same as that of a loan mod – their deferred interest will never go away – the can is just kicked down the road. These borrowers ALL DID IT TO THEMSELVES! These loans aren’t “crap.” Remember, they are “OPTION-ARMs” which were >90% made to prime and alt-A borrowers. The vast majority of Golden West’s (now WF-inherited) foolish (sh*t-for-brains) “Option-ARM” borrowers simply chose the “wrong payment option” every month. But they had the choice to amortize all along. No lender ever twisted their ARM (pun intended) to choose the option (1 of 4 avail) which deferred interest and failed to reduce their principal balances. WF purchased GW’s loans knowing full well the terms of ALL the blocks of loans in their portfolio and no doubt obtained deep discounts on some categories of loans, including those blocks of Option ARMS that had not amortized at all at the time of acquisition. Both WF and these borrowers now deserve everything that is coming to them.
The fallout due to misuse of these Option ARMS, including walkaways (due to inability to refi) and foreclosures will just add to all the reasonably-priced inventory for me to consider in the coming years when I am, once again, “in the market” to purchase :=)
Again, stockstradr, thanks for the link!
stockstradr
August 26, 2010 @
5:13 PM
bearishgurl, yes obviously I bearishgurl, yes obviously I agree with your point about the guilt of those homeowners who got mortgages from Golden West (passed to Wachovia, passed to WF).
They did it to themselves.
Also, yes, I gave thought to what must have been WF’s strategy when they gobbled up Wachovia. I believe (unproven) that Wells Fargo went after market share, despite knowing they were probably taking on toxic mortgages making WF effectively insolvent, but Wells Fargo PLANNED on dumping all those losses upon US taxpayers based upon a “Too Big to Fail” bailout.
That translates into two (albeit) risky investment opportunities:
1) Short Wells Fargo before the public comes to recognize Wells Fargo is insolvent.
2) Go long Wells Fargo stock after the stock slide but before it is announced that WF is off-the-hook when it is conspired to dump all those toxic WF mortgages upon American taxpayers.
waiting hawk
August 27, 2010 @
5:13 AM
UCGal wrote:I’m waiting for [quote=UCGal]I’m waiting for the no cost 3.5% to refi.
I refi’d last year at ‘historic lows’ last June with a 4.25/15 year. Same loan is around 3.75…
I have 4 coworkers talking to Sheldon this week. He’s got to be loving these low rates.[/quote]
I just had Sheldon (HLS) refi my house to a 4.6 30 year. I paid a total of 240 bucks (130 back the lender gave). Im lookin to call him if i can get 3.75 ona 30. If that happens then 15’s may hit 3.25 in which case ill do that.
Sheldons the shiznet.
stockstradr
August 26, 2010 @
5:02 PM
No mark to market, the refis No mark to market, the refis are performing – if you can get fantasy appraisals – or better yet, no appraisals – the loans are all insured by FNMA. Big five all get back their balance sheets, and the American tax payer foots the bill with interest rates below inflation.
Thank you. You’ve noted there a very important part of the larger conspiracy that I forgot to mention, which is to dump the whole mess upon the American taxpayer.
And that implies something else. We already know America cannot dig itself out from under our ponderous debt burden.
So what is implied is the future destruction of the American dollar and additional destruction of the American economy and our standard of living.
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.
CA renter
August 27, 2010 @
12:46 AM
stockstradr wrote:No mark to [quote=stockstradr]No mark to market, the refis are performing – if you can get fantasy appraisals – or better yet, no appraisals – the loans are all insured by FNMA. Big five all get back their balance sheets, and the American tax payer foots the bill with interest rates below inflation.
Thank you. You’ve noted there a very important part of the larger conspiracy that I forgot to mention, which is to dump the whole mess upon the American taxpayer.
And that implies something else. We already know America cannot dig itself out from under our ponderous debt burden.
So what is implied is the future destruction of the American dollar and additional destruction of the American economy and our standard of living.
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.[/quote]
Pretty much agree with everything you’ve said here and in your previous post (about the conspiracies).
ocrenter
August 27, 2010 @
1:07 AM
stockstradr wrote:
Implied [quote=stockstradr]
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.[/quote]
agree with this.
in fact this is the only way out.
seem like this would indicate inflation from this point forward. or am I looking at things from an overly simplistic view?
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.[/quote]
agree with this.
in fact this is the only way out.
seem like this would indicate inflation from this point forward. or am I looking at things from an overly simplistic view?[/quote]
I’d guess inflation at some point, but not necessarily from *here* (could be years out, with penty of deflation in the meantime). Whoever gets the timing right on this will be very lucky.
NotCranky
August 27, 2010 @
9:11 AM
CA renter wrote:ocrenter [quote=CA renter][quote=ocrenter][quote=stockstradr]
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.[/quote]
agree with this.
in fact this is the only way out.
seem like this would indicate inflation from this point forward. or am I looking at things from an overly simplistic view?[/quote]
I’d guess inflation at some point, but not necessarily from *here* (could be years out, with penty of deflation in the meantime). Whoever gets the timing right on this will be very lucky.[/quote]
It’s better to be bulletproof than it is to wonder about one’s luck.
XBoxBoy
August 27, 2010 @
9:12 AM
Worth noting: Bernanke’s Worth noting: Bernanke’s remarks this morning at Jackson Hole seem to be preparing everyone for more quantitative easing. (Most likely purchasing of more treasuries) If this comes to pass, then seems to me mortgage rates will follow treasury rates down. Perhaps a lot lower than most of us would think.
XBoxBoy
August 27, 2010 @
9:12 AM
Worth noting: Bernanke’s Worth noting: Bernanke’s remarks this morning at Jackson Hole seem to be preparing everyone for more quantitative easing. (Most likely purchasing of more treasuries) If this comes to pass, then seems to me mortgage rates will follow treasury rates down. Perhaps a lot lower than most of us would think.
sdrealtor
August 27, 2010 @
9:21 AM
I called for 4% rates for I called for 4% rates for everyone over a year ago. Looks like they are on the way. IMO its one of the best stimuli they could implement. Getting more discretionary income into the hands of the most responsible members of society that have the equity in their homes to refinance is very powerful. Contrary to what is beleived by many around here, these folks far outnumber the “Bubble Bumblers” (maybe I should trademark that one). Once these folks have confidence in the economy the spending they can unleash is unfathomable to me.
NotCranky
August 27, 2010 @
10:26 AM
sdrealtor wrote:I called for [quote=sdrealtor]I called for 4% rates for everyone over a year ago. Looks like they are on the way. IMO its one of the best stimuli they could implement. Getting more discretionary income into the hands of the most responsible members of society that have the equity in their homes to refinance is very powerful. Contrary to what is beleived by many around here, these folks far outnumber the “Bubble Bumblers” (maybe I should trademark that one). Once these folks have confidence in the economy the spending they can unleash is unfathomable to me.[/quote]
So how does it play out from here. The cheap money pulls supply from the future and the banks can get higher rates from current fence sitters at very similar or higher nominal prices as todays?
NotCranky
August 27, 2010 @
10:33 AM
I don’t think Andy, sdrealtor I don’t think Andy, sdrealtor or Rustico will be selling for a long time.
sdrealtor
August 27, 2010 @
11:01 AM
I just dont think cheap money I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.
bearishgurl
August 27, 2010 @
11:47 AM
sdrealtor wrote:I just dont [quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
If the mortgage interest rates continue to sink, I think people “en-masse” who are currently renters will try to buy if their credit is good enough and they can find something they like without regard to purchase price. They will be much more focused on their monthly housing exp-outlay than purchase price. It’s just human nature. This is especially common with FHA and VA buyers (w/little to no down-payment). They just end up paying too much for a (usually overtaxed and HOA’d) inferior location and are practically instantly underwater.
sdr, WHERE (zip code) was your long-time resident (11 years is actually a “recent transplant”) “move-up” buyer’s property located which they obviously purchased for <$210K in 1998-1999 and sold in 2009/2010 for $750K?? And how much of their own $$ did they put into it (remodeling/repairs) during the 11 years they owned it?
You emphasized here HOW EASY AND PAINLESS it was for them to recently purchase new construction but do you HONESTLY THINK the new construction they just purchased is WORTH the $830K they paid for it?? Did they give the extra $100K to the developer for "upgrades and landscaping" or did they contract the work themselves after closing? Would YOU purchase the same (or similar) property in this development for the same (or similar) price? Where are the sales comps used to base the $830K (+ $100K outside of escrow??) sales price on. Are there actually any sales comps around it at all to justify $830K? Would YOU, immediately after purchase, sink another $100K into the $830K purchase price on this property (or another one in this development)? Do you think it was wise for them to sell their (low-expense) home they had for 11 years and do what they did? If you were in their circumstances, would YOU do this, paying the price they paid?
You're stating here WHAT MOVE-UP BUYERS DO and that there are many of them but, knowing what you know, ARE THE RE DECISIONS THEY'RE MAKING WISE OR IN THEIR BEST INTEREST FOR THE LONG-TERM? That's my point here.
sdrealtor
August 27, 2010 @
12:17 PM
You make way to many You make way to many inaccuarte assumptions. Without getting into too much detail they mved about 2 miles away. The house they sold cost more than 210K and was also a move up. They have been in the areamuch longer than 11 years.
The property they paid $830K is definitely worth it and I would pay that if I was in the market. Total monthly payment is about $2500 and monthly income is over $12K.
Homes have sold well over $1M in this community recenty. They also got about $25K in incentives from builder. I would defintely invest (not sink) the $100K to make it right for me. Comps easily support it and are every where to be found. I think it was a very wise decision as the alternative was private school at close to $10K each for their kids who now get to stay in the same schools with the kids they have attended elementary school with. Yes I would do exactly what they did. In the long term their new home will appreciate more and hold value better for a handful of reason.
I never said there were many of them, I said they exist. I heard another similar story yesterday of buyer selling small Carmel Valley home for about 800K to move up to gorgeous So Carlsbad nearly new home with pool and 1500 sq ft larger for 950K. Great move up for them too.
briansd1
August 27, 2010 @
12:29 PM
If the government wants to If the government wants to increase consumer spending immediately….
The best way would be to immediately pass new legislation to cap credit card interest rates at 5% so people can feel free to charge away. Also pass simultaneous legislation to prohibit banks from canceling credit card, decreasing credit lines and charging penalty fees.
This will have long term problems, but would work in boosting immediate demand.
bearishgurl
August 27, 2010 @
12:53 PM
sdrealtor wrote:You make way [quote=sdrealtor]You make way to many inaccuarte assumptions. Without getting into too much detail they mved about 2 miles away. The house they sold cost more than 210K and was also a move up. They have been in the areamuch longer than 11 years.
The property they paid $830K is definitely worth it and I would pay that if I was in the market. Total monthly payment is about $2500 and monthly income is over $12K.
Homes have sold well over $1M in this community recenty. They also got about $25K in incentives from builder. I would defintely invest (not sink) the $100K to make it right for me. Comps easily support it and are every where to be found. I think it was a very wise decision as the alternative was private school at close to $10K each for their kids who now get to stay in the same schools with the kids they have attended elementary school with. Yes I would do exactly what they did. In the long term their new home will appreciate more and hold value better for a handful of reason.
I never said there were many of them, I said they exist. I heard another similar story yesterday of buyer selling small Carmel Valley home for about 800K to move up to gorgeous So Carlsbad nearly new home with pool and 1500 sq ft larger for 950K. Great move up for them too.[/quote]
So, the truth of the matter is, a good portion of the $600K your move-up friends extracted from their old home at sale WAS THEIR OWN DOWNPAYMENT. You still didn’t state (if you know) how much $$ they invested over the years to recently command a $750K purchase price. This amount would have also come off their “profit,” even though they may have used the improvements themselves prior to sale. In reality, these buyers of new construction may have just made a modest profit of <=6% per year of ownership of their old residence, or less, if they put improvements into the property. This is actually neither an "exceptional" return, nor rocket science.
You're also saying that these buyers made this (very expensive) move strictly to live within certain "middle school" attendance boundaries. Otherwise, their existing "middle school" (2 mi. away??) was going to be so bad that they were going to pay $20K annually for private school. ($20K x 3 yrs = $60K and $20K x 6 yrs = $120K.)
You're also stating that you would buy in this development and would also immediately pay to upgrade your purchase (before the ink was dry on your docs) and that the comps in and around the development support the current asking prices, plus any immediate improvements buyers elect to make.
sdr, please correct me if I don't have this "happy story" right.
sdrealtor
August 27, 2010 @
1:27 PM
More inaccurate assumptions. More inaccurate assumptions. The $600K is their house money that has accrued over years of home ownership. The house was new in 1999 and maintenance was fairly minimal. I never claimed exceptional returns or rocket science. These are very ordinary people with very ordinary occupations. The point wasnt that they are smart or that they made lots of money, the point is that there are in fact move-up buyers and that moving up makes sense for some people. Nothing more, nothing less.
The school reasons are complicated are beyond what I want to get into.
All the rest is spot on. If I was in their position I would buy what they bought, I would invest at least what they invested, I would have 100% confidence that the comps supported the purchase price plus the improvements and I would consider it a bargain. I would be very happy with the move up I was able to make.
bearishgurl
August 27, 2010 @
1:59 PM
Understand it all, sdr. Understand it all, sdr. Except the school issue is a little puzzling. One would assume that some of your move-up buyer’s children’s elementary-school classmates must have also lived in their old neighborhood and would be following their children to middle school.
I’m actually not that bearish in certain coastal locales that are not overtaxed and also encumbered by CC&R’s.
But, if you’ve read any of my previous posts, you would see that I’m extremely skeptical of new developments “straight out of the gates.” I feel the asking prices are trumped up by whatever the developer thinks they can get, NOT based on any REAL sales comps to support them. The developers often bring in their own lending teams who will give buyers MORE incentives to go with them instead of an outside choice. These in-house loan officers just try to make the overall monthly “expense pkg” look “good enough” (40-yr. loans, interest-only seconds, etc.) to unsophisticated buyers without regard to the actual purchase price in relation to the value of surrounding properties (if any). And the total costs of fees (even though disclosed in writing) aren’t properly explained to buyers who almost immediately go into payment shock after move-in.
Even though OT here, new construction projects (and the shenanigans they pulled to secure buyers in recent years) have played a HUGE part in the pain we’re all feeling now due to way too much distressed inventory in certain markets, IMO. In South County, these 2003-2007-built projects are now down in value 25% – 50%. ALL OF THEM are overtaxed and HOA’d. Every single one.
sdrealtor
August 27, 2010 @
2:49 PM
Its complicated and they dont Its complicated and they dont nor have they ever attended elementary school in the neighborhood they live in. Around here the elementary school (Encinitas Unified) and the secondary school district (San Dieguito) are different, on different calenders and have different rules. Its complicated and lots of folks move around her based upon that alone.
Around here the new developments have no problem with comps as they are very consistent and easy to find. If anything, the new developments are a bargain relative to similar sized existing homes that were built in the last 10 years. All the ptifalls you describe pertain to the old way, when in house lenders abused unqualified buyers slamming them into homes they had no business buying so the developer could close out a community. Its not like that anymore under new lending guidelines. Around here at these prices buyers are generally more sophisticated and well educated. They are far more likely to understand the costs of ownership unlike the disasters you have seen in the South Bay.
sdrealtor
August 27, 2010 @
3:15 PM
FYI, around here the MR are FYI, around here the MR are pretty mellow. They are only $800/year and are a CFD specifically for funding improvements to the San Dieguito Schools.
bearishgurl
August 27, 2010 @
3:28 PM
sdrealtor wrote:FYI, around [quote=sdrealtor]FYI, around here the MR are pretty mellow. They are only $800/year and are a CFD specifically for funding improvements to the San Dieguito Schools.[/quote]
Here, in South County, the school construction/improvement bonds are NOT CFD’s. They were voted in and are spread across ALL the taxpayers of the region.
