30 Year Mortgage Rate

Discussion in 'Business, Investing & Finance' started by NVGator, Apr 4, 2019.

  1. NVGator

    NVGator Member
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    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.


    Screen Shot 2019-04-04 at 11.38.12 AM.png
     
  2. 78

    78 Dazed and Confused
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    Risk aversion at a time when risk markets are trending higher. Weird. Hopefully this has a positive impact on new home starts.
     
  3. FireFoley

    FireFoley Senior Member
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    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.
     
    • divits

      divits A Muffin of the Studly Variety
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      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.
       
      • Zambo

        Zambo Poo Flinger
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        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.
         
        • NVGator

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          A smidge? What do you define as a smidge?
          If the purchase price is $350,000 and 20% down would be your mortgage price of $280,000. A 30 year @ 4.27% = $1,381/mo. A 15 year @15 @ 3.72% = $2,032/mo. I wouldn't say the delta of $651/mo for someone in an affordable price point of $350,000 is a smidge.

          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?

          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.
           
          • NVGator

            NVGator Member
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            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.
             
          • NVGator

            NVGator Member
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            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.
             
          • FireFoley

            FireFoley Senior Member
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            I don;t disagree with you @NVGator, but rates will not have to go to above 7 or 8 percent for house prices to decline. Above 5% and stay there for more than a second will do it, it just happened months ago. Secondly I agree with you on house appreciation. My economic view has always been a home should not increase in value by more than the rate of inflation. But since 2000, the majority view their home as a cash cow and "expect" 10+% gains annually. I personally sold a home for 3 times what I paid for it in 4 years and another for 70% higher in 5 years. But those were outliers and I live in a hot area and took advantage. Those days are over yet many think that is the norm.
             
            • Theologator

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              That’s great because we are selling & moving this summer. Need the expansion to extend at least a few more months.

              It does seem like the Fed and financial industry are expecting rates to ease in the next 18 months.
               
            • Theologator

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              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.
               
              • Theologator

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              • Concrete Helmet

                Concrete Helmet Hook, Line, and Sinker
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                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...
                 
                • Detroitgator

                  Detroitgator General Factotum
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                  Sounds a lot like 2003-2005ish...
                   
                • Concrete Helmet

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                  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.

                  I wasn't in the business in 2002-2005 but my Wife had 3 offices and almost 40 employees from 1999-2006....we sold one of the buildings and lease the other out now and work out of one with 12 employees....thank God for Mobile Notary's ....
                   
                  • bradgator2

                    bradgator2 Internet Bully
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                    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.
                     
                    • Detroitgator

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                      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.
                       
                      • Bushmaster

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                        I did a 30 year mortgage and paid the extra payment each year. Trimmed quite a bit off the time to pay it off.

                        Funny thing about house payments. Housing prices are a factor of 2 items, the cost and the interest rate will always equal a set amount when factoring the payment. Locals can't control the interest rate but they do control the price to a certain extent. People have so much in the budget for housing. When interest rates go up and stay there, you will see housing prices drop.

                        Similar to car shopping. I bought a new car in 2006 and they salesman kept harping on what my monthly payment would be and avoided the interest rate and months conversation altogether. I told him if he mentioned the monthly payment again I would have him fired (I did the accounting/tax work for the dealership and the GM was a good friend). It was annoying as hell. He was selling monthly payment, I was shopping cost and interest. Beat him down on the price and got ,9% for 60 months. Tried to get 72 months at that rate but Ford wasn't offering it.
                         
                      • Zambo

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                        It may be true at first glance that you’ll find a better rate for a 15 year note but that includes some assumptions that may not be true. As you pointed out in another post, the difference in monthly payment for a 30 vs 15 year note is significant, even on a moderately priced house. When you start computing debt-to-income ratios etc, many buyers wind up not qualifying for that sexy lower 15 year rate.

                        As for mortgage brokering, I can assure you the business is alive and well. Maybe not so much for folks who live a simple life, getting their trust W2 wage every month, and aren’t borrowing too much money. But where housing prices are high and you have alimony to the first wife and child support to the second wife, and some income from a W2 job and other income from a 1099 job, and a side business that has a partnership with some other guy, and you own a rental property somewhere etc etc etc....the underwriting of a loan gets to be a real chore. Especially if you’re buying an expensive house and your DTI ratios are hard to balance. This is the work that the mortgage broker does and it doesn’t really cost the borrower anything. It’s like a travel agent, they make their money based on rebates they have negotiated with the lenders.
                         
                        • 78

                          78 Dazed and Confused
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                          Unfortunately, the 10-year isn't directly correlated to the overnight lending rate.
                           

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