131–140 of 178 posts
People with adjustable or variable rate mortgages are probably full of regret right now.
Earlier quoted context omitted.
Some other key things: 4) Lots of people buying with all-cash or mostly-cash. You're not at all rate-sensitive if you're a cash buyer. 5) A lot of these cash-heavy buyers are powered by generational wealth. 6) The housing shortage in the US is incredibly acute, so much so that the market will continue chugging along even as borrowing conditions worsen considerably. I bought a couple of years ago when the market was r…
I don't think you should ever buy home all-cash. That would be financially stupid move. Even at 6% rates, you can get far better return on your capital on long term basis (>15 yrs). Additionally, you can always refinance later whenever rates goes down. So, paying all-cash for a house is losing a lot of ROI on your capital and is plain stupid.
Yes, it's perfectly sensible to use the bank's money when it's a fairly sure bet and the interest rate is low... but there is a big complexity cliff that exists between "used 0.1% of the bank's money" and "used 0% of the bank's money". Using 0% of the bank's money is preferable when closing the deal at least.
If you are in a position to make an all-cash offer but you want financing, you could probably buy the property in cash and then get a mortgage after. That's not the usual workflow for homebuyers but I don't see why you couldn't do it, it's just like refinancing really.
Earlier quoted context omitted.
did something change? normally even on a home you own outright you can get up-to 80% of the appraised value difference
You're confusing terms. That's a home equity loan, not a cash-out refinance.
people who can buy a house all cash will be the real winners here. if and when rates go down, they can cash out refinance, and if they don't they will benefit from the downward pressure high rates create on prices. it's rich to be rich.
My wife and I have been waiting for this for a few years now. We live in a college town in the South and the prices here are fairly delusional. I imagine this will allow for some market correction and we’ll be able to get into a bigger home.
Earlier quoted context omitted.
I've always heard 2.5x-3x your gross annual salary. Which makes sense, but us also would price people out of the big markets.
Right, and it ignores interest rates which is the whole point of comparing actual mortgage costs instead of home prices. Same example, $65k salary x 3x to get a home value would be a $200k house. That's a total annual home cost of $11,750 with 2.75% interest rates and $16,200 with 6.5% rates. If they can afford the $16,200 today based on the 3x rule, then surely they could have afforded a $285k house (4.4x gross) las…
Earlier quoted context omitted.
Some other key things: 4) Lots of people buying with all-cash or mostly-cash. You're not at all rate-sensitive if you're a cash buyer. 5) A lot of these cash-heavy buyers are powered by generational wealth. 6) The housing shortage in the US is incredibly acute, so much so that the market will continue chugging along even as borrowing conditions worsen considerably. I bought a couple of years ago when the market was r…
I don't think you should ever buy home all-cash. That would be financially stupid move. Even at 6% rates, you can get far better return on your capital on long term basis (>15 yrs). Additionally, you can always refinance later whenever rates goes down. So, paying all-cash for a house is losing a lot of ROI on your capital and is plain stupid.
I don't know about you but in my generational cohort the people buying entirely on their own earning power is a small minority. The bulk of buyers are only able to enter the market due to generational wealth - and that comes in the form of cash.
So yeah, agreed in principle that if you had $X in cash lying around it'd be a poor choice to put it all on a piece of real estate. But in this case the $X in cash doesn't belong to you.
The whole state of the housing market is beyond alarming - not only are things completely unaffordable to wage earners, the people who are able to survive in this market are overwhelmingly doing so via familial and generational wealth. This is a flywheel of wealth inequality that is accelerating by the day - the well-asseted use their wealth to catapult their offspring into more assets that largely wage-earning classes (even very well-paid wage earners) are completely cut out of.
Earlier quoted context omitted.
Right, and it ignores interest rates which is the whole point of comparing actual mortgage costs instead of home prices. Same example, $65k salary x 3x to get a home value would be a $200k house. That's a total annual home cost of $11,750 with 2.75% interest rates and $16,200 with 6.5% rates. If they can afford the $16,200 today based on the 3x rule, then surely they could have afforded a $285k house (4.4x gross) las…
Maybe, maybe not. The monthly cost wouldn't be identical due to taxes, difference in down payment (if also following best practices there), insurance, and that ignores potential future repairs (more expensive houses tend to be larger and/or fancier).
This is last week's data, Mortgage News Daily has the 30 year at 7.08% today. -- https://www.mortgagenewsdaily.com/mortgage-rates
Mortgage news daily is not a very accurate source
* Similar problems with house prices going up
* If you default on a mortgage in the UK, you still owe the difference between what the bank are able to sell it for and your original loan.
* The period over which people have fixed interest rates is most commonly two years, and at that point, people have to remortgage, or go onto a “variable rate”. Many people will not be able to remortgage, so they’ll end up at the Bank of England’s interest rate plus an additional 3.5-4%.
Earlier quoted context omitted.
My wife and I have been waiting for this for a few years now. We live in a college town in the South and the prices here are fairly delusional. I imagine this will allow for some market correction and we’ll be able to get into a bigger home.
I'm also from a small southern college town and the housing market has been absolutely absurd for the past decade or so. It's always seemed like football fans looking for vacation homes and retirees were buoying it.