What are the avg. monthly HOA dues in your local construction projects built in the last five years?
moneymaker
August 27, 2010 @
4:59 PM
I’m sorry but your numbers I’m sorry but your numbers don’t make sense, even with a 30 year loan payment on 330,000 principal would be no where near $1600 a month. You must have your facts mixed up!
andymajumder
August 27, 2010 @
9:31 PM
threadkiller wrote:I’m sorry [quote=threadkiller]I’m sorry but your numbers don’t make sense, even with a 30 year loan payment on 330,000 principal would be no where near $1600 a month. You must have your facts mixed up![/quote]
Why not…30 yr fixed, for a 330K loan, monthly P&I comes to $1672 @4.5%, at 4.375%, its about 1647 month.
sdrealtor
August 27, 2010 @
9:56 PM
Thanks Andy. Thanks Andy.
sdrealtor
August 27, 2010 @
10:02 PM
Monthly HOA dues probably Monthly HOA dues probably average around $200 which get you country club quality recreational facilites including olympic size lap pools heated year round, spas, kiddie pools, parks with playground equipment (swings, slides, sand box, monkey bars etc.), tennis courts, gyms, access to RV/boat storage at very favorable rates, clubhouses that look like 5 star catering facilites, organized activities for children, walking trails and substantial entry monuments/signage at community entrances.
CA renter
August 27, 2010 @
10:47 PM
sdrealtor wrote:Monthly HOA [quote=sdrealtor]Monthly HOA dues probably average around $200 which get you country club quality recreational facilites including olympic size lap pools heated year round, spas, kiddie pools, parks with playground equipment (swings, slides, sand box, monkey bars etc.), tennis courts, gyms, access to RV/boat storage at very favorable rates, clubhouses that look like 5 star catering facilites, organized activities for children, walking trails and substantial entry monuments/signage at community entrances.[/quote]
And if you live in the old, ratty neighborhood next door with no HOAs or Mello-Roos, you get the signage, the trails, the free parks (just a couple of blocks away), and the nicely kept landscaping that all our guests drive by, courtesy of those HOA members. 😉
sdrealtor
August 27, 2010 @
10:54 PM
Yes but the HOA members in Yes but the HOA members in that community only pay $100/month for all that which is a screaming deal!! Their kids also attend the #1 ranked elementary school in NCC and get to play with each other in all those wonderful facilities.
She asked for average HOA dues for homes built the last 5 years not the even nicer one built 10 years ago that is next door to that old, ratty neighborhood;)
bearishgurl
August 28, 2010 @
10:54 AM
sdrealtor wrote:She asked for [quote=sdrealtor]She asked for average HOA dues for homes built the last 5 years not the even nicer one built 10 years ago that is next door to that old, ratty neighborhood;)[/quote]
Okay, I’m now asking how much (range) the 5-15 yr. old SFR HOA’s charge for dues today in NCC.
And . . . if you remember, sdr, how much were the dues in these communities when they were first built and closed out and were trying to *entice* potential buyers.
This exercise is just for a comparison as to how much SFR HOA dues went up over the years. It’s really probably no different anywhere in the county, but just wondering about your *microcosm,* here. Thank you.
UCGal
August 28, 2010 @
11:18 AM
Really- one of the HOA’s Really- one of the HOA’s benefits is signage? I live in a neighborhood that has great signage on Gennesee as you enter the ‘hood. Nice plaster/stone arrangement… very pretty. Didn’t pay a penny for it.
And I’m with bearishgirl on the other benefits… we use the public parks for tennis, have Y membership for swimming, and if we need a fancy club house…on those RARE occasions, we rent an events place. Seriously – how often do people use their HOA club houses for catered affairs?
Some folks like HOAs… but to cite signage as a benefit… that’s pretty funny.
sdrealtor
August 29, 2010 @
8:51 AM
The dues started around $125 The dues started around $125 in the late 90’s when the comunity was not built out, they briefly rose to about $150 for several months and then settled back to $87. Over the last 10 years they have only gone to $103, far less than the inflation rate. It is one of the best, strongest, managed and well funded i have seen.
While you can join the Y, you are the only always banging the gavel about being close to things. Homeowners in that HOA can walk out their front door to them. Their pre-teens can use them safely without parental invovlement or supervision. Friends and family who visit can use them also. Sorry but you lose this one. Its a great deal.
Around here most of the 5 to 15 year old HOA range from $20 to $100 depending upon what kids of facilties they have. A few of the brand new ones with facilties like the one I mentioned are $200 but that is the exception and their facilties are really nice.
bearishgurl
August 29, 2010 @
11:40 AM
sdrealtor wrote:The dues [quote=sdrealtor]The dues started around $125 in the late 90’s when the comunity was not built out, they briefly rose to about $150 for several months and then settled back to $87. Over the last 10 years they have only gone to $103, far less than the inflation rate. It is one of the best, strongest, managed and well funded i have seen.
While you can join the Y, you are the only always banging the gavel about being close to things. Homeowners in that HOA can walk out their front door to them. Their pre-teens can use them safely without parental invovlement or supervision. Friends and family who visit can use them also. Sorry but you lose this one. Its a great deal.
Around here most of the 5 to 15 year old HOA range from $20 to $100 depending upon what kids of facilties they have. A few of the brand new ones with facilties like the one I mentioned are $200 but that is the exception and their facilties are really nice.[/quote](emphasis added)
sdr, in San Diego County urban and suburban areas, vans come to the elementary schools every afternoon to pick up kids for the YMCA after-school care program (off-site). The teen center in South County is walking distance from two middle schools and one high school. In addition, the City bus ($32 mo. for students to age 23) has a stop 1/2 block from the Y. The teen center is across the street. The YMCA’s are centrally situated so that it is convenient for everyone living in the service area to use it, usually <5 miles away and close to schools. The multitude of classes the Y offers (free to members) cost $48 - $100 mo. in private studios (for a 1x wk. class). I know this because I have paid these studios for YEARS until they got too expensive for me. The Y is non-profit and IS A BARGAIN for individuals and families who use and need their facilities and services and works with nearly everyone's schedule. And the services it offers are just awesome for working parents.
Of course, it may not make sense for those living in bedroom communities or rural areas to join a Y as it would be too inconvenient to use often enough to make it worth the membership fees.
No HOA could possibly offer all the classes, facilities and services that a YMCA membership offers. If you wouldn't attend any of the classes and just want circuit training and a jacuzzi afterwards, you don't have kids who would use any of the Y's classes and services and you are satisfied with the equipment in your HOA gym, then this might be all you need and want. After all, you are already paying (mandatory) dues for it, anyway, even if you choose not to use your facilities :=)
sdrealtor
August 30, 2010 @
10:51 AM
Thats great to here that Thats great to here that there are ways to get kids to the YMCA and all the wonderful programs they offer. We have a great YMCA up here that is less than 2 miles from my house also and my kids have taken classes, gone to camp and been in the adventure guide program. I donate to them every year. But I dont need to be a memeber of the Y to take advantage of all those wonderful programs. We have our community facilties which we use and enjoy year round and access to perhaps the nicest Y in SD County less than 2 miles away. The best of all worlds in my own suburban hell:=))
bearishgurl
August 30, 2010 @
11:45 AM
That’s awesome, sdr :=) That’s awesome, sdr :=)
CA renter
August 27, 2010 @
11:01 PM
That nicer, newish That nicer, newish development definitely has a reasonable HOA fee, as HOA fees go. I agree that you get a lot for the money, compared to most other newer developments.
moneymaker
August 28, 2010 @
3:42 AM
I have no idea what I have no idea what neighborhood it is, but isn’t it just like a realtor to leave out the taxes, HOA and insurance. A mere $800 a month more. So I guess your only off by 50%, not bad for a realtor.
sdrealtor
August 28, 2010 @
7:09 AM
Actually isnt it just like a Actually isnt it just like a threadskimmer to be wrong in attacking the realtor who did not leave those items out.
Here’s my quote:
“The property they paid $830K is definitely worth it and I would pay that if I was in the market. Total monthly payment is about $2500 and monthly income is over $12K.”
I didnt calculate the exact numbers but let’s do it here
P+I = 1575 (builder bought their rate down to 4%)
HOA = 200
Insurance = 80
Taxes + MR = 793
Total monthly cost = $2650 give or take a few bucks
I said ABOUT $2500. I’d say that was a pretty good guess as I didnt caluculate any of the numbers and not close to being off by 50%.
bearishgurl
August 28, 2010 @
10:36 AM
sdrealtor wrote:Monthly HOA [quote=sdrealtor]Monthly HOA dues probably average around $200 which get you country club quality recreational facilites including olympic size lap pools heated year round, spas, kiddie pools, parks with playground equipment (swings, slides, sand box, monkey bars etc.), tennis courts, gyms, access to RV/boat storage at very favorable rates, clubhouses that look like 5 star catering facilites, organized activities for children, walking trails and substantial entry monuments/signage at community entrances.[/quote]
The YMCA (several locations throughout county) is just $36 month for the first adult, $10 month for the first kid and $8 for the 2nd kid (w/an adult membership), max of up to about $90 mo. per 2-adult family (no contracts). They have a heated olympic pool (lap, lessons and free swim), children’s pool with water slides and fountains and 12+ person jacuzzi + state-of-the-art circuit training (S. Bay just rec’d $500K of new equip), running club and (incl. w/membership), offer one hr. classes in:
free teen center open 2-6 p.m. wkdys (w/homework help)
For a small fee, they offer:
adult personal trainers
Youth Ballet 4x wk
For discounted fee to members they offer:
Red Cross swimming lessons/lifesaving/swim team
Youth gymnastics (off-site)
Whew, now I’ll go hang the schedule back up . . .
Now I’m back. Walking, biking and horse trails and parks with playground equip, of course, are courtesy of the City, also free.
As an aside, if you have a military ID, dry boat & RV storage is $17-$34 month on all the bases in the county. MCRD even has waterfront dry storage, a launching ramp for two boats at once and a boat gas facility. You can also rent the military convention halls with just a damage/cleaning deposit and even have the military cater your function if you wish. The ASW and NAB halls are used for a lot of weddings where the bride and groom float away from the reception in a boat. Been to several of those.
The best parties/weddings I’ve ever been to have been in south and east county private back yards of 1/2 AC or more, professionally set up with gazebo and stage and managed by a private wedding/party coordinator.
So you don’t need to belong to an HOA to have access to amenities, but if you choose to pay $200 month for it (whether you use the amenities or not), that’s your choice.
Regarding a neighborhood “sign,” I’d rather not have it. They start to look cheesy when the letters start falling off and weeds grow up around them, that is, when the residents get tired of paying their HOA dues, lol :={
Coronita
August 28, 2010 @
11:09 AM
briansd1 wrote:If the [quote=briansd1]If the government wants to increase consumer spending immediately….
The best way would be to immediately pass new legislation to cap credit card interest rates at 5% so people can feel free to charge away. Also pass simultaneous legislation to prohibit banks from canceling credit card, decreasing credit lines and charging penalty fees.
This will have long term problems, but would work in boosting immediate demand.[/quote]
Nah, they just need to extend the foreclosure moratoriums for another 5-10 years, so that people can live rent/mortgage free…Imagine if that really was the case, and someone could live rent free for 5 years. That’s a lot of money to be saving!…
Aren’t the rest of us paying just suckers ? 🙂
LA LA LA LA LA LA LA LA LA LA LA LA
moneymaker
August 27, 2010 @
12:01 PM
sdrealtor wrote:I just dont [quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
Why didn’t they go for a 15 year loan? I think the term is no brainer there.
sdrealtor
August 27, 2010 @
12:16 PM
threadkiller wrote:sdrealtor [quote=threadkiller][quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
Why didn’t they go for a 15 year loan? I think the term is no brainer there.[/quote]
I dont know and did not want to make that assumption. They might have.
NotCranky
August 27, 2010 @
12:05 PM
sdrealtor wrote:I just dont [quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
I wasn’t speaking exclusively to the idea of buyers pulling supply from the future because of lower rates , but to current and near future holders of property refusing to sell in the slightly more distant future because of the rate on their notes.
This goes back to the argument that prices drop radically when rates go up( and tangentially to “you can always refinance to a lower rate”). All this cheap money now and until the current over supply problem could be mopped up and inflated away, isn’t leaning in favor of the buy cheap when rates are high crowd. From where I am looking it has equal potential of allowing banks to get higher interest for the same nominal prices(or higher) in the future.
bearishgurl
August 27, 2010 @
12:17 PM
Russell wrote:I wasn’t [quote=Russell]I wasn’t speaking exclusively to the idea of buyers pulling supply from the future because of lower rates , but to current and near future holders of property refusing to sell in the slightly more distant future because of the rate on their notes.[/quote]
Russell, are you saying here that, due to many current owners (and potential sellers) being able to refi at unheard-of low rates, that rather than market their properties at an unfavorable time, they will just hang onto them and perhaps put them into service as rentals if they have to move out of them, thus keeping potential inventory out of the market?
[quote=Russell]This goes back to the argument that prices drop radically when rates go up( and tangentially to “you can always refinance to a lower rate”). All this cheap money now and until the current over supply problem could be mopped up and inflated away, isn’t leaning in favor of the buy cheap when rates are high crowd. From where I am looking it has equal potential of allowing banks to get higher interest for the same nominal prices(or higher) in the future.[/quote]
How can banks get higher nominal interest on loans secured by the same (often distressed) properties (many in their own portfolios) when there seems to be a dearth or buyers (and borrowers) even at the current low rates? Maybe I’m not understanding what you’re trying to say here.
sdrealtor
August 27, 2010 @
12:18 PM
Russell wrote:sdrealtor [quote=Russell][quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
I wasn’t speaking exclusively to the idea of buyers pulling supply from the future because of lower rates , but to current and near future holders of property refusing to sell in the slightly more distant future because of the rate on their notes.
This goes back to the argument that prices drop radically when rates go up( and tangentially to “you can always refinance to a lower rate”). All this cheap money now and until the current over supply problem could be mopped up and inflated away, isn’t leaning in favor of the buy cheap when rates are high crowd. From where I am looking it has equal potential of allowing banks to get higher interest for the same nominal prices(or higher) in the future.[/quote]
Russ
Not sure I understand what you are saying but it brought up another thought. Owners that refi into historically low rates are more apt to hold onto properties in the future as long term rentals as they will cash flow even better in a higher interest rate environment with inflated currency.
briansd1
August 27, 2010 @
9:45 AM
XBoxBoy wrote:Worth noting: [quote=XBoxBoy]Worth noting: Bernanke’s remarks this morning at Jackson Hole seem to be preparing everyone for more quantitative easing. (Most likely purchasing of more treasuries) If this comes to pass, then seems to me mortgage rates will follow treasury rates down. Perhaps a lot lower than most of us would think.[/quote]
And to think that government intervention doesn’t work…
That reminds me that I need to compute what Year 2000 nominal mortgage payments would have been for the San Diego areas I’m interested in.
sdrealtor
August 27, 2010 @
10:04 AM
I can tell you with 100% I can tell you with 100% certainty that the P&I payment on a $320,000 loan for a purchase with 20% down for a prime borrower with 800+ FICO’s on a 5/1 ARM in late 1999 was $2150:)
andymajumder
August 27, 2010 @
10:21 AM
sdrealtor wrote:I can tell [quote=sdrealtor]I can tell you with 100% certainty that the P&I payment on a $320,000 loan for a purchase with 20% down for a prime borrower with 800+ FICO’s on a 5/1 ARM in late 1999 was $2150:)[/quote]
I am in the process of buying and my loan amount is slightly higher than that (around 350) with 20% down, getting 30 yr fixed @ 4.375 and my monthly (P&I) payment is significantly less than that. In fact, since my place has no HOA and MR, afer tax savings and deducting principal being payed down, I dare say I am doing better than renting a similar place.
andymajumder
August 27, 2010 @
10:26 AM
andymajumder wrote:sdrealtor [quote=andymajumder][quote=sdrealtor]I can tell you with 100% certainty that the P&I payment on a $320,000 loan for a purchase with 20% down for a prime borrower with 800+ FICO’s on a 5/1 ARM in late 1999 was $2150:)[/quote]
I am in the process of buying and my loan amount is slightly higher than that (around 350) with 20% down, getting 30 yr fixed @ 4.375 and my monthly (P&I) payment is significantly less than that. In fact, since my place has no HOA and MR, afer tax savings and deducting principal being payed down, I dare say I am doing better than renting a similar place.[/quote]
Of course, 400K in 1999 would have fetched you way more than what ~450K would fetch you now.
