Sadly this will not increase housing starts b/c the builders are not building lower cost single family homes b/c there is no margin in them, yet that is where the demand is. Also, IMO, with 30yr. rates at barely over 4%, almost everyone should be looking at 15 yr. mortgage rates. The monthly payment will be a smidge higher, but you will pay significantly less over time for the house. But that is the rub. Almost everyone purchases a home based on the monthly payment only, which to me is a mistake. They give no thought to the fact that if rates rise from these low levels that the odds are the value of that home will decrease and difficult to sell,preventing move up for many. Look at what happened a few months ago when the 30yr. mortgage rate went to 5%? The sales of homes dried up profusely. Why? Even tho 5% is very low historically, the large majority of people looking to buy homes today don;t know 12%+ mortgage rates from 40 years ago. They know sub 4 and 5 percent mortgages for the last 12 years, so to them a 5%+ rates is high. The argument that they are historically low does not hold water to the first time buyer. I believe in no debt if possible, except for home purchases. But don;t buy based on what you can afford monthly on a 30yr. mortgage. The home you purchase to live in is NOT a financial investment, it is a LIFESTYLE investment, Rental properties, etc. are financial investments.
Also, IMO, with 30yr. rates at barely over 4%, almost everyone should be looking at 15 yr. mortgage rates. The monthly payment will be a smidge higher, but you will pay significantly less over time for the house.
This kind of talk is if rate are going back up to 8%, 9%, or 10%. Would you like me to graph out what rates have been for the last 15 years?They give no thought to the fact that if rates rise from these low levels that the odds are the value of that home will decrease and difficult to sell, preventing move up for many.
While I do agree with this, the expectation is that you home will increase in value at a rate of 0.005% per year. If you live in it for 10 years, that $350,000 home would now be worth $368,000.The home you purchase to live in is NOT a financial investment, it is a LIFESTYLE investment, Rental properties, etc. are financial investments.
I'm not going to argue with you but the current rate for 30 year is 4.08% and for a 15 year is 3.56%. Of course, it all has to do with your credit, qualifications, etc. but I can tell you the Lenders we deal with are able to get different rates for the 2 different terms. I only know of 1 Mortgage Broker in town. No one deals in Mortgage Brokerage anymore here.These days it can actually be tough to find a 15 year rate that is significantly better than the 30 year rates. In many cases you are just as well off getting the 30 year and just paying extra each month toward the note.
BTW my wife is a mortgage broker and she routinely does complicated loan scenarios if anyone needs help getting financing.
You're in a good spot. Almost everyone we deal with, if they are financing, are Conventional/20% down. A lot of cash Buyers and we have helped a lot that are VA, $0 Down. The problem with that is it doesn't compete and very risky for the Seller. Just depends on the situation.I remember when mortgage rates were running 16-18%. Can you imagine? My first boss was buying a house and I remember he was all excited because he got a "low" 15% 30 year. o_O I'm in a 15 year now with a 3.125% rate. I'm a happy camper
Also, I realize that probably most homebuyers don't have 20% to put down but that's what I would recommend if you can in order to avoid PMI right from the start.
Down for the 5th straight month. March ended at 4.27% and April is trending even lower. We could be Sub 4s again by the Summer.
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Sounds a lot like 2003-2005ish...Were back up to closing well over 200 purchases, refi's and HELOC's a month again(did 67 last week and 64 the week prior) and Title orders are coming in as fast as we can put them in our system, but the reality is we never dropped below around 160-180 per month Nov.-Feb.
That's the good news.....Now the bad news is a lot of them are borrowers that just refied in the last 3 or 4 years meaning they are using their equity and the historically low rates to cycle revolving debt and home improvements. The ledger of payoffs on some of the files is absolutely endless with a lot going to pay off credit cards. Some people never learn or never learn to earn more than they spend...
I think this may be a little more gradual cycle( it's been trending upward since 15-16) but you can't fix dumb dumb.....people seem to get really silly when their equity is on the climb and assume that market value translates to actual cash value.Sounds a lot like 2003-2005ish...
We've always "rounded up" (if not more) on almost anything financed. We had a car (I think it was a car financed by then GMAC) and it got to the point where they were sending us statements that said nothing was due that month trying to get us to stop paying principal.For those that dont want a 15 year, another option is pay half of your mortgage payment every 2 weeks. This will sneak in an extra monthly payment a year. If you start on day 1, it'll shave roughly 5 years off and save many tens of thousands of dollars. For the love of humanity... dont pay a company to do this for you.
For NV's example of $280,000 at 4.26%... it would save $36,000 over the loan term. Instead of $1381 a month, it is $691 every 2 weeks. It's an "effective" monthly payment of $1497.
I'm not going to argue with you but the current rate for 30 year is 4.08% and for a 15 year is 3.56%. Of course, it all has to do with your credit, qualifications, etc. but I can tell you the Lenders we deal with are able to get different rates for the 2 different terms. I only know of 1 Mortgage Broker in town. No one deals in Mortgage Brokerage anymore here.
Unfortunately, the 10-year isn't directly correlated to the overnight lending rate.The Fed can’t & won’t allow rates to rise because it would blow the debt service sky high.
Our first mortgage in 1990 was 11%. We cut that in half just a few years later. I don’t think we can go there again without serious consequences.