Mortgage Rates

[LATB]

Originally Posted by Yadkin

Buying at the top of the market, with mortgage rates now rising to Carter levels. What do you think is going to happen to the value of the home that you just bought?

Why is it assumed that rising interest rates devalue ones home?

[Yadkin]

Originally Posted by LATB

Why is it assumed that rising interest rates devalue ones home?

Because most buyers, wisely, buy as much as they can afford.

[Yadkin]

Originally Posted by StorytellerStealth

Genius most everyone buys at the top of the market. If you already have a mortgage, higher mortgage rates will not affect you. History has shown if you are in for the long haul buying a house, you will not lose money.

I didn't. I bought my house in the Piedmont 26 years ago, after it had been on the market for 18 months and the owners then desperate to sell it. I payed almost $50k less than they had been asking. Sold it two months ago with the market at its peak.

My current home I built in 2005 when the market in this resort area was down. Two years later my house was worth twice what I had in it- condos up the street being bought for stupid money. Then the 2008 crash and most of them were underwater.

[GTOguy]

Originally Posted by StorytellerStealth

Genius most everyone buys at the top of the market. If you already have a mortgage, higher mortgage rates will not affect you. History has shown if you are in for the long haul buying a house, you will not lose money.

Funny....Out of the last 3 houses I purchased, two were purchased at the bottom of the market....the Bay Area house in the slump of '97, and the big house in Fresno in the depression of 2011.
I got the house in Fresno because the people who bought it in '06 on a Jumbo loan with an adjustable mtg. defaulted.
I paid less than 50% their price for the home. And it has tripled in value in ten years.

I have always bought property when the 'window of opportunity' opened and I was in the market and had the means. It's never not worked out.
I almost bought 3 more rentals in 2011 because it was easy money but let it pass because I didn't need the $$$ or headaches going into my 50's.

Egah is a baller and has no real worries anyway.

[LATB]

Originally Posted by Yadkin

Because most buyers, wisely, buy as much as they can afford.

I believe I get your point.

But I’d add, many (most?) buy more than they can afford. I have consulted many that just because you can qualify for a mortgage doesn’t necessarily mean that you can “afford” the home.

[LATB]

Originally Posted by Ill Duce

Clueless much?

The home I bought in January this year is worth 30% more than I paid. And interest rates have doubled since then.

[Yadkin]

Originally Posted by LATB

I believe I get your point.

But I’d add, many (most?) buy more than they can afford. I have consulted many that just because you can qualify for a mortgage doesn’t necessarily mean that you can “afford” the home.

A lot of that depends on three factors:
1. Job security;
2. Ability to DIY maintenance and repairs;
3. Management of entertainment budget.

[Egnalf]

Originally Posted by Yadkin

Buying at the top of the market, with mortgage rates now rising to Carter levels. What do you think is going to happen to the value of the home that you just bought?

you make dumb assumptions. true, I bought near the top of the market. I had another home which I sold at the top of the market, so gains moved across laterally. homes go up, they go down, at the end of a day, its the cost difference which matters. only first time buyers are in tough shape buying at the top.
next up, I took the cash out and stuck it in an online savings account currently earning 2%, so my net cost of borrowing (not factoring tax ramifications or other) is .75%. that will go lower as rates go up. where the fk can you borrow money at .75%

on house two, its current value is mid 2 millions. if I chose to do so it would rent for >125,000 per summer season. the carrying cost is a mere 4200 per month.

none of this factors my ability to earn, my savings, or demand in the areas I own which could give me a fairly easy exit.

just because you and el douche bag think its a bad idea doesnt make it so.

[Yadkin]

Originally Posted by Egnalf

you make dumb assumptions. true, I bought near the top of the market. I had another home which I sold at the top of the market, so gains moved across laterally. homes go up, they go down, at the end of a day, its the cost difference which matters. only first time buyers are in tough shape buying at the top.
next up, I took the cash out and stuck it in an online savings account currently earning 2%, so my net cost of borrowing (not factoring tax ramifications or other) is .75%. that will go lower as rates go up. where the fk can you borrow money at .75%

on house two, its current value is mid 2 millions. if I chose to do so it would rent for >125,000 per summer season. the carrying cost is a mere 4200 per month.

none of this factors my ability to earn, my savings, or demand in the areas I own which could give me a fairly easy exit.

just because you and el douche bag think its a bad idea doesnt make it so.

Yet you failed to answer my simple question.

[LATB]

Originally Posted by Ill Duce

I know how much you love sucking your own dick but your individual anecdotal situation doesn't represent the millions of homes in this country.