DWCAP
August 27, 2010 @
10:05 AM
I really doubt mortgage rates I really doubt mortgage rates get much below 4% on a 30 year. There are just structeral boundries that wont be broken. Even if the Ten year fell to 2%, and the spread stays so very very low at ~1.3-1.5%, you are looking at 3.4 or so as a max when you take into account fee’s.
My guess goes that if things get worse, and Big Ben desides to go QE2 on us, Rates will go no lower than 3.9% on a 30 year.
Mind you, just a few years ago, that was a usual introductery APR on a CC for alot of people.
sobmaz
August 28, 2010 @
7:31 AM
I don’t know how low they I don’t know how low they will go in the next two years but what I do know is if the bubble is not reflated enough to satisfy the FED they will drive rates as low as possible until either the bubble is reflated or 30 year rates are less than 2%.
desmond
August 28, 2010 @
7:39 AM
sobmaz wrote:I don’t know how [quote=sobmaz]I don’t know how low they will go in the next two years but what I do know is if the bubble is not reflated enough to satisfy the FED they will drive rates as low as possible until either the bubble is reflated or 30 year rates are less than 2%.[/quote]
They will go so low, Flu will refinance.
Arraya
August 28, 2010 @
7:57 AM
sobmaz wrote:I don’t know how [quote=sobmaz]I don’t know how low they will go in the next two years but what I do know is if the bubble is not reflated enough to satisfy the FED they will drive rates as low as possible until either the bubble is reflated or 30 year rates are less than 2%.[/quote]
Or deflation finally overcomes the Feds ability to stop it regardless of interest rates. A 4% 30 year and sales falling of a cliff is not indicative of inflation success. This inflate or die policy just might end in die.
I’m pretty sure this is what trying to inflate and failing looks like
Anonymous
August 28, 2010 @
8:57 AM
What everyone seems to be What everyone seems to be missing is, who’s walking away? I don’t know anyone in a foreclosure situation who is. Living rent-free is all the rage these days! So where is that money going to go? Not to the banks. My guess is the banks are going to start unloading their shadow inventory to raise cash. Sooner or later the foreclosure process will speed up as banks realize the futility of the present course. The new buyers will buy at low prices but have enough skin in the game so that the banks can sell that mortgage.
CA renter
August 29, 2010 @
12:59 AM
Arraya wrote:
Or deflation [quote=Arraya]
Or deflation finally overcomes the Feds ability to stop it regardless of interest rates. A 4% 30 year and sales falling of a cliff is not indicative of inflation success. This inflate or die policy just might end in die.
I’m pretty sure this is what trying to inflate and failing looks like[/quote]
Yep!
sobmaz
August 28, 2010 @
7:44 AM
I almost bought a house this I almost bought a house this spring for 600K. I was going to finance 120K.
With PITI and a 5.125 interest rate my payment was going to be about 1400. I have been watching rates fall in disbelief and recently recalculated what my payment would be at 4.25. On my payment I would have saved somewhere around 75.00 a month….BFD!
The amount is still much more important, and always will be, compared to the rate.
By the way, the reason I did not close is the apprasial came in at 549K and the seller would not meet me half way, or even a penny of the way. It later closed at 550K.
bearishgurl
August 28, 2010 @
11:32 AM
sobmaz wrote:I almost bought [quote=sobmaz]I almost bought a house this spring for 600K. I was going to finance 120K.
With PITI and a 5.125 interest rate my payment was going to be about 1400. I have been watching rates fall in disbelief and recently recalculated what my payment would be at 4.25. On my payment I would have saved somewhere around 75.00 a month….BFD!
The amount is still much more important, and always will be, compared to the rate.
By the way, the reason I did not close is the apprasial came in at 549K and the seller would not meet me half way, or even a penny of the way. It later closed at 550K.[/quote](emphasis added)
sobmaz, you did right by walking. You will eventually find a motivated seller :=)
Your post illustrates why it is really not worth the closing costs (and recast back to 30 yrs) for a borrower to refinance a small loan, aged around 10 years or more. I only owe about $200K and even the *full amount* of annual interest generated from my mortgage does me no good on my taxes, with my “lowish” income and other deductions. I have no incentive to refinance to 15 yrs, either, as I can just send more principal in every month if I wish, accomplish the same thing and pay NOTHING in closing costs. My mortgage is automatically recast once a year on the remaining balance.
Because my mtg follows the market so closely, it almost works the same as an *automatic convertible* mortgage. Any Piggs know if “convertible loans” are still available??
I agree that small mortgages almost cost as much to originate as larger mortgages (because of set fees in the escrow process), making it more cost-effective to just pay all cash, if possible.
HLS
August 28, 2010 @
2:34 PM
The number of years left on The number of years left on an existing mortgage has ABSOLUTELY NOTHING to do with whether it makes sense to refi or not.
******N-O-T-H-I-N-G!!******
YOU choose how many years you want to take to payoff. Many people can’t qualify for a new loan
The recast to a 30yr amortization only changes the minimum payment due.
BY ADJUSTING THE PAYMENT YOU CHANGE THE PAYOFF DATE.
It’s a simple formula that people have made complicated.
1. Take current interest rate and subtract new interest rate = interest rate savings.
2. Multiply rate savings by the principal balance to get approximate first year savings of interest.
Following years savings will decline slightly.
3. Understand the total cost to get into the new loan and figure out if it makes sense to do it.
Whether you have 7-12-15-19-21-25-28 years left on an existing loan makes NO DIFFERENCE, if you can save on the interest rate.
There are different ways to benefit from the savings.
For most people who plan on staying in a loan for 5 years or longer, the GUARANTEED return is far better than most other investments, including a 401K.
It’s not about the payment savings, it’s about the interest savings. Most people including mortgage “professionals” don’t understand this!!
No cost loans are not free. You get a higher rate and higher payment. Sometimes they make sense, sometimes they dont. Eventually they will cost much more than having paid upfront. (Usually 3-4yrs)
Anybody planning on paying off a loan in less than 10 years should be in a 3.25% rate today, assuming that they qualify.
The net cost will depend on the exact loan amount.
At the moment, a $400K loan would cost $1000 total to get to 3.25%.
If they were in a 4.00% rate today, the interest savings would be $3000 just the first year,(at a total net cost of $1000)
Remaining term of the current mortgage is meaningless to the savings.
98% truly don’t understand their options.
bearishgurl
August 28, 2010 @
3:38 PM
Thank you, HLS. I understand Thank you, HLS. I understand now. Acc. to Russell’s calculator he posted on a recent related thread:
the rate would need to be at 3.19% fixed with less than a $2,800 *total* closing cost to make sense for me to refi. And that’s *assuming I would qualify.*
I would also have to consider that if I sold in as little as four years (good chance I will do so), I would lose my assumable loan if I refied. This loan may be attractive to a buyer in my area due to relatives helping them purchase the property as is the custom around here (because the assumption fee is very low). Thus, a potential buyer may not need a big loan to purchase my property. So the “assumption possiblity” just adds to its saleability, IMO.
Interesting calculator, btw, Russell. Thanks for linking it :=)
HLS
August 28, 2010 @
4:59 PM
BG,,
I was not addressing BG,,
I was not addressing your situation directly as you had previously stated that you had an assumable, adjustable rate that you were comfortable with.
IMO that calculator is dangerous.
“The site makes no warranty about the calculator’s accuracy, performance, or value as a source of practical advice. Use entirely at your own risk”
Other threads have talked about the remaining term on an existing loan being a factor,,,, that’s poppycock. Worrying about recourse vs. non-recourse is a personal choice.
If you can qualify for a true no cost loan that lowers your rate. it doesn’t matter if you have 2 years left or 28 years left, it’s worth doing.
When there is a cost involved you have to understand how to figure the payback period (which is NOT the cost divided by the payment savings) !!
1/8th of a point difference can save thousands of dollars on some loans. Some people don’t think that it’s worth refinancing unless they save a full point, even if there is no cost.
It’s unfortunate that many will miss out on the lowest rates in history because of foolishness, stubborness and greed.
At some point rates will go up and then the party will start of people complaining that they should have refied when rates were lower and they still wont.
I’ve heard some pretty lame excuses and objections.
*** When ya don’t qualify it doesn’t matter what the rates are.
bearishgurl
August 28, 2010 @
5:46 PM
HLS wrote:BG,
I was not [quote=HLS]BG,
I was not addressing your situation directly as you had previously stated that you had an assumable, adjustable rate that you were comfortable with. . . . I’ve heard some pretty lame excuses and objections.
*** When ya don’t qualify it doesn’t matter what the rates are.[/quote]
HLS, yes, my current mortgage is a PM loan and is therefore non-recourse. That wouldn’t be what’s stopping me from refi as I have no foreclosure worries or otherwise. When I qualified for my current loan, I had a substantially higher income than I do now, and just *barely* qualified then. I no longer have W-2 income as I did then. My mortgage has since amortized for 9+ years but given the current allowable ratios, I’m sure I can’t qualify to refi.
I *COULD HAVE* “qualified” for a “stated-income product” four years ago but never tried . . . I surely would have been (1) a “failed HAMP story” by now, or (2) foreclosed on by now, had I done this. My “magnifying glasses” chained to my neck and calculator attached to my right hand would have kept me from signing to one of these deals, had I applied. Really, I’ve seen too much already, first hand, from single homeowners who did this . . . lol.
I can pay my mortgage payments fine because I am FRUGAL. FRUGAL in the sense that most other folks wouldn’t care for my “lifestyle.”
And, one would have to agree that the “assumable feature” of my current mortgage IS a *rare* sales asset these days :=)
HLS
August 28, 2010 @
6:03 PM
BG,,
As an example, I gather BG,,
As an example, I gather that you currently have a $200K mortgage @ 4.54%
You said that you might sell within a few years.
If that plan is less than 7 yrs, you don’t need a 30yr fixed rate.
IF you did qualify, based on yesterday’s pricing, you could refi to a 7YR ARM rate of 3.375% with a TOTAL cost of $1600
Regardless of the payment, you could save 1.165% in interest per year, or about $2300 just the first year. Cost recouped in about 8 months.
Additional savings in future years…
You could still amortize the payment over 21 years if it would make you feel better! the compounded savings becomes huge.
Advantage= You get a fixed rate (rather than adj) for the next 7 yrs AND a lower rate.
Disadvantage= You might lose the assumability
(Some ARMS are still assumable to a qualified buyer)
Your income tax rate doesn’t matter nor does how long you have been in your existing loan.
How long you plan on staying there does.
With ZERO cost to you, approx. 30yr fixed is 4.50%
20yr fixed 4.375%
(Zero cost loans are based on loan amount..
Higher balance can mean a lower rate)
If you don’t qualify, then you are just stuck with what you have~ 😉
bearishgurl
August 28, 2010 @
6:53 PM
HLS wrote:BG,,
As an [quote=HLS]BG,,
As an example, I gather that you currently have a $200K mortgage @ 4.54%
You said that you might sell within a few years.
If that plan is less than 7 yrs, you don’t need a 30yr fixed rate . . .
If you don’t qualify, then you are just stuck with what you have~ ;-)[/quote]
You are close in your calculations, HLS. However, I KNOW I don’t qualify to refi and don’t mind continuing my journey down COFI road, as I HAVE DONE most of my life. We’re never sure of course, but I COULD end up with an interest rate of 3.375% before I want to sell (or thereabouts, if the index plunges) by doing nothing (and keep my assumability feature). This might prove to be particularly valuable for sales purposes as these young kids with families (dual or single-income F/T workers [NOT typically college grads]) often can’t qualify for “mainstream” mortgages and need help from parents and grandparents to enable them to live nearby, which is typically given on the condition that they purchase a property <2 blocks (preferably <1 block) away from the relative(s).
Young families that don't have relatives around here typically opt for *newer* subdivisions than mine and my house is probably *too big* for most "empty nesters."
The last four sales within one block of me were all sold to persons related to homeowners who already lived here.
CA renter
August 29, 2010 @
1:33 AM
sobmaz wrote:I almost bought [quote=sobmaz]I almost bought a house this spring for 600K. I was going to finance 120K.
With PITI and a 5.125 interest rate my payment was going to be about 1400. I have been watching rates fall in disbelief and recently recalculated what my payment would be at 4.25. On my payment I would have saved somewhere around 75.00 a month….BFD!
The amount is still much more important, and always will be, compared to the rate.
By the way, the reason I did not close is the apprasial came in at 549K and the seller would not meet me half way, or even a penny of the way. It later closed at 550K.[/quote]
This is exactly what we keep bumping up against. There comes a point where the interest rate is so low already that any further reduction in rates makes a smaller and smaller difference. At some point, you still have to pay off the loan, even if the interest payment is zero.
Additionally, the effects of lower rates are negated by the higher property taxes a new buyer has to pay at these **artificially inflated** prices.
IMHO, we’re at a point where lower mortgage rates will mostly affect refinances, but not new purchases. Ultimately, prices are **still too high** for new buyers.
Just as an example, if we were to buy a house comparable to our rental at $660K with a 20% down payment of $132K, the payment would be approximately:
Income tax benefit from interest and tax deductions (by about 25%) would be ~$653.75, giving a monthly payment (after tax deduction benefit) of:
$2,779.75
We pay $2,200/month, and don’t have to worry about maintenance or repairs (though we do help with these in our particular situation). Also, at some point, there will be an opportunity cost with that $132K down payment. The Fed/govt is trying to make us think that $132K isn’t worth anything…when people are being laid off all over the place and UE benefits are at risk of ending (at some point?).
Besides, what happens if/when interest rates go up or if the govt finally concedes that prices are too high and gets out of the price-fixing business? IMHO, there is far greater risk of losing money on a purchase when you buy during a period of low rates (and govt stimulus) vs. buying at high rates (and no stimululs).
andymajumder
August 29, 2010 @
9:48 AM
CA renter wrote:sobmaz [quote=CA renter][quote=sobmaz]I almost bought a house this spring for 600K. I was going to finance 120K.
With PITI and a 5.125 interest rate my payment was going to be about 1400. I have been watching rates fall in disbelief and recently recalculated what my payment would be at 4.25. On my payment I would have saved somewhere around 75.00 a month….BFD!
The amount is still much more important, and always will be, compared to the rate.
By the way, the reason I did not close is the apprasial came in at 549K and the seller would not meet me half way, or even a penny of the way. It later closed at 550K.[/quote]
This is exactly what we keep bumping up against. There comes a point where the interest rate is so low already that any further reduction in rates makes a smaller and smaller difference. At some point, you still have to pay off the loan, even if the interest payment is zero.
Additionally, the effects of lower rates are negated by the higher property taxes a new buyer has to pay at these **artificially inflated** prices.
IMHO, we’re at a point where lower mortgage rates will mostly affect refinances, but not new purchases. Ultimately, prices are **still too high** for new buyers.
Just as an example, if we were to buy a house comparable to our rental at $660K with a 20% down payment of $132K, the payment would be approximately:
Income tax benefit from interest and tax deductions (by about 25%) would be ~$653.75, giving a monthly payment (after tax deduction benefit) of:
$2,779.75
We pay $2,200/month, and don’t have to worry about maintenance or repairs (though we do help with these in our particular situation). Also, at some point, there will be an opportunity cost with that $132K down payment. The Fed/govt is trying to make us think that $132K isn’t worth anything…when people are being laid off all over the place and UE benefits are at risk of ending (at some point?).
