Mortgage rates

[Concrete Helmet]

("kicked down the road"):

You can also bet that ALL of us will share this burden and it's not going to end well. Some here believe that they will benefit from the gov. printing money.....BUT they are forgetting the other parts of the equation.....taxes and non sustainable fixed income assets for retirees.

The banks will continue to leach from equities drawing in the Robinhood idiots in mass with their new found source of income(stimulus) and steal profits selling off shares they never paid for, meanwhile the Fed will keep replacing those same banks borrowed bonds with newer ones and moving the old ones into the black hole known as their balance sheet...

Prepare yourselves for the new term "fifty percenter" because that's what your taxes will be if you make a six figure salary...like I said someone's gonna pay for it

 

[Concrete Helmet]

And make it worse... Friend in Nevada is posting on FB how rental property owners can't sell their properties (and there are willing buyers) because of no evictions of what are now non-rent paying squatters.

Well that gives new meaning to the term government housing now doesn't it...they may not own it it yet...but they will since nearly 50% of mortgages are fed owned.....and you wondered why I would take my cash and pay sh!t off....

 

[BMF]

My wife has been aggressively looking in the Tampa/St. Pete market. Anything under $300k is in a ghetto or is a dump...hell, most houses under $400k are nothing impressive. You have to go way out to the suburbs is you want your money to go far (in this market). It's just the two of us, so we don't want to live in the suburbs. I posted earlier, we're looking at buying something that we could convert to a rental property after there (hopefully) is a correction...so we're focusing on $300-$400k and it's pretty discouraging what we're finding. On the bright side, my dump in Arlington will probably sell of over $725k (which is mind blowing if you saw it - we don't have a bathroom in our master br, no bathroom on the ground floor)...but, location, location, location.

 

[CGgater]

My wife has been aggressively looking in the Tampa/St. Pete market. Anything under $300k is in a ghetto or is a dump...hell, most houses under $400k are nothing impressive. You have to go way out to the suburbs is you want your money to go far (in this market). It's just the two of us, so we don't want to live in the suburbs. I posted earlier, we're looking at buying something that we could convert to a rental property after there (hopefully) is a correction...so we're focusing on $300-$400k and it's pretty discouraging what we're finding. On the bright side, my dump in Arlington will probably sell of over $725k (which is mind blowing if you saw it - we don't have a bathroom in our master br, no bathroom on the ground floor)...but, location, location, location.

First of all, DC is nuts.

Secondly, FL real estate is rising, reportedly because people are sick of getting taxed and regulated into poverty by ny, nj and the like. I just wonder how long it will take before this surplus wave of snowbirds decide to vote FL into becoming the very stupidity they were trying to escape. Don't new york my Florida!!!

 

[BMF]

First of all, DC is nuts.

Secondly, FL real estate is rising, reportedly because people are sick of getting taxed and regulated into poverty by ny, nj and the like. I just wonder how long it will take before this surplus wave of snowbirds decide to vote FL into becoming the very stupidity they were trying to escape. Don't new york my Florida!!!

Florida, just like Georgia and Texas, is about 51% red (Georgia may have already tipped, but I'm not buying that they won those elections straight up). Florida real estate is out of control. And the property taxes in city of Tampa and city of St. Petersburg are higher than they are here in Arlington, VA (shockingly). I'm hoping for the 100% VA disability, as Florida gives a big tax break if you're 100%.

 

[CGgater]

Florida, just like Georgia and Texas, is about 51% red (Georgia may have already tipped, but I'm not buying that they won those elections straight up). Florida real estate is out of control. And the property taxes in city of Tampa and city of St. Petersburg are higher than they are here in Arlington, VA (shockingly). I'm hoping for the 100% VA disability, as Florida gives a big tax break if you're 100%.

Wow, that IS surprising. Although I could see a higher bracket for waterfront property. Anyway, good luck in your search. Assuming FL property values continue to rise, i suggest time is of the essence.

 

[BMF]

Wow, that IS surprising. Although I could see a higher bracket for waterfront property. Anyway, good luck in your search. Assuming FL property values continue to rise, i suggest time is of the essence.

That's what worries me. I don't want to be the FOMO guy who buys at the tippy top of the market (like 2005, 2006). That's why we're not focusing on our "primary" home - but any home we buy (if we buy) in this current market will be at the tippy to, regardless if it's in the $300K price range or the $800K price range. It's a gamble, so we're also considering renting for a year.

 

[Bernardo de la Paz]

That's what worries me. I don't want to be the FOMO guy who buys at the tippy top of the market (like 2005, 2006). That's why we're not focusing on our "primary" home - but any home we buy (if we buy) in this current market will be at the tippy to, regardless if it's in the $300K price range or the $800K price range. It's a gamble, so we're also considering renting for a year.

You probably already know this...

One of the best indicators of whether real estate is overvalued is the price to rent ratio. It's pretty high right now, but it's not 2005/2006 high. I would expect some flattening or small declines, but I wouldn't expect to see a huge 2008 sized crash.

 

[Detroitgator]

You probably already know this...

One of the best indicators of whether real estate is overvalued is the price to rent ratio. It's pretty high right now, but it's not 2005/2006 high. I would expect some flattening or small declines, but I wouldn't expect to see a huge 2008 sized crash.

Said everyone in 2005/2006 except about 10 people... ;) but i'm with ya.

 

[BMF]

You probably already know this...

One of the best indicators of whether real estate is overvalued is the price to rent ratio. It's pretty high right now, but it's not 2005/2006 high. I would expect some flattening or small declines, but I wouldn't expect to see a huge 2008 sized crash.

