Mortgage rates

Back then there were heavy cash outs. I wonder how that compares to today vs just refi with no cash out

 

Were seeing a lot of paid off property owners taking HELOC's with minimum or no draws. Pretty smart actually to have the source of funds available if needed without spending personal savings or capital in the event you decide to remodel or need repairs....good news.

Bad news is we are still paying off high revolving accounts on people who are at 70-80% and have refied at least once within the last couple of years...some 2 or 3 times in the last 4 to 5 years. These are like candy for us since we are already insuring the previous loans....quick update title and lien search, copy paste close and fund...next....

 

I just hadn’t heard about what was going on with the cash outs. Thanks for sharing that.

you’re right, HELOCs are a great way to access equity. Usually no appraisals or closing costs either. People do these long term cash outs and all they do is limit their options.

 

Our market is scary nuts. Everything under $1M has at least 10 offers within 3 days. Missed out on the Buy side of a home last week asking $825k. Our client offered $865k and was beat by a higher offer.

Writing another offer for another client that is going to be beat out on an asking of $725k and our clients offer is $810k and there's higher offers.

Mindblowing.

 

Buying season is just starting. Spring break and all. Plus there’s fear of interest rates wavering. I’m wondering how hard the fall is going to be. May end up worse than ‘08

 

Our market is built on something completely different then it was in in 2006-2010 and that bubble. Builders have been cautious this go around and the demand it by far higher than supply. Not saying there won’t be a dip but I just don’t see the collapse we saw previously.

 

I share your sentiment to a degree NV but what causes a housing crash is when the bottom gives way. At the rate of current inflation the bottom(first time and lower income earners who can barely afford their house)is living on the edge right now and it won't take some big Black Swan event for their legs begin to buckle....how many are on fore bearance right now? How many still haven't gone back to work, lost their business or will as unemployment continues to be in the 10% range according to Jerome Powell speaking for the Fed. We are still losing as many jobs as we are gaining.

Once the first few start to let go sentiment kicks in(remember how in 2008-2010 people were openly bragging about walking away or short selling?) It won't take more than 2 or so down month's to start an epidemic. I certainly don't want it to happen that way but it's better to prepare for it just as it can be seen in the stock market people are pulling in and out because they know it is due for a large correction.

 

This go around, the market is built on cheap money. For instance, take a $250k loan at 2.5% for 30yrs. You’re P&I is $988. If you raise it 50bps, your pymt goes to $1,054. Or you keep the same pymt and you can afford $234k loan. At 5%, which used to be considered dirt cheap, you can afford $184k, or a 26% decrease.

Then you have part two. Turnover becomes an issue. People are over leveraged on homes and can’t move and the market becomes stagnant. Or you keep rates dirt cheap, and then what?

not every crash is built the same. I don’t know what will happen, but I do know that this can’t sustain itself. We are riding a Trumpian wave without a Trumpian economy and spending is out of hand.

 

Maybe a little more context for you.

Cash-out Refis Hit Highest Level Since Financial Crisis

 

Ever have one of those days where you have to argue because the "rules" are so stupid?

I'm doing taxes and couldn't find our mortgage documents. When I got online they weren't available for me. @Seedy is listed as primary and I'm secondary but he doesn't have an online profile. We found out that he would have to die or we would have to refinance for me to get those tax documents on my profile. After Seedy argued with them on how ridiculous this was she suggested he make an online profile and give me the username and password. That didn't go over well with him. For all they know I handed the phone over to a stranger. They told him he was "verified" by me because I handed him the phone.

 

There was no validation process. If I knew someone who worked in their risk management department, I would provide them with details.

The "supervisor" spoke a little more sheepishly after I informed her she was likely operating outside of what was permitted within bank policy.

 

Cool. We’re back to this. WTF.

 

What could go wrong?

 

Probably because it's racist to ask for a bank statement and income verification.

 

Ninja!

 

Thanks, and COVID probably had a role of some sort.

I think I hear a train whistle in the distance.

 

We’re human beings. We’ve been doing the same things over and over, and being burned over and over since the beginning of time. We just can’t help ourselves it seems.

I do agree though that their seems to be a slightly different feel to this bubble. Granted I’m in a different market now, but I don’t see what I saw in So Fla back in the early/mid 2000s. Not only the 40k guy having three houses he was “flipping”, but even the regular guy who had one home but insisted on cashing out every dime to put granite, marble and crown in his 1700 square foot 1960s home in old inner city West Palm/FtL/Miami. When my wife and I were shopping for a home in 2009, I saw some of the most puzzling things I’ve ever seen. One room would look like the Kardashians, the rest of the home Fred and Lamont Sanford.

 

Market is definitely interesting. I am about to close on a sale and flipped a home in the middle of no where on the west coast, purchased for 350k in 6/2019 and now under contract to sell it for 500k (fingers crossed), sank about 30k in minor improvements. Definitely well beyond my most rosy expectations when I first bought it in 2019. What I am seeing driving the market is very limited supply meeting very low interest rates.

I realize everyone is bracing for a collapse in the real estate market. I don't think we see a major pullback unless interest rates hit 4.5%+ and the economy slows down enough to keep the velocity of money at historic lows. It will take a while for builders to catch up, and even then the cost of building has significantly increased, causing prices of new homes to be significantly higher too, which also fuels why Builders remain cautious about overbuilding.

Speaking of mortgage rates, I am looking to refinance an investment property that I am renting as an AirBNB in Ocala. Currently at 4.125%. Anyone know a Credit union or bank that offers rates at least 3.25% or lower on investment properties currently?

 

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