Besides, what happens if/when interest rates go up or if the govt finally concedes that prices are too high and gets out of the price-fixing business? IMHO, there is far greater risk of losing money on a purchase when you buy during a period of low rates (and govt stimulus) vs. buying at high rates (and no stimululs).[/quote]
I think you are getting a steal if you are able if you are able to rent a 650K house for 2200 a month. I had been looking to rent a SFH in the scripps ranch, carmel mountain or penasquitos area. A house that big or new which costs about 650K in these areas rent for 2700-3000 range.
Scarlett
August 29, 2010 @
9:51 AM
Totally true. Totally true.
sobmaz
August 29, 2010 @
12:45 PM
.
.
CA renter
August 29, 2010 @
11:44 PM
andymajumder wrote:
I think [quote=andymajumder]
I think you are getting a steal if you are able if you are able to rent a 650K house for 2200 a month. I had been looking to rent a SFH in the scripps ranch, carmel mountain or penasquitos area. A house that big or new which costs about 650K in these areas rent for 2700-3000 range.[/quote]
Yes, and this is something sdr has brought up about our personal situation as well. We started renting from our LL (original owners from the 1970s) back in 2004, and have made it a very favorable situation for them by helping with a lot of maintenance and repairs, and pre-paying 6-12 months in advance. We are their “dream tenants” (their words), so they haven’t raised our rent except for the first hundred (from $2,000 to $2,100) as per our lease agreement the first year, and I actually raised our rent last year by $100/mo. to $2,200 because I know we’re well under market and wanted to control the increases (being proactive and naming the increase vs. waiting for them to do it on their terms).
At this point, they could probably rent our house to another tenant for around $2,600-$2,900, which means that the ratio for rent/own is pretty much in line with these current interest rates. It’s a dilema for us because renting is favorable only if we stay in our current rental. If we had to move, there’s a strong chance we’d be forced to buy, because another rental would not necessarily work in our favor.
We are waiting for higher interest rates and an overwhelmed govt/Fed. The decision to rent is not as easy today as it was six+ years ago, largely because of all the Fed/govt intervention in interest rates, housing stimulus, and with foreclosure interventions. IMHO, they are trying their hardest to squeeze people out of cash and into overpriced assets. It is not an easy market to navigate right now, as the timing of everything can only be guessed, and this stalemate can last for many years.
bearishgurl
August 29, 2010 @
11:13 AM
CA renter wrote: . . . [quote=CA renter] . . . Besides, what happens if/when interest rates go up or if the govt finally concedes that prices are too high and gets out of the price-fixing business? IMHO, there is far greater risk of losing money on a purchase when you buy during a period of low rates (and govt stimulus) vs. buying at high rates (and no stimululs).[/quote]
Agreed, CAR. If you are still in the market to buy RE, you would do better to wait until the “gov’t gets out of the price-fixing business.”
Unless, of course, you can find a particularly MOTIVATED seller in your area of choice. The most motivated seem to be elderly, who have just decided they don’t want to waste another minute of their lives living far from children and grandchildren.
If you take one of these properties, be prepared to have to update and upgrade. You could do this gradually, however. IMO, you might have to “overlook” a lot of things you might be used to having in your rental house that aren’t present in the house you make an offer on, because the elderly owner hasn’t cared or been bothered with having these things in all the years they’ve lived there.
PRICE is more important than anything. Good luck in your search!
sdrealtor
August 29, 2010 @
11:29 AM
I always thought finding the I always thought finding the RIGHT house was more important than anything. You can potentially negotiate a better deal on the right house at another time but if you get a great deal on the wrong house it will always be the wrong house.
bearishgurl
August 29, 2010 @
12:08 PM
sdrealtor wrote:I always [quote=sdrealtor]I always thought finding the RIGHT house was more important than anything. You can potentially negotiate a better deal on the right house at another time but if you get a great deal on the wrong house it will always be the wrong house.[/quote]
As long as the PRICE and LOCATION are satisfactory, an ALMOST-RIGHT house or even a SEMI-WRONG house can be made RIGHT, in time. It all depends on the PRICE PAID.
Fundamentally, PRICE and LOCATION (I should have added “location” earlier) are the two most important considerations when purchasing real estate in CA.
These two attributes can NEVER BE FIXED after the deal is done.
A third attribute of RE that can never be fixed are permissible LAND USES. CC&R’s on title WILL ALWAYS ENCUMBER THE UNDERLYING PROPERTY. In fact, they are an encumbrance, the same as easements but have a far more profound effect on the urban or suburban landowner.
CFD’s (MR) on a tax bill tie in with LOCATION – this is also a sub-effect of location that CANNOT be altered/changed.
The presence of CC&R’s on title and CFD’s on a tax bill tie in with what the buyer is comfortable with now and what they believe they will be comfortable with in the future. IMO, these are even MORE IMPORTANT considerations for present buyers, as there may not be an easy or quick way to unload a property in the foreseeable future if you should need to and still recover your own investment(s) in it.
CA renter
August 29, 2010 @
11:52 PM
bearishgurl wrote:Agreed, [quote=bearishgurl]Agreed, CAR. If you are still in the market to buy RE, you would do better to wait until the “gov’t gets out of the price-fixing business.”
Unless, of course, you can find a particularly MOTIVATED seller in your area of choice. The most motivated seem to be elderly, who have just decided they don’t want to waste another minute of their lives living far from children and grandchildren.
If you take one of these properties, be prepared to have to update and upgrade. You could do this gradually, however. IMO, you might have to “overlook” a lot of things you might be used to having in your rental house that aren’t present in the house you make an offer on, because the elderly owner hasn’t cared or been bothered with having these things in all the years they’ve lived there.
PRICE is more important than anything. Good luck in your search![/quote]
BG,
You are exactly right. IMHO, it is the original owners, not the foreclosures, who are the greater threat to high prices in the areas we’re targeting (older areas with very old owners who bought their homes for under $200K, and often have them completely paid off). They can undercut any other sellers because they can drop their prices as low as they want just to get out.
We actually prefer older houses that have been well-maintained (plumbing, electrical, structural issues, etc.), but NOT upgraded. We will want to rennovate/redesign to accomodate our own tastes and needs, and the “flipper upgrades” of the 2000s is absolutely NOT what we desire. We’d even prefer to have unmaintained houses over “upgraded” houses, because we want to control the workmanship and design ourselves.
What you’ve mentioned is *exactly* what we’re looking for.
Anonymous
August 17, 2011 @
4:27 AM
(spam) (spam)
XBoxBoy
September 29, 2011 @
2:47 PM
I keep watching to see if we I keep watching to see if we are going to break the 4% barrier. Today I saw this posted on Marketwatch
CHICAGO (MarketWatch) — Average rates on fixed-rate mortgages hit record lows this week, with the 30-year fixed-rate mortgage averaging 4.01%, according to Freddie Mac’s weekly survey of conforming mortgage rates.
Getting darned close,
XBoxBoy
nocommonsense
September 29, 2011 @
4:06 PM
I locked in a 3.875%, no I locked in a 3.875%, no point no fee 30 year fix rate for refinancing last week. Very happy about that. It could happen again.
scaredyclassic
September 29, 2011 @
7:28 PM
i think it’s going down to 3% i think it’s going down to 3% now. I wouldve thought thatw as nuts but now probably, another rush to cash sometime soon, driving it down to 3. will it stop there? no. it’ll stop at 2.375%
XBoxBoy
October 6, 2011 @
10:35 AM
It’s official, we are below It’s official, we are below 4% for average 30 year mortgage.
30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.
15-year FRM this week averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. A year ago at this time, the 15-year FRM averaged 3.72 percent.
Coronita
October 12, 2011 @
6:57 AM
Seems like rates are Seems like rates are trickling up this week…
According to Freddie Mac’s According to Freddie Mac’s weekly Primary Mortgage Market Survey, 30-year fixed rate mortgages averaged 3.87 percent for the week ending Thursday, Feb.2. That is a drop from last week’s 3.98 percent, and a major fall from 2011′s 4.81 percent. Meanwhile, the 15-year fixed rate mortgage averaged 3.14 percent, dropping from 3.24 percent last week and 4.08 percent a year ago.
XBoxBoy
July 23, 2012 @
4:33 PM
A little more than a month to A little more than a month to go until the two year time period is up.
The rate on the 30-year mortgage averaged 3.53% for the week ending July 19 according to Freddie Mac
Will we break below 3.5%???? The suspense is killing me…
August 26, 2010 @ 11:21 AM
Today the 30 yr fixed
Today the 30 yr fixed conforming is 4.36% and I keep wondering, just how low will mortgage rates fall. So, what will be the bottom rate in the next two years?
August 26, 2010 @ 12:04 PM
I am of the opinion that the
I am of the opinion that the bottom on 30-year fixed is about ~3.75% with ~$3000 cost. This is for the primest of the prime conforming mortgage. The cost would include actual costs like escrow/appraisal etc and not things like prepaid interest. Of course you can get a lower rate by paying more upfront and vice versa.
Today such a loan for similar cost maybe obtained for 4.125% So I think we can fall another 0.375%.
Why?
10-year treasury is now at ~2.5%. The absolute lowest it has ever been was 2%, which happened in ~1936 and then again for a brief period in late-2008. It is hard for me to believe that times today are anywhere near as worse as 1936, so the bond investors will not be happy with anything less than 2%.
So the 10-year may fall another 0.5%.
The spread of 30-year over 10-year bond is now about ~1.625% for the said loan. IMO it is about as low as it can possibly get. Chances are that if 10-year drops anymore it will be accompanies by some panic – and the spread will actually rise, like what happened in late-2008.
So at best 0.5% drop in 10-year accompanied by some increase in the spread, will mean maybe 0.375% real drop in 30-year fixed rate (if we ever get there).
edit: From what I remember reading, mortgage rates were ~7% even during the great depression, implying spreads of ~5%+ as a result of tight monetary policy.
August 26, 2010 @ 12:45 PM
I’m voting for less than 2.5%
I’m voting for less than 2.5% on the 30-year fixed, paying no points.
My personal rule is this: NEVER forget the underlying fundamentals and always identify the conspiracies.
We are in a deflationary environment, where most mortgages are insured by our tax dollars.
So that which is insane, meaning 2% rates, can and probably will be seen before it is all over.
Let’s talk about the conspiracies.
Think about what is feared most by Those in Power (with decision making power over the economy, banking, financial markets)
They fear the tipping point, a point of no return when average home values have declined so much that most homeowners with underwater mortgages not only walk away – but also walk aways gain popular widespread momentum, making it a self-reinforcing snowball-rolling-downhill kind of thing. As more walk away, housing prices drop more, causing more to walk away.
They know and fear that the tipping point must be reached if housing prices decline much more (10%? 20%? nobody knows at what point it occurs)
I believe it is inevitable the tipping point will be reached, creating panic in our country’s decision makers, who in their twisted deluded minds will launch completely insane degrees of additional government intervention.
Many insightful blogs have written on the existing conspiracy already happening between the Treasury dept, the Fed, our nation’s banks, congress, and the FDIC (and numerous other political entities)
And many Americans are such dumb sheep they are not even aware of that conspiracy, one that will have radical impact upon their lives.
The conspiracy starts with keeping secret the fact that many of our largest banks are already insolvent, when properly audited from a mark-to-REALITY basis. I’m talking about really big banks, like Wells Fargo.
Next the conspiracy stands upon our congress having allowed mark-to-FANTASY accounting, which magically turns insolvent banks into being “solvent and strong.”
The FDIC is in on it because the DIF at the FDIC is already bankrupt, and the FDIC knows it doesn’t have either the bandwidth to process the true number of already failed banks, nor the balls to ask the congress for the amount of money required for the DIF to handle the actual number of banks insolvent on a mark-to-REALITY basis.
So the FDIC wants to control (redefine) the bank failures to only be a “trickle” they can handle.
So the conspiracy is to use mark-to-fantasy and then *cross their fingers* HOPING TO GOD the housing market and economic turnaround reverses mortgage failures thus floating the failed banks back up into true solvency. And the conspiracy includes multiple forms of intervention to keep housing prices from falling further.
(of course much of this applies to both commercial real estate mortgages and mortgages for private homes)
The conspiracy also involves the financial institutions (holding large amounts of Option-ARMs) to use various nonsense tactics to DELAY the resets by many years, because they know the resets will cause mortgage failures, which are difficult to hide even with mark-to-fantasy accounting.
Look at how Wells Fargo is delaying resets on the $120 billion of crap Option-ARMs it got when it acquired Wachovia.
http://healdsburgbubble.blogspot.com/2009/05/reset-chart-from-credit-suisse-has.html
And the conspiracy further involves financial institutions holding back their inventory foreclosed homes (that’s your shadow inventory) and merely trickling them into the market to try and avoid further pricing declines.
(I’m sure I’m also forgetting here multiple other aspects of this overall conspiracy. You can do your own detective work/brainstorming to think of them.)
My overall point is in order to start guessing how low mortgage rates will go, you gotta first dig really deep behind the lies to see all the conspiracies in place being applied to hide or delay impact of the true magnitude of the fundamental underlying problems (that will eventually hit the fan). Then knowing the true magnitude, you can run simulations in your head about how it will all play out (and affect mortgage rates) once it all hits the fan.
A second overall point is to myself as an investor. I try to remember that these conspiracies may have markets behaving in VERY odd ways for many years before we see the inevitable impact upon markets and economy. For example if the problems can be hidden and ignored for a few years, the stock markets and economy could see a “recovery” that might last another several years.
August 26, 2010 @ 1:21 PM
Your comments are dead on.
Your comments are dead on. And unfortunately low rates is one of the paths to keeping people in their houses. If 30 year rates go to 1%, mortgage payments are on par with rents. And buying a house becomes a good investment because you are building equity (after a while) and it does not cost any more than rent.
No mark to market, the refis are performing – if you can get fantasy apprasials – or better yet, no apprasials – the loans are all insured by FNMA. Big five all get back their balance sheets, and the American tax payer foots the bill with interest rates below inflation.
You gotta love capitalism.
August 26, 2010 @ 1:53 PM
I’m waiting for the no cost
I’m waiting for the no cost 3.5% to refi.
I refi’d last year at ‘historic lows’ last June with a 4.25/15 year. Same loan is around 3.75…
I have 4 coworkers talking to Sheldon this week. He’s got to be loving these low rates.
August 26, 2010 @ 4:40 PM
Personally, I feel the real
Personally, I feel the real question for the RE market is, how long will rates stay down at the 3.5 to 4% level?
End of 2010? All the way through 2011? Thoughts?
My belief is, as long as yields keep getting pushed down, fence sitters will keep waiting. But, once they see rates start to continually creep up, everyone will rush in to purchase.
August 26, 2010 @ 5:19 PM
Huckleberry wrote:Personally,
[quote=Huckleberry]Personally, I feel the real question for the RE market is, how long will rates stay down at the 3.5 to 4% level?
End of 2010? All the way through 2011? Thoughts?
My belief is, as long as yields keep getting pushed down, fence sitters will keep waiting. But, once they see rates start to continually creep up, everyone will rush in to purchase.[/quote]
Re: this “herding mentality,” I don’t think its wise to “rush to purchase” simply based upon how short-term interest rates move up or down. Within reason (up to 7%), I would focus on PRICE and LOCATION only and whether I NEEDED to buy RE at the time.
I would think a >6% mortgage interest-rate market would be MORE FAVORABLE to purchase in than the current market. Remember, you can ALWAYS refi (or sell) later, but can NEVER CHANGE THE PRICE YOU PAID.
August 26, 2010 @ 5:57 PM
LOL…Tell all the underwater
LOL…Tell all the underwater homeowners that they can ALWAYS refi or sell later.
August 26, 2010 @ 7:01 PM
Well said stockstradr and
Well said stockstradr and bearish. Between the placebo economy being sold to us by Washington under the guise of the “recovery” and fantasy accounting being done by CBO, I wonder if we are going Weimar republic in the near future. Precious metals are starting to make sense for survival.