I agree w/ you, that's why I keep saying "correction" vs. a 'crash'. I think we'll see about a 10% correction. I'm already seeing a lot of houses in the Tampa area sit and having price reductions. The houses in the "hot" neighborhoods are moving fast though, especially if they're not ridiculously over priced.

 

[FireFoley]

I agree w/ you, that's why I keep saying "correction" vs. a 'crash'. I think we'll see about a 10% correction. I'm already seeing a lot of houses in the Tampa area sit and having price reductions. The houses in the "hot" neighborhoods are moving fast though, especially if they're not ridiculously over priced.

Yes you have been saying correction vs. crash. No crash this time due to low rates as opposed to the teaser rates used in mid 2000's just to get people into a home. But at these price levels any changes to almost anything could cause that correction. Until the Mortgage forbearance and rental eviction moratoriums are totally off the table we will not begin to see how true the market really is everywhere.

 

[Concrete Helmet]

‘Trillion on top of a trillion’ in stimulus will push 10-year Treasury yields to 2% by year-end, top forecaster says

 

[FireFoley]

‘Trillion on top of a trillion’ in stimulus will push 10-year Treasury yields to 2% by year-end, top forecaster says

I hope this comes to fruition, but me thinks that the FED will do all they can by buying a huge portion of the longer dated treasurys if they think higher long rates becomes a problem.

 

[Concrete Helmet]

1

I hope this comes to fruition, but me thinks that the FED will do all they can by buying a huge portion of the longer dated treasurys if they think higher long rates becomes a problem.

10-4 on that. You're a bond guy what is your opinion on the computer buying/selling on bonds? Have you ever figured out reasoning on it? I bought some LT EFT back at the beginning of the month expecting a stock exodus after the holidays and got dinged pretty good before I got the hot potato out of my hand....my understanding is there was a mass sell off leading up to the last auction....

 

[FireFoley]

1

10-4 on that. You're a bond guy what is your opinion on the computer buying/selling on bonds? Have you ever figured out reasoning on it? I bought some LT EFT back at the beginning of the month expecting a stock exodus after the holidays and got dinged pretty good before I got the hot potato out of my hand....my understanding is there was a mass sell off leading up to the last auction....

I do not trade any ETF's on interest rate products but I do watch the TLT and TBT. when I want to take an interest rate position I trade Treasury futures. Be that as it may, yes there was a huge sell off prior to the 10 yr. Treasury auction last week to a high of about 1.18%. The thinking is that we will have to borrow the most amount ever this year, so perhaps the appetite might not be so great for Treasurys this year. Well based on this year's first auction, there is plenty of appetite for treasurys. Keep an eye on inflation, but as I said I have a hard time thinking the FED will let long term rates rise much.

 

[Bernardo de la Paz]

Years ago it was a rule of thumb to not refinance unless it's more than a point. Is that still applicable? We probably missed the window on the cheapest rates. Currently at 3 1/8.

Interestingly I just got quoted for a refinance and they were willing to give me a rate 5/8 of a percent lower if I take cash out.

Normally you'd have to pay a higher rate to take cash out, but in my case I have about 60% equity. I am assuming that makes me more likely to pay off the mortgage early and thus a less attractive investment. They offered the better rate if the cash out was enough to put me under 50% equity.

 

[bradgator2]

Interestingly I just got quoted for a refinance and they were willing to give me a rate 5/8 of a percent lower if I take cash out.

Normally you'd have to pay a higher rate to take cash out, but in my case I have about 60% equity. I am assuming that makes me more likely to pay off the mortgage early and thus a less attractive investment. They offered the better rate if the cash out was enough to put me under 50% equity.

This is a fun, yet complicated, one to think through.

Not to get personal, but could you be a little more specific with your numbers?

Also, can you take the "cash out" and immediately turn around and put that back into the new mortgage? That would allow you to take the lower rate and maintain your 60% equity.

 

[Bernardo de la Paz]

This is a fun, yet complicated, one to think through.

Not to get personal, but could you be a little more specific with your numbers?

Also, can you take the "cash out" and immediately turn around and put that back into the new mortgage? That would allow you to take the lower rate and maintain your 60% equity.

I could do that. I have some clarification though after talking to some additional lenders. The first lender I spoke to quoted me 2.875 for cash out and 3.5 for no cash out. Two other lenders I spoke to gave me about an 1/8 point better for no cash out vs cash out, or 2.75 for no cash out vs 2.875 for cash out. I do have a small home equity loan though and one of the lenders told me it would increase the closing costs by about $650 to subordinate it. That lender also pointed out that since I am getting a lender credit (essentially negative points) to cover the closing costs, increasing the size of the loan increases the lender credit for a given interest rate. That means taking cash out up to about 30% remaining equity can actually lower the rate (or simply increase the amount they are paying me to refinance).

I've never made extra payments against the principle of my mortgage, but I assume by doing that the payment amount stays the same, but the loan gets paid off earlier. So in doing that I could also look at a 15 or 20 year mortgage. Incidentally today I was only quoted 0.25% for 15 vs 30.

Edit: I fixed the first scenario to reflect that the first lender gave me a better deal for the cash out option

 

[Concrete Helmet]

one of the lenders told me it would increase the closing costs by about $650 to subordinate it.

$250 is about normal rate...

 

[Bernardo de la Paz]

$250 is about normal rate...

He also said that with the volume of refinancing they are doing they don't want any part of the extra work associated with it. Makes sense they would charge a premium.

I'll let you know what the title fees are from the closing and you can tell me if I'm getting ripped off.