Maybe you should try pulling your head out of your ass for once and understand how things work for a change instead of parroting the realturd drivel 'now is a great time to buy'.

We can always count on you for positive and insightful posts.
What a joy and blessing you must be to your family and friends and community.

[Anjdog2003]

Originally Posted by LATB

We can always count on you for positive and insightful posts.
What a joy and blessing you must be to your family and friends and community.

Ill Dunce is a troll. That's why he's had so many names. Gets banned comes back in six month acts like an ass gets banned comes back in six month with another name gets banned comes back with another name. He has no family or friends they all got executed in Hungary.

[Yadkin]

Originally Posted by Anjdog2003

Ill Dunce is a troll.

Lighten up, Francis. He just doesn't like Real Turds.

[Egnalf]

Originally Posted by Yadkin

Yet you failed to answer my simple question.

The value of a home is irrelevant until decided to buy/sell. Regardless, let's discuss.

My beach home was purchased during the last downturn when no one was buying. I got it a discount for 1.1 million. Its now valued well over 2 million, approaching 3. EVEN if there is a pull back, with a mortgage of 500k, how exactly am I screwed?

My primary was purchased using funds from my previous home. I also bought it slightly under current market (about 60k under). Even if it were to pull back to 2014 pricing, it would still trade at something like 750-850k. Any losses I would incur, would be paper losses from the paper gains on the previous home. In short, it would wash out, meaning technically, I would have sold the previous home at a lower price as well.

In either case, I am well ahead, as I have places to live, accrued value, and on the other side a million bucks on the sidelines from previous sale, earning 2% interest, defrayign the carrying cost of the current mortgages.

please, tell me how I am screwed......

[dvarapala]

Originally Posted by Egnalf

The value of a home is irrelevant until decided to buy/sell.

Unless your local government levies taxes on your real property - then the value is extremely revelant.

[Yadkin]

Previously you wrote:

Originally Posted by Egnalf

I bought a new home last august, right at top of the market.

Now the story is changed:

Originally Posted by Egnalf

My beach home was purchased during the last downturn when no one was buying. I got it a discount for 1.1 million.

My primary was purchased using funds from my previous home. I also bought it slightly under current market (about 60k under).

[Yadkin]

Originally Posted by dvarapala

Unless your local government levies taxes on your real property - then the value is extremely revelant.

I'm doing OK here in a fiscally responsible county and village. My tax valuation only increased slightly. Meanwhile the market values have gone through the roof.

[Rob]

This is insane, I just got an email from my bank I use for checking and this was their latest "offer" for a HELOC

[Onebadcad]

Originally Posted by Rob

This is insane, I just got an email from my bank I use for checking and this was their latest "offer" for a HELOC

All HELOCs are variable rates, as the usage of the line is usually for ten years--it is impossible to charge a fixed rate under 10.000% to hedge against future draws on the line.

The interest rate they are marketing probably includes an initial teaser rate, at Prime Rate, or even below Prime, for the first year or two, and after that period the index will remain Prime, but the margin, the amount added to Prime to get the actual rate, will increase.

I see these daily, if you want a HELOC, a good rate would be Prime and no higher than Prime plus 1.00%.

Today, Prime is 6.250%, BUT remember, every HELOC I have seen in 30+ years has no annual rate increase limitations, it can go up 5.00% in a given year, AND most HELOCs are capped at 18.000% rate, seen very few lower than that.

[Rob]

Originally Posted by Onebadcad

All HELOCs are variable rates, as the usage of the line is usually for ten years--it is impossible to charge a fixed rate under 10.000% to hedge against future draws on the line.

The interest rate they are marketing probably includes an initial teaser rate, at Prime Rate, or even below Prime, for the first year or two, and after that period the index will remain Prime, but the margin, the amount added to Prime to get the actual rate, will increase.

I see these daily, if you want a HELOC, a good rate would be Prime and no higher than Prime plus 1.00%.

Today, Prime is 6.250%, BUT remember, every HELOC I have seen in 30+ years has no annual rate increase limitations, it can go up 5.00% in a given year, AND most HELOCs are capped at 18.000% rate, seen very few lower than that.

I have never paid more than (Prime - 1) on a heloc, which usually puts me at 1-2%, and I have always paid if off in less than 12 months. Just shocks me the rate these interest rates are growing.

Guessing it is time to shift money around again to take advantage of these interest rates.

[dvarapala]

Originally Posted by Yadkin

I'm doing OK here in a fiscally responsible county and village. My tax valuation only increased slightly. Meanwhile the market values have gone through the roof.

Try living in Illinois sometime. The formula they use to calculate your property taxes is so clever your taxes can go up even though the value of your house went down.