August 27, 2010 @ 10:59 AM
sdrealtor wrote:LOL…Tell
[quote=sdrealtor]LOL…Tell all the underwater homeowners that they can ALWAYS refi or sell later.[/quote]
You just bolstered my point here, sdr. Your UNDERWATER homeowners got that way because they PAID TOO MUCH for their property, no doubt during a FRENZY when the masses were RUSHING TO PURCHASE. They’re also UNDERWATER because they elected to REDUCE LITTLE TO NONE of their principal balance over their ownership period and/or because THEY ALREADY REMOVED THEIR EQUITY (and then some) from their properties.
IMO, the BEST TIME TO PURCHASE RE is when HARDLY ANYONE IS INTERESTED IN DOING SO, because the HERD is only interested in what their size of P&I is going to be, (or, if they’re smart, PITI + HOA) without regard to THE PRICE THEY PAID. PURCHASE PRICE and LOCATION are the MOST IMPORTANT considerations when purchasing RE. ALL OTHER CONDITIONS CAN BE FIXED . . . EVENTUALLY.
As an agent, I’d rather be slumming around trying to locate a doable up-leg for a Starker client who is unable to sell their building than working in the current govm’t-infused and “supervised short-sale” environment, rife with inexcusable delays all stemming from utter incompetence.
As a buyer, I’d rather slum around with a high FICO score and low income in a >7% mortgage-rate market and stumble upon a FANTASTIC BUY in one of my coveted areas where I can work out an owner-carryback on the seller’s kitchen table and/or assume their current mortgage (however low) WITH NO COMPETITION than deal with all the fake frenzied crapola going on in the market right now. Lay it on me . . . balloons, straight notes . . . h@ll, I’ll draw them up myself! I’ve got the templates. Let’s get it on . . . bring back 1983 . . . lol.
Paying too much for RE (ESP in the wrong location) is a recipe for financial ruin. I don’t care if your mtg interest rate is 1%.
August 27, 2010 @ 11:03 AM
BG
Its still sunny out there.
BG
Its still sunny out there. How about those heartwarming stories? Still waiting for some to make me smile.
August 27, 2010 @ 11:45 AM
Have you heard the discussion
Have you heard the discussion about getting rid of the mortgage deduction? I guess that would really drive the final nail in the coffin of real estate! Just wondering what you insiders think the chance of that happening or might they just lower the percentage of deductions for houses at a certain level, say 1 million. Your thoughts… We all know the federal government is a hungry beast that constantly needs to be fed.
August 27, 2010 @ 12:21 PM
Aecetia wrote:Have you heard
[quote=Aecetia]Have you heard the discussion about getting rid of the mortgage deduction? I guess that would really drive the final nail in the coffin of real estate! Just wondering what you insiders think the chance of that happening or might they just lower the percentage of deductions for houses at a certain level, say 1 million. Your thoughts… We all know the federal government is a hungry beast that constantly needs to be fed.[/quote]
Not going to happen anytime soon. I think the homebuilders, banks and housing industry in general have enough lobbying power to stop something like that from happening. Also, its not like interest deduction matters during the entire duration of the loan…its only the first 10 yrs of your loan that you benefit from it, one’s pricipal become the sizable portion of you monthly payment you might be better off taking the standard deduction (of course depends on what other deductions you qualify for).
August 28, 2010 @ 7:05 AM
Aecetia wrote:Have you heard
[quote=Aecetia]Have you heard the discussion about getting rid of the mortgage deduction? I guess that would really drive the final nail in the coffin of real estate! Just wondering what you insiders think the chance of that happening or might they just lower the percentage of deductions for houses at a certain level, say 1 million. Your thoughts… We all know the federal government is a hungry beast that constantly needs to be fed.[/quote]
With the lower interest rates – everyone refi’ing w/out cash out is reducing their tax deduction (as well as their payment).
My goal is to personally eliminate my mortgage interest rate deduction… by paying off my mortgage early.
August 26, 2010 @ 7:04 PM
Huckleberry wrote:My belief
[quote=Huckleberry]My belief is, as long as yields keep getting pushed down, fence sitters will keep waiting. But, once they see rates start to continually creep up, everyone will rush in to purchase.[/quote]
That’s what I said earlier too…They should try pushing the rate up a bit, let’s say for 6 months, a half point, and watch what happens!
August 26, 2010 @ 7:12 PM
All eyes on Ben:
“The
All eyes on Ben:
“The so-called quantitative easing announced in August involves the Fed replacing its maturing mortgage securities with Treasury securities, which in essence keeps the Fed balance sheet stable. In theory, it also could prevents a passive tightening.
The Fed also left the door open to further easing, which some in the market believe could ultimately be multiple trillions in Treasury purchases. The expected outcome would be that the Fed’s purchases would help force down rates, helping to spur lending. Traders have been gaming how and when the Fed might act.”
http://www.cnbc.com/id/38872170
August 26, 2010 @ 5:00 PM
stockstradr wrote: . . . The
[quote=stockstradr] . . . The conspiracy also involves the financial institutions (holding large amounts of Option-ARMs) to use various nonsense tactics to DELAY the resets by many years, because they know the resets will cause mortgage failures, which are difficult to hide even with mark-to-fantasy accounting.
Look at how Wells Fargo is delaying resets on the $120 billion of crap Option-ARMs it got when it acquired Wachovia.
http://healdsburgbubble.blogspot.com/2009/05/reset-chart-from-credit-suisse-has.html%5B/quote%5D
Thank you for drawing my attention to this blog, stockstradr, as this is one of the areas on my retirement “short-list” 🙂 I’m actually gratified right now to see it depreciating at the moment and that 60% of the properties in Sonoma County have changed hands in recent years.
IMO, it doesn’t matter if WF delays these (neg-am affected) “Option-ARM” mortgages it inherited from Golden West. Already, the ten years that these affected borrowers are receiving until their first contractual or 125% recast is generous as most banks only allowed five years on similar programs. The end result is the same as that of a loan mod – their deferred interest will never go away – the can is just kicked down the road. These borrowers ALL DID IT TO THEMSELVES! These loans aren’t “crap.” Remember, they are “OPTION-ARMs” which were >90% made to prime and alt-A borrowers. The vast majority of Golden West’s (now WF-inherited) foolish (sh*t-for-brains) “Option-ARM” borrowers simply chose the “wrong payment option” every month. But they had the choice to amortize all along. No lender ever twisted their ARM (pun intended) to choose the option (1 of 4 avail) which deferred interest and failed to reduce their principal balances. WF purchased GW’s loans knowing full well the terms of ALL the blocks of loans in their portfolio and no doubt obtained deep discounts on some categories of loans, including those blocks of Option ARMS that had not amortized at all at the time of acquisition. Both WF and these borrowers now deserve everything that is coming to them.
The fallout due to misuse of these Option ARMS, including walkaways (due to inability to refi) and foreclosures will just add to all the reasonably-priced inventory for me to consider in the coming years when I am, once again, “in the market” to purchase :=)
Again, stockstradr, thanks for the link!
August 26, 2010 @ 5:13 PM
bearishgurl, yes obviously I
bearishgurl, yes obviously I agree with your point about the guilt of those homeowners who got mortgages from Golden West (passed to Wachovia, passed to WF).
They did it to themselves.
Also, yes, I gave thought to what must have been WF’s strategy when they gobbled up Wachovia. I believe (unproven) that Wells Fargo went after market share, despite knowing they were probably taking on toxic mortgages making WF effectively insolvent, but Wells Fargo PLANNED on dumping all those losses upon US taxpayers based upon a “Too Big to Fail” bailout.
That translates into two (albeit) risky investment opportunities:
1) Short Wells Fargo before the public comes to recognize Wells Fargo is insolvent.
2) Go long Wells Fargo stock after the stock slide but before it is announced that WF is off-the-hook when it is conspired to dump all those toxic WF mortgages upon American taxpayers.
August 27, 2010 @ 5:13 AM
UCGal wrote:I’m waiting for
[quote=UCGal]I’m waiting for the no cost 3.5% to refi.
I refi’d last year at ‘historic lows’ last June with a 4.25/15 year. Same loan is around 3.75…
I have 4 coworkers talking to Sheldon this week. He’s got to be loving these low rates.[/quote]
I just had Sheldon (HLS) refi my house to a 4.6 30 year. I paid a total of 240 bucks (130 back the lender gave). Im lookin to call him if i can get 3.75 ona 30. If that happens then 15’s may hit 3.25 in which case ill do that.
Sheldons the shiznet.
August 26, 2010 @ 5:02 PM
No mark to market, the refis
No mark to market, the refis are performing – if you can get fantasy appraisals – or better yet, no appraisals – the loans are all insured by FNMA. Big five all get back their balance sheets, and the American tax payer foots the bill with interest rates below inflation.
Thank you. You’ve noted there a very important part of the larger conspiracy that I forgot to mention, which is to dump the whole mess upon the American taxpayer.
And that implies something else. We already know America cannot dig itself out from under our ponderous debt burden.
So what is implied is the future destruction of the American dollar and additional destruction of the American economy and our standard of living.
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.
August 27, 2010 @ 12:46 AM
stockstradr wrote:No mark to
[quote=stockstradr]No mark to market, the refis are performing – if you can get fantasy appraisals – or better yet, no appraisals – the loans are all insured by FNMA. Big five all get back their balance sheets, and the American tax payer foots the bill with interest rates below inflation.
Thank you. You’ve noted there a very important part of the larger conspiracy that I forgot to mention, which is to dump the whole mess upon the American taxpayer.
And that implies something else. We already know America cannot dig itself out from under our ponderous debt burden.
So what is implied is the future destruction of the American dollar and additional destruction of the American economy and our standard of living.
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.[/quote]
Pretty much agree with everything you’ve said here and in your previous post (about the conspiracies).
August 27, 2010 @ 1:07 AM
stockstradr wrote:
Implied
[quote=stockstradr]
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.[/quote]
agree with this.
in fact this is the only way out.
seem like this would indicate inflation from this point forward. or am I looking at things from an overly simplistic view?
August 27, 2010 @ 2:27 AM
ocrenter wrote:stockstradr
[quote=ocrenter][quote=stockstradr]
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.[/quote]
agree with this.
in fact this is the only way out.
seem like this would indicate inflation from this point forward. or am I looking at things from an overly simplistic view?[/quote]
I’d guess inflation at some point, but not necessarily from *here* (could be years out, with penty of deflation in the meantime). Whoever gets the timing right on this will be very lucky.
August 27, 2010 @ 9:11 AM
CA renter wrote:ocrenter
[quote=CA renter][quote=ocrenter][quote=stockstradr]
Implied because simple math shows it will never be politically feasible to enact the budget cuts + tax increases at the continuing levels that would be required for American taxpayers to directly cover the total debt burden, especially when it also includes the trillions of dollars in failed mortgages.
So we will pay for it “indirectly” when the government inevitable prints massive amounts of dollars as an attempt to manage the debt.[/quote]
agree with this.
in fact this is the only way out.
seem like this would indicate inflation from this point forward. or am I looking at things from an overly simplistic view?[/quote]
I’d guess inflation at some point, but not necessarily from *here* (could be years out, with penty of deflation in the meantime). Whoever gets the timing right on this will be very lucky.[/quote]
It’s better to be bulletproof than it is to wonder about one’s luck.
August 27, 2010 @ 9:12 AM
Worth noting: Bernanke’s
Worth noting: Bernanke’s remarks this morning at Jackson Hole seem to be preparing everyone for more quantitative easing. (Most likely purchasing of more treasuries) If this comes to pass, then seems to me mortgage rates will follow treasury rates down. Perhaps a lot lower than most of us would think.
August 27, 2010 @ 9:12 AM
Worth noting: Bernanke’s
Worth noting: Bernanke’s remarks this morning at Jackson Hole seem to be preparing everyone for more quantitative easing. (Most likely purchasing of more treasuries) If this comes to pass, then seems to me mortgage rates will follow treasury rates down. Perhaps a lot lower than most of us would think.
August 27, 2010 @ 9:21 AM
I called for 4% rates for
I called for 4% rates for everyone over a year ago. Looks like they are on the way. IMO its one of the best stimuli they could implement. Getting more discretionary income into the hands of the most responsible members of society that have the equity in their homes to refinance is very powerful. Contrary to what is beleived by many around here, these folks far outnumber the “Bubble Bumblers” (maybe I should trademark that one). Once these folks have confidence in the economy the spending they can unleash is unfathomable to me.
August 27, 2010 @ 10:26 AM
sdrealtor wrote:I called for
[quote=sdrealtor]I called for 4% rates for everyone over a year ago. Looks like they are on the way. IMO its one of the best stimuli they could implement. Getting more discretionary income into the hands of the most responsible members of society that have the equity in their homes to refinance is very powerful. Contrary to what is beleived by many around here, these folks far outnumber the “Bubble Bumblers” (maybe I should trademark that one). Once these folks have confidence in the economy the spending they can unleash is unfathomable to me.[/quote]
So how does it play out from here. The cheap money pulls supply from the future and the banks can get higher rates from current fence sitters at very similar or higher nominal prices as todays?
August 27, 2010 @ 10:33 AM
I don’t think Andy, sdrealtor
I don’t think Andy, sdrealtor or Rustico will be selling for a long time.
August 27, 2010 @ 11:01 AM
I just dont think cheap money
I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.
August 27, 2010 @ 11:47 AM
sdrealtor wrote:I just dont
[quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
If the mortgage interest rates continue to sink, I think people “en-masse” who are currently renters will try to buy if their credit is good enough and they can find something they like without regard to purchase price. They will be much more focused on their monthly housing exp-outlay than purchase price. It’s just human nature. This is especially common with FHA and VA buyers (w/little to no down-payment). They just end up paying too much for a (usually overtaxed and HOA’d) inferior location and are practically instantly underwater.
sdr, WHERE (zip code) was your long-time resident (11 years is actually a “recent transplant”) “move-up” buyer’s property located which they obviously purchased for <$210K in 1998-1999 and sold in 2009/2010 for $750K?? And how much of their own $$ did they put into it (remodeling/repairs) during the 11 years they owned it? You emphasized here HOW EASY AND PAINLESS it was for them to recently purchase new construction but do you HONESTLY THINK the new construction they just purchased is WORTH the $830K they paid for it?? Did they give the extra $100K to the developer for "upgrades and landscaping" or did they contract the work themselves after closing? Would YOU purchase the same (or similar) property in this development for the same (or similar) price? Where are the sales comps used to base the $830K (+ $100K outside of escrow??) sales price on. Are there actually any sales comps around it at all to justify $830K? Would YOU, immediately after purchase, sink another $100K into the $830K purchase price on this property (or another one in this development)? Do you think it was wise for them to sell their (low-expense) home they had for 11 years and do what they did? If you were in their circumstances, would YOU do this, paying the price they paid? You're stating here WHAT MOVE-UP BUYERS DO and that there are many of them but, knowing what you know, ARE THE RE DECISIONS THEY'RE MAKING WISE OR IN THEIR BEST INTEREST FOR THE LONG-TERM? That's my point here.
August 27, 2010 @ 12:17 PM
You make way to many
You make way to many inaccuarte assumptions. Without getting into too much detail they mved about 2 miles away. The house they sold cost more than 210K and was also a move up. They have been in the areamuch longer than 11 years.
The property they paid $830K is definitely worth it and I would pay that if I was in the market. Total monthly payment is about $2500 and monthly income is over $12K.
Homes have sold well over $1M in this community recenty. They also got about $25K in incentives from builder. I would defintely invest (not sink) the $100K to make it right for me. Comps easily support it and are every where to be found. I think it was a very wise decision as the alternative was private school at close to $10K each for their kids who now get to stay in the same schools with the kids they have attended elementary school with. Yes I would do exactly what they did. In the long term their new home will appreciate more and hold value better for a handful of reason.
