Plus you got a sweet interest rate, probably the lowest you'll ever see for the rest of your life. Anyone who got a mortgage within the past few months got in at the most opportune time as long as you weren't furloughed or lost your job due to the plandemic.
I wrote a longer comment to the OC, but the gist of it was: Mortgage lenders (and their investors) have to consider prevailing interest rates for the entire life of the loan, not just what it is now. It's extremely unlikely that the Fed's rates will remain zero.
Mortgage lenders have to consider interest rates over the entire term of the mortgage. So yes, prevailing interest rates are really low right now, but they aren't expected to last for 30 years.
It depends on the mortgage lender, but many of them sell bonds to investors to raise their money to lend. Investors won't buy a bond that pays a very low interest rate for 30 years, unless there is no risk.
30-year US Treasury Bonds are the gold standard, even after Obama threatened to suspend dividend payments. In the most recent auction, the dividend rate was 2%, although the high bid pushed the yield down to 1.3%.
This is what mortgage companies have to compete with. They have to offer a better yield (because the risk is higher), and their cost of servicing the mortgage has to be paid by that yield. Spez, I forgot to add: they also have to cover the costs associated with any defaults.
Yep, I'm an investor. I've been talking to many in the business. Everyone expecting a burst. Banks will tighten up. Prices will drop.on one end it's good that you got a loan. The other end is that your house will lose value in it unless you plan on staying for years. My nephew just bought a house. I told him to wait. He didn't listen. His 140k house will drop to 110 or lower.
A 15-year mortgage was a great choice. With the discount on the interest rate, your monthly payment isn't a huge increment over a 30-year mortgage, and you save a boatload on total financing costs.
You deserve props for taking advantage of the better terms, instead of stretching out your mortgage further and/or taking out a bunch of cash to spend on other stuff.
What you did was admirable, under any circumstances.
With our first house, we did the same thing. We couldn't afford a 20% downpayment at purchase, so we had to pay private mortgage insurance (PMI). Rates dropped 2%, and by that time we could refinance and get rid of the PMI. Then, rates dropped another 2%, and we refinanced for 15 years. That's how we ended up with a paid-off house, even before retiring early.
With rates at 1/3rd of what we were paying for our first mortgage, we knew we could do better than that with our investments over the 15-year term. But, never in our wildest dreams did we think we would do this well.
However, anyone complaining about today's mortgage rates has no idea how high they were back in the 80's and even 90's.
When the oil economy imploded in Dallas in the '80s, rents dropped in half, houses dropped almost in half, and condos lost 70% in value in about 4 years.
The bottom wasn't reached until many properties had been foreclosed on twice. It wasn't until 2016 that my house was worth what it sold for in 1985
We retired, even with a mortgage outstanding (albeit a 15-year one). The previous house was paid off, so we invested the equity. We have enough retirement income from various sources that the mortgage payment isn't a burden.
We still have enough liquid assets to pay off the mortgage at anytime, and we've made a few principal payments. But, I actually regret that, because our investments have done VERY well since those payments, even after this latest correction.
I just locked in to refinance from 5% down to 3.125%, and knocked off 5 years of my mortgage. I wish we could buy now instead of refinance, but kids are in the equation for schools.
The lenders are asking more questions to the barrows employers now. They are asking things like, has china virus affected hours? Will the employee be taking any sick or vacation pay? Can you guaranty employment in a month?
It's going way beyond just confirming employment now.
Plus you got a sweet interest rate, probably the lowest you'll ever see for the rest of your life. Anyone who got a mortgage within the past few months got in at the most opportune time as long as you weren't furloughed or lost your job due to the plandemic.
Here's the thing. Interest rates are low but not really for mortgages. Banks are raising them. Crooks
This. Nobody was issuing standard 30-year fixed mortgages below 3.25%
3.25% for a 30-year mortgage is insanely low, historically.
Correct. But the rates were already around that benchmark, before the Fed "dropped rates to zero."
For example, when I bought my first house in 2012, my mortgage rate was 3.75%.
I wrote a longer comment to the OC, but the gist of it was: Mortgage lenders (and their investors) have to consider prevailing interest rates for the entire life of the loan, not just what it is now. It's extremely unlikely that the Fed's rates will remain zero.
Mortgage lenders have to consider interest rates over the entire term of the mortgage. So yes, prevailing interest rates are really low right now, but they aren't expected to last for 30 years.
It depends on the mortgage lender, but many of them sell bonds to investors to raise their money to lend. Investors won't buy a bond that pays a very low interest rate for 30 years, unless there is no risk.
30-year US Treasury Bonds are the gold standard, even after Obama threatened to suspend dividend payments. In the most recent auction, the dividend rate was 2%, although the high bid pushed the yield down to 1.3%.
This is what mortgage companies have to compete with. They have to offer a better yield (because the risk is higher), and their cost of servicing the mortgage has to be paid by that yield. Spez, I forgot to add: they also have to cover the costs associated with any defaults.
Yep, I'm an investor. I've been talking to many in the business. Everyone expecting a burst. Banks will tighten up. Prices will drop.on one end it's good that you got a loan. The other end is that your house will lose value in it unless you plan on staying for years. My nephew just bought a house. I told him to wait. He didn't listen. His 140k house will drop to 110 or lower.
A 15-year mortgage was a great choice. With the discount on the interest rate, your monthly payment isn't a huge increment over a 30-year mortgage, and you save a boatload on total financing costs.
You deserve props for taking advantage of the better terms, instead of stretching out your mortgage further and/or taking out a bunch of cash to spend on other stuff.
What you did was admirable, under any circumstances.
With our first house, we did the same thing. We couldn't afford a 20% downpayment at purchase, so we had to pay private mortgage insurance (PMI). Rates dropped 2%, and by that time we could refinance and get rid of the PMI. Then, rates dropped another 2%, and we refinanced for 15 years. That's how we ended up with a paid-off house, even before retiring early.
With rates at 1/3rd of what we were paying for our first mortgage, we knew we could do better than that with our investments over the 15-year term. But, never in our wildest dreams did we think we would do this well.
However, anyone complaining about today's mortgage rates has no idea how high they were back in the 80's and even 90's.
Yup. I knew one person shopping for a house, whose primary criteria was having an assumeable mortgage.
When the oil economy imploded in Dallas in the '80s, rents dropped in half, houses dropped almost in half, and condos lost 70% in value in about 4 years.
The bottom wasn't reached until many properties had been foreclosed on twice. It wasn't until 2016 that my house was worth what it sold for in 1985
We retired, even with a mortgage outstanding (albeit a 15-year one). The previous house was paid off, so we invested the equity. We have enough retirement income from various sources that the mortgage payment isn't a burden.
We still have enough liquid assets to pay off the mortgage at anytime, and we've made a few principal payments. But, I actually regret that, because our investments have done VERY well since those payments, even after this latest correction.
I just locked in to refinance from 5% down to 3.125%, and knocked off 5 years of my mortgage. I wish we could buy now instead of refinance, but kids are in the equation for schools.
The lenders are asking more questions to the barrows employers now. They are asking things like, has china virus affected hours? Will the employee be taking any sick or vacation pay? Can you guaranty employment in a month?
It's going way beyond just confirming employment now.
Hahaha
Heck me. Im looking to buy my first house around July...