Seems like the bubble burst is going to be more sudden than we thought. 30 year mortgages are suddenly at nearly 5.5-6%, listings are sitting on the market for longer, and multiple cities are cracking down on Airbnb.
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Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
221–230 of 510 posts
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#222Earlier quoted context omitted.
Whole-term-fixed rates are pretty uncommon in Europe. Fixes of 2, 5 sometimes 10 years are products most providers offer, but as the term increases, the rate shoots up, to offset rate uncertainty. My question is: why would you fix for 30yr when you know you're paying multiple points to offset market uncertainty? Remortgaging every couple of years takes a bit of time, and shopping around, but is much cheaper.
> My question is: why would you fix for 30yr when you know you're paying multiple points to offset market uncertainty? To fix your monthly payment for the next 30 years. Furthermore, with a fixed rate mortgage you can benefit from interest rate volatility since you can always buy back the debt at par. In practice this means you can: 1. Take out a fixed rate loan for $n at x% 2. If the rate doubles (to 2x%) you can re…
> If the rate doubles (to 2x%) you can refinance and you now only owe half ($n/2)
FYI you're describing a bond loan. Most countries, including America, don't really offer these, so most people won't understand what you're talking about.
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#223I use to be a shareholder of Rocket. Then I tried to get a mortgage with them. I'm self-employed. I make about 200k/year. I had 0 debt (I paid off my house the prior year). I had 20% for up to 350k. I had an 812 credit score. When I applied they asked for my P&R statements for 2 years. The current year showed a $400 deficit (which was due to charitable giving). They said that I was losing money.Therefore I was too gr…
It’s not rare for large volume companies like this to fail on edge cases. I’m sure they have an algorithm to calculate rates and risk and there was little anyone could do to change the output. I imagine it wasn’t designed with the self employed as a high priority. I’m not convinced any of that means they are destined to fail.
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#224Earlier quoted context omitted.
Getting a mortgage is the easiest way to build wealth through government subsidized leverage (mortgage interest deduction).
After the 2017 tax reform bill, itemizing deductions is not cost effective for the vast majority of Americans.
Vast majority being 90% according to IRS statistics. It seems it will take some time for the myth of the effects of the mortgage interest tax deductions to die down.
It is also capped at $750k of mortgage debt, which is not much for the 10% of filers who are itemizing and using the deduction.
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#225No post body was provided.
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#226Earlier quoted context omitted.
Whole-term-fixed rates are pretty uncommon in Europe. Fixes of 2, 5 sometimes 10 years are products most providers offer, but as the term increases, the rate shoots up, to offset rate uncertainty. My question is: why would you fix for 30yr when you know you're paying multiple points to offset market uncertainty? Remortgaging every couple of years takes a bit of time, and shopping around, but is much cheaper.
The 30-year fixed mortgage (the entire amortization period is at one fixed interest rate) is a government created product. It would never be offered by banks, at the low rates they are, if they had to hold them on their books. The "normal" mortgages in the US prior to the FHA were 50% down and 5-year terms. https://bebusinessed.com/history/history-of-mortgages/ Fannie and Freddie basically agree to "back" those new m…
Back then you could order a house from the Sears catalog for $1,495
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#227Earlier quoted context omitted.
Most of the housing bubble is actually a land price bubble. Land is only a long-term depreciating asset in shrinking cities, because demand for the land is decreasing.
Simply put, house price is a function of rents for similar houses and the multiple of annual rent that houses sell for. The multiple is primarily a function of interest rates, and a significant proportion of house price increases in recent decades has been the increase in multiple. It is also a function of expected future house price growth - the higher the expectation, the higher the multiple, which is where psychol…
Housing [land] prices have been grinding higher long before the Great Decline in interest rates
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#228Earlier quoted context omitted.
> To fix your monthly payment for the next 30 years. Sure, but .. nothing else is fixed for those 30 years? Not your salary, the price of fuel, your place of work, life circumstances? And you're paying a premium at the start for this. It's more apparent in the UK where you can choose how long you want the fix for and see the interest rate you're offered go up. > you can benefit from interest rate volatility since you…
In the US, you can refinance your loans. Essentially taking out a new loan to pay off your old mortgage. The new loan has the new market interest rate. In the US, you’re typically allowed to pay off additional principal without any penalty, so you can end a loan by paying off the outstanding principal without needing the pay the remainder of the interest on the loan.
As I understand it, it's this refinancing that leads US citizens in the UK ending up with a surprising US capital gains bill after they re-mortgage their UK property. And we also (normally) have ERCs in the UK so as usual, the rest is the worst of both worlds.
Ideally one could renounce the citizenship, oh wait...
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#229Earlier quoted context omitted.
> Going into debt at the lowest interest rate you'll ever be offered to buy a leveraged asset that's likely to increase in price and reduce the overhead you pay on your largest expense, housing, and hedge against the risk of rent increases and security against the whims of landlords? Look, if I had enough money around, I'd maybe consider the gamble. But I don't want to buy property to sell it later, I just want to li…
Around here, monthly rent is as high as or higher than mortgage payments. With mortgage payments, you accrue ownership (for the "standard" mortgages around here). If you expect house prices to remain stable or increase during your residency in a property, ownership financially makes more sense.
Why do people compare monthly mortgage amount and rent? It misses several big elements to housing costs: taxes, maintenance, closing costs, realtor costs, and opportunity cost of the money tied up.
Renting vs buying comparisons need to account for lot more than those two numbers but that's all I see posted most of the time.
Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks
#230Rocket Mortgage has a pretty modern stack, and they make good use of third party API’s to aid their processing. There’s an entire fintech ecosystem that are providers for mortgage providers like Rocket Mortgage that could be impacted if this turns into a trend.
They are also 'it' when it comes to Detroit for information technology, unless you count Compuware.