I never said there were many of them, I said they exist. I heard another similar story yesterday of buyer selling small Carmel Valley home for about 800K to move up to gorgeous So Carlsbad nearly new home with pool and 1500 sq ft larger for 950K. Great move up for them too.
August 27, 2010 @ 12:29 PM
If the government wants to
If the government wants to increase consumer spending immediately….
The best way would be to immediately pass new legislation to cap credit card interest rates at 5% so people can feel free to charge away. Also pass simultaneous legislation to prohibit banks from canceling credit card, decreasing credit lines and charging penalty fees.
This will have long term problems, but would work in boosting immediate demand.
August 27, 2010 @ 12:53 PM
sdrealtor wrote:You make way
[quote=sdrealtor]You make way to many inaccuarte assumptions. Without getting into too much detail they mved about 2 miles away. The house they sold cost more than 210K and was also a move up. They have been in the areamuch longer than 11 years.
The property they paid $830K is definitely worth it and I would pay that if I was in the market. Total monthly payment is about $2500 and monthly income is over $12K.
Homes have sold well over $1M in this community recenty. They also got about $25K in incentives from builder. I would defintely invest (not sink) the $100K to make it right for me. Comps easily support it and are every where to be found. I think it was a very wise decision as the alternative was private school at close to $10K each for their kids who now get to stay in the same schools with the kids they have attended elementary school with. Yes I would do exactly what they did. In the long term their new home will appreciate more and hold value better for a handful of reason.
I never said there were many of them, I said they exist. I heard another similar story yesterday of buyer selling small Carmel Valley home for about 800K to move up to gorgeous So Carlsbad nearly new home with pool and 1500 sq ft larger for 950K. Great move up for them too.[/quote]
So, the truth of the matter is, a good portion of the $600K your move-up friends extracted from their old home at sale WAS THEIR OWN DOWNPAYMENT. You still didn’t state (if you know) how much $$ they invested over the years to recently command a $750K purchase price. This amount would have also come off their “profit,” even though they may have used the improvements themselves prior to sale. In reality, these buyers of new construction may have just made a modest profit of <=6% per year of ownership of their old residence, or less, if they put improvements into the property. This is actually neither an "exceptional" return, nor rocket science. You're also saying that these buyers made this (very expensive) move strictly to live within certain "middle school" attendance boundaries. Otherwise, their existing "middle school" (2 mi. away??) was going to be so bad that they were going to pay $20K annually for private school. ($20K x 3 yrs = $60K and $20K x 6 yrs = $120K.) You're also stating that you would buy in this development and would also immediately pay to upgrade your purchase (before the ink was dry on your docs) and that the comps in and around the development support the current asking prices, plus any immediate improvements buyers elect to make. sdr, please correct me if I don't have this "happy story" right.
August 27, 2010 @ 1:27 PM
More inaccurate assumptions.
More inaccurate assumptions. The $600K is their house money that has accrued over years of home ownership. The house was new in 1999 and maintenance was fairly minimal. I never claimed exceptional returns or rocket science. These are very ordinary people with very ordinary occupations. The point wasnt that they are smart or that they made lots of money, the point is that there are in fact move-up buyers and that moving up makes sense for some people. Nothing more, nothing less.
The school reasons are complicated are beyond what I want to get into.
All the rest is spot on. If I was in their position I would buy what they bought, I would invest at least what they invested, I would have 100% confidence that the comps supported the purchase price plus the improvements and I would consider it a bargain. I would be very happy with the move up I was able to make.
August 27, 2010 @ 1:59 PM
Understand it all, sdr.
Understand it all, sdr. Except the school issue is a little puzzling. One would assume that some of your move-up buyer’s children’s elementary-school classmates must have also lived in their old neighborhood and would be following their children to middle school.
I’m actually not that bearish in certain coastal locales that are not overtaxed and also encumbered by CC&R’s.
But, if you’ve read any of my previous posts, you would see that I’m extremely skeptical of new developments “straight out of the gates.” I feel the asking prices are trumped up by whatever the developer thinks they can get, NOT based on any REAL sales comps to support them. The developers often bring in their own lending teams who will give buyers MORE incentives to go with them instead of an outside choice. These in-house loan officers just try to make the overall monthly “expense pkg” look “good enough” (40-yr. loans, interest-only seconds, etc.) to unsophisticated buyers without regard to the actual purchase price in relation to the value of surrounding properties (if any). And the total costs of fees (even though disclosed in writing) aren’t properly explained to buyers who almost immediately go into payment shock after move-in.
Even though OT here, new construction projects (and the shenanigans they pulled to secure buyers in recent years) have played a HUGE part in the pain we’re all feeling now due to way too much distressed inventory in certain markets, IMO. In South County, these 2003-2007-built projects are now down in value 25% – 50%. ALL OF THEM are overtaxed and HOA’d. Every single one.
August 27, 2010 @ 2:49 PM
Its complicated and they dont
Its complicated and they dont nor have they ever attended elementary school in the neighborhood they live in. Around here the elementary school (Encinitas Unified) and the secondary school district (San Dieguito) are different, on different calenders and have different rules. Its complicated and lots of folks move around her based upon that alone.
Around here the new developments have no problem with comps as they are very consistent and easy to find. If anything, the new developments are a bargain relative to similar sized existing homes that were built in the last 10 years. All the ptifalls you describe pertain to the old way, when in house lenders abused unqualified buyers slamming them into homes they had no business buying so the developer could close out a community. Its not like that anymore under new lending guidelines. Around here at these prices buyers are generally more sophisticated and well educated. They are far more likely to understand the costs of ownership unlike the disasters you have seen in the South Bay.
August 27, 2010 @ 3:15 PM
FYI, around here the MR are
FYI, around here the MR are pretty mellow. They are only $800/year and are a CFD specifically for funding improvements to the San Dieguito Schools.
August 27, 2010 @ 3:28 PM
sdrealtor wrote:FYI, around
[quote=sdrealtor]FYI, around here the MR are pretty mellow. They are only $800/year and are a CFD specifically for funding improvements to the San Dieguito Schools.[/quote]
Here, in South County, the school construction/improvement bonds are NOT CFD’s. They were voted in and are spread across ALL the taxpayers of the region.
What are the avg. monthly HOA dues in your local construction projects built in the last five years?
August 27, 2010 @ 4:59 PM
I’m sorry but your numbers
I’m sorry but your numbers don’t make sense, even with a 30 year loan payment on 330,000 principal would be no where near $1600 a month. You must have your facts mixed up!
August 27, 2010 @ 9:31 PM
threadkiller wrote:I’m sorry
[quote=threadkiller]I’m sorry but your numbers don’t make sense, even with a 30 year loan payment on 330,000 principal would be no where near $1600 a month. You must have your facts mixed up![/quote]
Why not…30 yr fixed, for a 330K loan, monthly P&I comes to $1672 @4.5%, at 4.375%, its about 1647 month.
August 27, 2010 @ 9:56 PM
Thanks Andy.
Thanks Andy.
August 27, 2010 @ 10:02 PM
Monthly HOA dues probably
Monthly HOA dues probably average around $200 which get you country club quality recreational facilites including olympic size lap pools heated year round, spas, kiddie pools, parks with playground equipment (swings, slides, sand box, monkey bars etc.), tennis courts, gyms, access to RV/boat storage at very favorable rates, clubhouses that look like 5 star catering facilites, organized activities for children, walking trails and substantial entry monuments/signage at community entrances.
August 27, 2010 @ 10:47 PM
sdrealtor wrote:Monthly HOA
[quote=sdrealtor]Monthly HOA dues probably average around $200 which get you country club quality recreational facilites including olympic size lap pools heated year round, spas, kiddie pools, parks with playground equipment (swings, slides, sand box, monkey bars etc.), tennis courts, gyms, access to RV/boat storage at very favorable rates, clubhouses that look like 5 star catering facilites, organized activities for children, walking trails and substantial entry monuments/signage at community entrances.[/quote]
And if you live in the old, ratty neighborhood next door with no HOAs or Mello-Roos, you get the signage, the trails, the free parks (just a couple of blocks away), and the nicely kept landscaping that all our guests drive by, courtesy of those HOA members. 😉
August 27, 2010 @ 10:54 PM
Yes but the HOA members in
Yes but the HOA members in that community only pay $100/month for all that which is a screaming deal!! Their kids also attend the #1 ranked elementary school in NCC and get to play with each other in all those wonderful facilities.
She asked for average HOA dues for homes built the last 5 years not the even nicer one built 10 years ago that is next door to that old, ratty neighborhood;)
August 28, 2010 @ 10:54 AM
sdrealtor wrote:She asked for
[quote=sdrealtor]She asked for average HOA dues for homes built the last 5 years not the even nicer one built 10 years ago that is next door to that old, ratty neighborhood;)[/quote]
Okay, I’m now asking how much (range) the 5-15 yr. old SFR HOA’s charge for dues today in NCC.
And . . . if you remember, sdr, how much were the dues in these communities when they were first built and closed out and were trying to *entice* potential buyers.
This exercise is just for a comparison as to how much SFR HOA dues went up over the years. It’s really probably no different anywhere in the county, but just wondering about your *microcosm,* here. Thank you.
August 28, 2010 @ 11:18 AM
Really- one of the HOA’s
Really- one of the HOA’s benefits is signage? I live in a neighborhood that has great signage on Gennesee as you enter the ‘hood. Nice plaster/stone arrangement… very pretty. Didn’t pay a penny for it.
And I’m with bearishgirl on the other benefits… we use the public parks for tennis, have Y membership for swimming, and if we need a fancy club house…on those RARE occasions, we rent an events place. Seriously – how often do people use their HOA club houses for catered affairs?
Some folks like HOAs… but to cite signage as a benefit… that’s pretty funny.
August 29, 2010 @ 8:51 AM
The dues started around $125
The dues started around $125 in the late 90’s when the comunity was not built out, they briefly rose to about $150 for several months and then settled back to $87. Over the last 10 years they have only gone to $103, far less than the inflation rate. It is one of the best, strongest, managed and well funded i have seen.
While you can join the Y, you are the only always banging the gavel about being close to things. Homeowners in that HOA can walk out their front door to them. Their pre-teens can use them safely without parental invovlement or supervision. Friends and family who visit can use them also. Sorry but you lose this one. Its a great deal.
Around here most of the 5 to 15 year old HOA range from $20 to $100 depending upon what kids of facilties they have. A few of the brand new ones with facilties like the one I mentioned are $200 but that is the exception and their facilties are really nice.
August 29, 2010 @ 11:40 AM
sdrealtor wrote:The dues
[quote=sdrealtor]The dues started around $125 in the late 90’s when the comunity was not built out, they briefly rose to about $150 for several months and then settled back to $87. Over the last 10 years they have only gone to $103, far less than the inflation rate. It is one of the best, strongest, managed and well funded i have seen.
While you can join the Y, you are the only always banging the gavel about being close to things. Homeowners in that HOA can walk out their front door to them. Their pre-teens can use them safely without parental invovlement or supervision. Friends and family who visit can use them also. Sorry but you lose this one. Its a great deal.
Around here most of the 5 to 15 year old HOA range from $20 to $100 depending upon what kids of facilties they have. A few of the brand new ones with facilties like the one I mentioned are $200 but that is the exception and their facilties are really nice.[/quote](emphasis added)
sdr, in San Diego County urban and suburban areas, vans come to the elementary schools every afternoon to pick up kids for the YMCA after-school care program (off-site). The teen center in South County is walking distance from two middle schools and one high school. In addition, the City bus ($32 mo. for students to age 23) has a stop 1/2 block from the Y. The teen center is across the street. The YMCA’s are centrally situated so that it is convenient for everyone living in the service area to use it, usually <5 miles away and close to schools. The multitude of classes the Y offers (free to members) cost $48 - $100 mo. in private studios (for a 1x wk. class). I know this because I have paid these studios for YEARS until they got too expensive for me. The Y is non-profit and IS A BARGAIN for individuals and families who use and need their facilities and services and works with nearly everyone's schedule. And the services it offers are just awesome for working parents.
Of course, it may not make sense for those living in bedroom communities or rural areas to join a Y as it would be too inconvenient to use often enough to make it worth the membership fees.
No HOA could possibly offer all the classes, facilities and services that a YMCA membership offers. If you wouldn't attend any of the classes and just want circuit training and a jacuzzi afterwards, you don't have kids who would use any of the Y's classes and services and you are satisfied with the equipment in your HOA gym, then this might be all you need and want. After all, you are already paying (mandatory) dues for it, anyway, even if you choose not to use your facilities :=)
August 30, 2010 @ 10:51 AM
Thats great to here that
Thats great to here that there are ways to get kids to the YMCA and all the wonderful programs they offer. We have a great YMCA up here that is less than 2 miles from my house also and my kids have taken classes, gone to camp and been in the adventure guide program. I donate to them every year. But I dont need to be a memeber of the Y to take advantage of all those wonderful programs. We have our community facilties which we use and enjoy year round and access to perhaps the nicest Y in SD County less than 2 miles away. The best of all worlds in my own suburban hell:=))
August 30, 2010 @ 11:45 AM
That’s awesome, sdr :=)
That’s awesome, sdr :=)
August 27, 2010 @ 11:01 PM
That nicer, newish
That nicer, newish development definitely has a reasonable HOA fee, as HOA fees go. I agree that you get a lot for the money, compared to most other newer developments.
August 28, 2010 @ 3:42 AM
I have no idea what
I have no idea what neighborhood it is, but isn’t it just like a realtor to leave out the taxes, HOA and insurance. A mere $800 a month more. So I guess your only off by 50%, not bad for a realtor.
August 28, 2010 @ 7:09 AM
Actually isnt it just like a
Actually isnt it just like a threadskimmer to be wrong in attacking the realtor who did not leave those items out.
Here’s my quote:
“The property they paid $830K is definitely worth it and I would pay that if I was in the market. Total monthly payment is about $2500 and monthly income is over $12K.”
I didnt calculate the exact numbers but let’s do it here
P+I = 1575 (builder bought their rate down to 4%)
HOA = 200
Insurance = 80
Taxes + MR = 793
Total monthly cost = $2650 give or take a few bucks
I said ABOUT $2500. I’d say that was a pretty good guess as I didnt caluculate any of the numbers and not close to being off by 50%.
August 28, 2010 @ 10:36 AM
sdrealtor wrote:Monthly HOA
[quote=sdrealtor]Monthly HOA dues probably average around $200 which get you country club quality recreational facilites including olympic size lap pools heated year round, spas, kiddie pools, parks with playground equipment (swings, slides, sand box, monkey bars etc.), tennis courts, gyms, access to RV/boat storage at very favorable rates, clubhouses that look like 5 star catering facilites, organized activities for children, walking trails and substantial entry monuments/signage at community entrances.[/quote]
The YMCA (several locations throughout county) is just $36 month for the first adult, $10 month for the first kid and $8 for the 2nd kid (w/an adult membership), max of up to about $90 mo. per 2-adult family (no contracts). They have a heated olympic pool (lap, lessons and free swim), children’s pool with water slides and fountains and 12+ person jacuzzi + state-of-the-art circuit training (S. Bay just rec’d $500K of new equip), running club and (incl. w/membership), offer one hr. classes in:
yoga 9x wk
zumba 3x wk
pilates 5x wk
Tai Chi 2x wk
step classes 8x wk
body sculpt 1x wk
cardio kickboxing 5x wk
interval training 3x wk
senior-cise 7x wk
body pump 7x wk
spinning (cycling) 12x wk
aquafit 10x wk
deepwater exercise 8x wk
arthritis (pool) exercise 2x wk
free child care while parents work out:
bouncin buddies (age 3-5) 2x wk
youth fitness (elem. sch) 4x wk
jiu-jitsu 4x wk
tai-kwan-do 8x wk
capoeira Brazil 1x wk
free teen center open 2-6 p.m. wkdys (w/homework help)
For a small fee, they offer:
adult personal trainers
Youth Ballet 4x wk
For discounted fee to members they offer:
Red Cross swimming lessons/lifesaving/swim team
Youth gymnastics (off-site)
Whew, now I’ll go hang the schedule back up . . .
Now I’m back. Walking, biking and horse trails and parks with playground equip, of course, are courtesy of the City, also free.
As an aside, if you have a military ID, dry boat & RV storage is $17-$34 month on all the bases in the county. MCRD even has waterfront dry storage, a launching ramp for two boats at once and a boat gas facility. You can also rent the military convention halls with just a damage/cleaning deposit and even have the military cater your function if you wish. The ASW and NAB halls are used for a lot of weddings where the bride and groom float away from the reception in a boat. Been to several of those.
The best parties/weddings I’ve ever been to have been in south and east county private back yards of 1/2 AC or more, professionally set up with gazebo and stage and managed by a private wedding/party coordinator.
So you don’t need to belong to an HOA to have access to amenities, but if you choose to pay $200 month for it (whether you use the amenities or not), that’s your choice.
Regarding a neighborhood “sign,” I’d rather not have it. They start to look cheesy when the letters start falling off and weeds grow up around them, that is, when the residents get tired of paying their HOA dues, lol :={
August 28, 2010 @ 11:09 AM
briansd1 wrote:If the
[quote=briansd1]If the government wants to increase consumer spending immediately….
The best way would be to immediately pass new legislation to cap credit card interest rates at 5% so people can feel free to charge away. Also pass simultaneous legislation to prohibit banks from canceling credit card, decreasing credit lines and charging penalty fees.
This will have long term problems, but would work in boosting immediate demand.[/quote]
Nah, they just need to extend the foreclosure moratoriums for another 5-10 years, so that people can live rent/mortgage free…Imagine if that really was the case, and someone could live rent free for 5 years. That’s a lot of money to be saving!…
Aren’t the rest of us paying just suckers ? 🙂
LA LA LA LA LA LA LA LA LA LA LA LA
August 27, 2010 @ 12:01 PM
sdrealtor wrote:I just dont
[quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
Why didn’t they go for a 15 year loan? I think the term is no brainer there.
August 27, 2010 @ 12:16 PM
threadkiller wrote:sdrealtor
[quote=threadkiller][quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
Why didn’t they go for a 15 year loan? I think the term is no brainer there.[/quote]
I dont know and did not want to make that assumption. They might have.
August 27, 2010 @ 12:05 PM
sdrealtor wrote:I just dont
[quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
I wasn’t speaking exclusively to the idea of buyers pulling supply from the future because of lower rates , but to current and near future holders of property refusing to sell in the slightly more distant future because of the rate on their notes.
This goes back to the argument that prices drop radically when rates go up( and tangentially to “you can always refinance to a lower rate”). All this cheap money now and until the current over supply problem could be mopped up and inflated away, isn’t leaning in favor of the buy cheap when rates are high crowd. From where I am looking it has equal potential of allowing banks to get higher interest for the same nominal prices(or higher) in the future.
August 27, 2010 @ 12:17 PM
Russell wrote:I wasn’t
[quote=Russell]I wasn’t speaking exclusively to the idea of buyers pulling supply from the future because of lower rates , but to current and near future holders of property refusing to sell in the slightly more distant future because of the rate on their notes.[/quote]
Russell, are you saying here that, due to many current owners (and potential sellers) being able to refi at unheard-of low rates, that rather than market their properties at an unfavorable time, they will just hang onto them and perhaps put them into service as rentals if they have to move out of them, thus keeping potential inventory out of the market?
[quote=Russell]This goes back to the argument that prices drop radically when rates go up( and tangentially to “you can always refinance to a lower rate”). All this cheap money now and until the current over supply problem could be mopped up and inflated away, isn’t leaning in favor of the buy cheap when rates are high crowd. From where I am looking it has equal potential of allowing banks to get higher interest for the same nominal prices(or higher) in the future.[/quote]
How can banks get higher nominal interest on loans secured by the same (often distressed) properties (many in their own portfolios) when there seems to be a dearth or buyers (and borrowers) even at the current low rates? Maybe I’m not understanding what you’re trying to say here.
August 27, 2010 @ 12:18 PM
Russell wrote:sdrealtor
[quote=Russell][quote=sdrealtor]I just dont think cheap money is that effective at pulling supply from the future. People buy when they are ready and while they may move a little quicker I dont see people en masse moving their buying decisions up a few years.
The exception is move up buyers which many around here dont beleive exist. For long time residents with equity it is a phenomenal time to move up. Just spoke with one yesterday that moved up from an 11 year old home that they never extracted equity out of. Sold for $750K and left with $600K of it. Bought a new house for 830K, put 500K down and used $100K for upgrades/landscaping. Now they have a $330K mortgage for about $1600/month. Both have guaranteed recession proof jobs and income that will keep them her another 20 years. The move up gets them a brand new highly upgraded home that is 500 sq ft bigger and has a view. It also gets them in the school district they needed as their kids will soon be in Jr High.[/quote]
I wasn’t speaking exclusively to the idea of buyers pulling supply from the future because of lower rates , but to current and near future holders of property refusing to sell in the slightly more distant future because of the rate on their notes.
This goes back to the argument that prices drop radically when rates go up( and tangentially to “you can always refinance to a lower rate”). All this cheap money now and until the current over supply problem could be mopped up and inflated away, isn’t leaning in favor of the buy cheap when rates are high crowd. From where I am looking it has equal potential of allowing banks to get higher interest for the same nominal prices(or higher) in the future.[/quote]
Russ
Not sure I understand what you are saying but it brought up another thought. Owners that refi into historically low rates are more apt to hold onto properties in the future as long term rentals as they will cash flow even better in a higher interest rate environment with inflated currency.
August 27, 2010 @ 9:45 AM
XBoxBoy wrote:Worth noting:
[quote=XBoxBoy]Worth noting: Bernanke’s remarks this morning at Jackson Hole seem to be preparing everyone for more quantitative easing. (Most likely purchasing of more treasuries) If this comes to pass, then seems to me mortgage rates will follow treasury rates down. Perhaps a lot lower than most of us would think.[/quote]
And to think that government intervention doesn’t work…
That reminds me that I need to compute what Year 2000 nominal mortgage payments would have been for the San Diego areas I’m interested in.
August 27, 2010 @ 10:04 AM
I can tell you with 100%
I can tell you with 100% certainty that the P&I payment on a $320,000 loan for a purchase with 20% down for a prime borrower with 800+ FICO’s on a 5/1 ARM in late 1999 was $2150:)
August 27, 2010 @ 10:21 AM
sdrealtor wrote:I can tell
[quote=sdrealtor]I can tell you with 100% certainty that the P&I payment on a $320,000 loan for a purchase with 20% down for a prime borrower with 800+ FICO’s on a 5/1 ARM in late 1999 was $2150:)[/quote]
I am in the process of buying and my loan amount is slightly higher than that (around 350) with 20% down, getting 30 yr fixed @ 4.375 and my monthly (P&I) payment is significantly less than that. In fact, since my place has no HOA and MR, afer tax savings and deducting principal being payed down, I dare say I am doing better than renting a similar place.
August 27, 2010 @ 10:26 AM
andymajumder wrote:sdrealtor
[quote=andymajumder][quote=sdrealtor]I can tell you with 100% certainty that the P&I payment on a $320,000 loan for a purchase with 20% down for a prime borrower with 800+ FICO’s on a 5/1 ARM in late 1999 was $2150:)[/quote]
I am in the process of buying and my loan amount is slightly higher than that (around 350) with 20% down, getting 30 yr fixed @ 4.375 and my monthly (P&I) payment is significantly less than that. In fact, since my place has no HOA and MR, afer tax savings and deducting principal being payed down, I dare say I am doing better than renting a similar place.[/quote]
Of course, 400K in 1999 would have fetched you way more than what ~450K would fetch you now.
August 27, 2010 @ 10:05 AM
I really doubt mortgage rates
I really doubt mortgage rates get much below 4% on a 30 year. There are just structeral boundries that wont be broken. Even if the Ten year fell to 2%, and the spread stays so very very low at ~1.3-1.5%, you are looking at 3.4 or so as a max when you take into account fee’s.
My guess goes that if things get worse, and Big Ben desides to go QE2 on us, Rates will go no lower than 3.9% on a 30 year.
Mind you, just a few years ago, that was a usual introductery APR on a CC for alot of people.
August 28, 2010 @ 7:31 AM
I don’t know how low they
I don’t know how low they will go in the next two years but what I do know is if the bubble is not reflated enough to satisfy the FED they will drive rates as low as possible until either the bubble is reflated or 30 year rates are less than 2%.
August 28, 2010 @ 7:39 AM
sobmaz wrote:I don’t know how
[quote=sobmaz]I don’t know how low they will go in the next two years but what I do know is if the bubble is not reflated enough to satisfy the FED they will drive rates as low as possible until either the bubble is reflated or 30 year rates are less than 2%.[/quote]
They will go so low, Flu will refinance.
August 28, 2010 @ 7:57 AM
sobmaz wrote:I don’t know how
[quote=sobmaz]I don’t know how low they will go in the next two years but what I do know is if the bubble is not reflated enough to satisfy the FED they will drive rates as low as possible until either the bubble is reflated or 30 year rates are less than 2%.[/quote]
Or deflation finally overcomes the Feds ability to stop it regardless of interest rates. A 4% 30 year and sales falling of a cliff is not indicative of inflation success. This inflate or die policy just might end in die.
I’m pretty sure this is what trying to inflate and failing looks like
August 28, 2010 @ 8:57 AM
What everyone seems to be
What everyone seems to be missing is, who’s walking away? I don’t know anyone in a foreclosure situation who is. Living rent-free is all the rage these days! So where is that money going to go? Not to the banks. My guess is the banks are going to start unloading their shadow inventory to raise cash. Sooner or later the foreclosure process will speed up as banks realize the futility of the present course. The new buyers will buy at low prices but have enough skin in the game so that the banks can sell that mortgage.
August 29, 2010 @ 12:59 AM
Arraya wrote:
Or deflation
[quote=Arraya]
Or deflation finally overcomes the Feds ability to stop it regardless of interest rates. A 4% 30 year and sales falling of a cliff is not indicative of inflation success. This inflate or die policy just might end in die.
I’m pretty sure this is what trying to inflate and failing looks like[/quote]
Yep!
August 28, 2010 @ 7:44 AM
I almost bought a house this
I almost bought a house this spring for 600K. I was going to finance 120K.
With PITI and a 5.125 interest rate my payment was going to be about 1400. I have been watching rates fall in disbelief and recently recalculated what my payment would be at 4.25. On my payment I would have saved somewhere around 75.00 a month….BFD!
The amount is still much more important, and always will be, compared to the rate.
By the way, the reason I did not close is the apprasial came in at 549K and the seller would not meet me half way, or even a penny of the way. It later closed at 550K.
August 28, 2010 @ 11:32 AM
sobmaz wrote:I almost bought
[quote=sobmaz]I almost bought a house this spring for 600K. I was going to finance 120K.
With PITI and a 5.125 interest rate my payment was going to be about 1400. I have been watching rates fall in disbelief and recently recalculated what my payment would be at 4.25. On my payment I would have saved somewhere around 75.00 a month….BFD!
The amount is still much more important, and always will be, compared to the rate.
By the way, the reason I did not close is the apprasial came in at 549K and the seller would not meet me half way, or even a penny of the way. It later closed at 550K.[/quote](emphasis added)
sobmaz, you did right by walking. You will eventually find a motivated seller :=)
Your post illustrates why it is really not worth the closing costs (and recast back to 30 yrs) for a borrower to refinance a small loan, aged around 10 years or more. I only owe about $200K and even the *full amount* of annual interest generated from my mortgage does me no good on my taxes, with my “lowish” income and other deductions. I have no incentive to refinance to 15 yrs, either, as I can just send more principal in every month if I wish, accomplish the same thing and pay NOTHING in closing costs. My mortgage is automatically recast once a year on the remaining balance.
Because my mtg follows the market so closely, it almost works the same as an *automatic convertible* mortgage. Any Piggs know if “convertible loans” are still available??
I agree that small mortgages almost cost as much to originate as larger mortgages (because of set fees in the escrow process), making it more cost-effective to just pay all cash, if possible.
August 28, 2010 @ 2:34 PM
The number of years left on
The number of years left on an existing mortgage has ABSOLUTELY NOTHING to do with whether it makes sense to refi or not.
******N-O-T-H-I-N-G!!******
YOU choose how many years you want to take to payoff. Many people can’t qualify for a new loan
The recast to a 30yr amortization only changes the minimum payment due.
BY ADJUSTING THE PAYMENT YOU CHANGE THE PAYOFF DATE.
It’s a simple formula that people have made complicated.
1. Take current interest rate and subtract new interest rate = interest rate savings.
2. Multiply rate savings by the principal balance to get approximate first year savings of interest.
Following years savings will decline slightly.
3. Understand the total cost to get into the new loan and figure out if it makes sense to do it.
Whether you have 7-12-15-19-21-25-28 years left on an existing loan makes NO DIFFERENCE, if you can save on the interest rate.
There are different ways to benefit from the savings.
For most people who plan on staying in a loan for 5 years or longer, the GUARANTEED return is far better than most other investments, including a 401K.
It’s not about the payment savings, it’s about the interest savings. Most people including mortgage “professionals” don’t understand this!!
No cost loans are not free. You get a higher rate and higher payment. Sometimes they make sense, sometimes they dont. Eventually they will cost much more than having paid upfront. (Usually 3-4yrs)
Anybody planning on paying off a loan in less than 10 years should be in a 3.25% rate today, assuming that they qualify.
The net cost will depend on the exact loan amount.
At the moment, a $400K loan would cost $1000 total to get to 3.25%.
If they were in a 4.00% rate today, the interest savings would be $3000 just the first year,(at a total net cost of $1000)
Remaining term of the current mortgage is meaningless to the savings.
98% truly don’t understand their options.
August 28, 2010 @ 3:38 PM
Thank you, HLS. I understand
Thank you, HLS. I understand now. Acc. to Russell’s calculator he posted on a recent related thread:
http://zwicke.nber.org/refinance/index.py
the rate would need to be at 3.19% fixed with less than a $2,800 *total* closing cost to make sense for me to refi. And that’s *assuming I would qualify.*
I would also have to consider that if I sold in as little as four years (good chance I will do so), I would lose my assumable loan if I refied. This loan may be attractive to a buyer in my area due to relatives helping them purchase the property as is the custom around here (because the assumption fee is very low). Thus, a potential buyer may not need a big loan to purchase my property. So the “assumption possiblity” just adds to its saleability, IMO.
Interesting calculator, btw, Russell. Thanks for linking it :=)
August 28, 2010 @ 4:59 PM
BG,,
I was not addressing
BG,,
I was not addressing your situation directly as you had previously stated that you had an assumable, adjustable rate that you were comfortable with.
IMO that calculator is dangerous.
“The site makes no warranty about the calculator’s accuracy, performance, or value as a source of practical advice. Use entirely at your own risk”
Other threads have talked about the remaining term on an existing loan being a factor,,,, that’s poppycock. Worrying about recourse vs. non-recourse is a personal choice.
If you can qualify for a true no cost loan that lowers your rate. it doesn’t matter if you have 2 years left or 28 years left, it’s worth doing.
When there is a cost involved you have to understand how to figure the payback period (which is NOT the cost divided by the payment savings) !!
1/8th of a point difference can save thousands of dollars on some loans. Some people don’t think that it’s worth refinancing unless they save a full point, even if there is no cost.
It’s unfortunate that many will miss out on the lowest rates in history because of foolishness, stubborness and greed.
At some point rates will go up and then the party will start of people complaining that they should have refied when rates were lower and they still wont.
I’ve heard some pretty lame excuses and objections.
*** When ya don’t qualify it doesn’t matter what the rates are.
August 28, 2010 @ 5:46 PM
HLS wrote:BG,
I was not
[quote=HLS]BG,
I was not addressing your situation directly as you had previously stated that you had an assumable, adjustable rate that you were comfortable with. . . . I’ve heard some pretty lame excuses and objections.
*** When ya don’t qualify it doesn’t matter what the rates are.[/quote]
HLS, yes, my current mortgage is a PM loan and is therefore non-recourse. That wouldn’t be what’s stopping me from refi as I have no foreclosure worries or otherwise. When I qualified for my current loan, I had a substantially higher income than I do now, and just *barely* qualified then. I no longer have W-2 income as I did then. My mortgage has since amortized for 9+ years but given the current allowable ratios, I’m sure I can’t qualify to refi.
I *COULD HAVE* “qualified” for a “stated-income product” four years ago but never tried . . . I surely would have been (1) a “failed HAMP story” by now, or (2) foreclosed on by now, had I done this. My “magnifying glasses” chained to my neck and calculator attached to my right hand would have kept me from signing to one of these deals, had I applied. Really, I’ve seen too much already, first hand, from single homeowners who did this . . . lol.
I can pay my mortgage payments fine because I am FRUGAL. FRUGAL in the sense that most other folks wouldn’t care for my “lifestyle.”
And, one would have to agree that the “assumable feature” of my current mortgage IS a *rare* sales asset these days :=)
August 28, 2010 @ 6:03 PM
BG,,
As an example, I gather
BG,,
As an example, I gather that you currently have a $200K mortgage @ 4.54%
You said that you might sell within a few years.
If that plan is less than 7 yrs, you don’t need a 30yr fixed rate.
IF you did qualify, based on yesterday’s pricing, you could refi to a 7YR ARM rate of 3.375% with a TOTAL cost of $1600
Regardless of the payment, you could save 1.165% in interest per year, or about $2300 just the first year. Cost recouped in about 8 months.
Additional savings in future years…
You could still amortize the payment over 21 years if it would make you feel better! the compounded savings becomes huge.
Advantage= You get a fixed rate (rather than adj) for the next 7 yrs AND a lower rate.
Disadvantage= You might lose the assumability
(Some ARMS are still assumable to a qualified buyer)
Your income tax rate doesn’t matter nor does how long you have been in your existing loan.
How long you plan on staying there does.
With ZERO cost to you, approx. 30yr fixed is 4.50%
20yr fixed 4.375%
(Zero cost loans are based on loan amount..
Higher balance can mean a lower rate)
If you don’t qualify, then you are just stuck with what you have~ 😉
August 28, 2010 @ 6:53 PM
HLS wrote:BG,,
As an
[quote=HLS]BG,,
As an example, I gather that you currently have a $200K mortgage @ 4.54%
You said that you might sell within a few years.
If that plan is less than 7 yrs, you don’t need a 30yr fixed rate . . .
If you don’t qualify, then you are just stuck with what you have~ ;-)[/quote]
You are close in your calculations, HLS. However, I KNOW I don’t qualify to refi and don’t mind continuing my journey down COFI road, as I HAVE DONE most of my life. We’re never sure of course, but I COULD end up with an interest rate of 3.375% before I want to sell (or thereabouts, if the index plunges) by doing nothing (and keep my assumability feature). This might prove to be particularly valuable for sales purposes as these young kids with families (dual or single-income F/T workers [NOT typically college grads]) often can’t qualify for “mainstream” mortgages and need help from parents and grandparents to enable them to live nearby, which is typically given on the condition that they purchase a property <2 blocks (preferably <1 block) away from the relative(s).
Young families that don't have relatives around here typically opt for *newer* subdivisions than mine and my house is probably *too big* for most "empty nesters."
The last four sales within one block of me were all sold to persons related to homeowners who already lived here.
August 29, 2010 @ 1:33 AM
sobmaz wrote:I almost bought
[quote=sobmaz]I almost bought a house this spring for 600K. I was going to finance 120K.
With PITI and a 5.125 interest rate my payment was going to be about 1400. I have been watching rates fall in disbelief and recently recalculated what my payment would be at 4.25. On my payment I would have saved somewhere around 75.00 a month….BFD!
The amount is still much more important, and always will be, compared to the rate.
By the way, the reason I did not close is the apprasial came in at 549K and the seller would not meet me half way, or even a penny of the way. It later closed at 550K.[/quote]
This is exactly what we keep bumping up against. There comes a point where the interest rate is so low already that any further reduction in rates makes a smaller and smaller difference. At some point, you still have to pay off the loan, even if the interest payment is zero.
Additionally, the effects of lower rates are negated by the higher property taxes a new buyer has to pay at these **artificially inflated** prices.
IMHO, we’re at a point where lower mortgage rates will mostly affect refinances, but not new purchases. Ultimately, prices are **still too high** for new buyers.
Just as an example, if we were to buy a house comparable to our rental at $660K with a 20% down payment of $132K, the payment would be approximately:
P&I: $2618.50 (30yr FRM @ 4.318%)
Tax: $715.00 (@1.3%)
Ins: $100.00
Total: $3,433.50
Income tax benefit from interest and tax deductions (by about 25%) would be ~$653.75, giving a monthly payment (after tax deduction benefit) of:
$2,779.75
We pay $2,200/month, and don’t have to worry about maintenance or repairs (though we do help with these in our particular situation). Also, at some point, there will be an opportunity cost with that $132K down payment. The Fed/govt is trying to make us think that $132K isn’t worth anything…when people are being laid off all over the place and UE benefits are at risk of ending (at some point?).
Besides, what happens if/when interest rates go up or if the govt finally concedes that prices are too high and gets out of the price-fixing business? IMHO, there is far greater risk of losing money on a purchase when you buy during a period of low rates (and govt stimulus) vs. buying at high rates (and no stimululs).
August 29, 2010 @ 9:48 AM
CA renter wrote:sobmaz
[quote=CA renter][quote=sobmaz]I almost bought a house this spring for 600K. I was going to finance 120K.
With PITI and a 5.125 interest rate my payment was going to be about 1400. I have been watching rates fall in disbelief and recently recalculated what my payment would be at 4.25. On my payment I would have saved somewhere around 75.00 a month….BFD!
The amount is still much more important, and always will be, compared to the rate.
By the way, the reason I did not close is the apprasial came in at 549K and the seller would not meet me half way, or even a penny of the way. It later closed at 550K.[/quote]
This is exactly what we keep bumping up against. There comes a point where the interest rate is so low already that any further reduction in rates makes a smaller and smaller difference. At some point, you still have to pay off the loan, even if the interest payment is zero.
Additionally, the effects of lower rates are negated by the higher property taxes a new buyer has to pay at these **artificially inflated** prices.
IMHO, we’re at a point where lower mortgage rates will mostly affect refinances, but not new purchases. Ultimately, prices are **still too high** for new buyers.
Just as an example, if we were to buy a house comparable to our rental at $660K with a 20% down payment of $132K, the payment would be approximately:
P&I: $2618.50 (30yr FRM @ 4.318%)
Tax: $715.00 (@1.3%)
Ins: $100.00
Total: $3,433.50
Income tax benefit from interest and tax deductions (by about 25%) would be ~$653.75, giving a monthly payment (after tax deduction benefit) of:
$2,779.75
We pay $2,200/month, and don’t have to worry about maintenance or repairs (though we do help with these in our particular situation). Also, at some point, there will be an opportunity cost with that $132K down payment. The Fed/govt is trying to make us think that $132K isn’t worth anything…when people are being laid off all over the place and UE benefits are at risk of ending (at some point?).
Besides, what happens if/when interest rates go up or if the govt finally concedes that prices are too high and gets out of the price-fixing business? IMHO, there is far greater risk of losing money on a purchase when you buy during a period of low rates (and govt stimulus) vs. buying at high rates (and no stimululs).[/quote]
I think you are getting a steal if you are able if you are able to rent a 650K house for 2200 a month. I had been looking to rent a SFH in the scripps ranch, carmel mountain or penasquitos area. A house that big or new which costs about 650K in these areas rent for 2700-3000 range.
August 29, 2010 @ 9:51 AM
Totally true.
Totally true.
August 29, 2010 @ 12:45 PM
.
.
August 29, 2010 @ 11:44 PM
andymajumder wrote:
I think
[quote=andymajumder]
I think you are getting a steal if you are able if you are able to rent a 650K house for 2200 a month. I had been looking to rent a SFH in the scripps ranch, carmel mountain or penasquitos area. A house that big or new which costs about 650K in these areas rent for 2700-3000 range.[/quote]
Yes, and this is something sdr has brought up about our personal situation as well. We started renting from our LL (original owners from the 1970s) back in 2004, and have made it a very favorable situation for them by helping with a lot of maintenance and repairs, and pre-paying 6-12 months in advance. We are their “dream tenants” (their words), so they haven’t raised our rent except for the first hundred (from $2,000 to $2,100) as per our lease agreement the first year, and I actually raised our rent last year by $100/mo. to $2,200 because I know we’re well under market and wanted to control the increases (being proactive and naming the increase vs. waiting for them to do it on their terms).
At this point, they could probably rent our house to another tenant for around $2,600-$2,900, which means that the ratio for rent/own is pretty much in line with these current interest rates. It’s a dilema for us because renting is favorable only if we stay in our current rental. If we had to move, there’s a strong chance we’d be forced to buy, because another rental would not necessarily work in our favor.
We are waiting for higher interest rates and an overwhelmed govt/Fed. The decision to rent is not as easy today as it was six+ years ago, largely because of all the Fed/govt intervention in interest rates, housing stimulus, and with foreclosure interventions. IMHO, they are trying their hardest to squeeze people out of cash and into overpriced assets. It is not an easy market to navigate right now, as the timing of everything can only be guessed, and this stalemate can last for many years.
August 29, 2010 @ 11:13 AM
CA renter wrote: . . .
[quote=CA renter] . . . Besides, what happens if/when interest rates go up or if the govt finally concedes that prices are too high and gets out of the price-fixing business? IMHO, there is far greater risk of losing money on a purchase when you buy during a period of low rates (and govt stimulus) vs. buying at high rates (and no stimululs).[/quote]
Agreed, CAR. If you are still in the market to buy RE, you would do better to wait until the “gov’t gets out of the price-fixing business.”
Unless, of course, you can find a particularly MOTIVATED seller in your area of choice. The most motivated seem to be elderly, who have just decided they don’t want to waste another minute of their lives living far from children and grandchildren.
If you take one of these properties, be prepared to have to update and upgrade. You could do this gradually, however. IMO, you might have to “overlook” a lot of things you might be used to having in your rental house that aren’t present in the house you make an offer on, because the elderly owner hasn’t cared or been bothered with having these things in all the years they’ve lived there.
PRICE is more important than anything. Good luck in your search!
August 29, 2010 @ 11:29 AM
I always thought finding the
I always thought finding the RIGHT house was more important than anything. You can potentially negotiate a better deal on the right house at another time but if you get a great deal on the wrong house it will always be the wrong house.
August 29, 2010 @ 12:08 PM
sdrealtor wrote:I always
[quote=sdrealtor]I always thought finding the RIGHT house was more important than anything. You can potentially negotiate a better deal on the right house at another time but if you get a great deal on the wrong house it will always be the wrong house.[/quote]
As long as the PRICE and LOCATION are satisfactory, an ALMOST-RIGHT house or even a SEMI-WRONG house can be made RIGHT, in time. It all depends on the PRICE PAID.
Fundamentally, PRICE and LOCATION (I should have added “location” earlier) are the two most important considerations when purchasing real estate in CA.
These two attributes can NEVER BE FIXED after the deal is done.
A third attribute of RE that can never be fixed are permissible LAND USES. CC&R’s on title WILL ALWAYS ENCUMBER THE UNDERLYING PROPERTY. In fact, they are an encumbrance, the same as easements but have a far more profound effect on the urban or suburban landowner.
CFD’s (MR) on a tax bill tie in with LOCATION – this is also a sub-effect of location that CANNOT be altered/changed.
The presence of CC&R’s on title and CFD’s on a tax bill tie in with what the buyer is comfortable with now and what they believe they will be comfortable with in the future. IMO, these are even MORE IMPORTANT considerations for present buyers, as there may not be an easy or quick way to unload a property in the foreseeable future if you should need to and still recover your own investment(s) in it.
August 29, 2010 @ 11:52 PM
bearishgurl wrote:Agreed,
[quote=bearishgurl]Agreed, CAR. If you are still in the market to buy RE, you would do better to wait until the “gov’t gets out of the price-fixing business.”
Unless, of course, you can find a particularly MOTIVATED seller in your area of choice. The most motivated seem to be elderly, who have just decided they don’t want to waste another minute of their lives living far from children and grandchildren.
If you take one of these properties, be prepared to have to update and upgrade. You could do this gradually, however. IMO, you might have to “overlook” a lot of things you might be used to having in your rental house that aren’t present in the house you make an offer on, because the elderly owner hasn’t cared or been bothered with having these things in all the years they’ve lived there.
PRICE is more important than anything. Good luck in your search![/quote]
BG,
You are exactly right. IMHO, it is the original owners, not the foreclosures, who are the greater threat to high prices in the areas we’re targeting (older areas with very old owners who bought their homes for under $200K, and often have them completely paid off). They can undercut any other sellers because they can drop their prices as low as they want just to get out.
We actually prefer older houses that have been well-maintained (plumbing, electrical, structural issues, etc.), but NOT upgraded. We will want to rennovate/redesign to accomodate our own tastes and needs, and the “flipper upgrades” of the 2000s is absolutely NOT what we desire. We’d even prefer to have unmaintained houses over “upgraded” houses, because we want to control the workmanship and design ourselves.
What you’ve mentioned is *exactly* what we’re looking for.
August 17, 2011 @ 4:27 AM
(spam)
(spam)
September 29, 2011 @ 2:47 PM
I keep watching to see if we
I keep watching to see if we are going to break the 4% barrier. Today I saw this posted on Marketwatch
CHICAGO (MarketWatch) — Average rates on fixed-rate mortgages hit record lows this week, with the 30-year fixed-rate mortgage averaging 4.01%, according to Freddie Mac’s weekly survey of conforming mortgage rates.
Getting darned close,
XBoxBoy
September 29, 2011 @ 4:06 PM
I locked in a 3.875%, no
I locked in a 3.875%, no point no fee 30 year fix rate for refinancing last week. Very happy about that. It could happen again.
September 29, 2011 @ 7:28 PM
i think it’s going down to 3%
i think it’s going down to 3% now. I wouldve thought thatw as nuts but now probably, another rush to cash sometime soon, driving it down to 3. will it stop there? no. it’ll stop at 2.375%
October 6, 2011 @ 10:35 AM
It’s official, we are below
It’s official, we are below 4% for average 30 year mortgage.
30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.
15-year FRM this week averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. A year ago at this time, the 15-year FRM averaged 3.72 percent.
October 12, 2011 @ 6:57 AM
Seems like rates are
Seems like rates are trickling up this week…
30 Year Fixed Rate
Rate APR Points
4.000% 4.059% 0.000%
3.750% 3.965% 1.875%
15 Year Fixed Rate
Rate APR Points
3.250% 3.353% 0.000%
3.000% 3.378% 1.875%
February 7, 2012 @ 10:14 PM
According to Freddie Mac’s
According to Freddie Mac’s weekly Primary Mortgage Market Survey, 30-year fixed rate mortgages averaged 3.87 percent for the week ending Thursday, Feb.2. That is a drop from last week’s 3.98 percent, and a major fall from 2011′s 4.81 percent. Meanwhile, the 15-year fixed rate mortgage averaged 3.14 percent, dropping from 3.24 percent last week and 4.08 percent a year ago.
July 23, 2012 @ 4:33 PM
A little more than a month to
A little more than a month to go until the two year time period is up.
The rate on the 30-year mortgage averaged 3.53% for the week ending July 19 according to Freddie Mac
Will we break below 3.5%???? The suspense is killing me…
XBoxBoy