Not a good day for new home buyers...
OperationButter
Posts: 1,672 ✭✭✭
This should start the cooling off in the RE market.
Wells quoted for 30 fixed at 5.05%. For those that dont frequently track this, it was 3.5% less than 40 days ago.
https://www.wellsfargo.com/mortgage/rates/
Wells quoted for 30 fixed at 5.05%. For those that dont frequently track this, it was 3.5% less than 40 days ago.
https://www.wellsfargo.com/mortgage/rates/
Gold is for savings. Fiat is for transactions.
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
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Amat Colligendo Focum
Top 10 • FOR SALE
<< <i>This should start the cooling off in the RE market.
Wells quoted for 30 fixed at 5.05%. For those that dont frequently track this, it was 3.5% less than 40 days ago.
https://www.wellsfargo.com/mortgage/rates/ >>
Not sure what you were looking at...but I don't see a 5% rate with them
Wells Fargo rates
Butter makes reference to APR for a 30 yr conforming fixed.
That is the industry standard.
Actually, it is still a gift...just not like a couple of months ago. Weaker RE
areas will loose sales because of this.
I simply posted Wells Fargo rates as it was a good example of a reputable bank.
10 and 15 year rates are still below 4% however, the 30 year has been steady on the rise for the past 45ish days.
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Homebuyers should sit tight and build cash.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Mortgage rates are still very low and it is cheaper to buy a home than rent in many areas.
Knowledge is the enemy of fear
15yr: 3.375%
20yr: 3.875%
30yr: 4.125%
Too many positive BST transactions with too many members to list.
<< <i>Here were our WF re-fi rate quotes from last week:
15yr: 3.375%
20yr: 3.875%
30yr: 4.125% >>
That was last week
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
<< <i>Wow what a jump. My wife and I purchased our first home back in October at 3.75%. >>
congrats
<< <i>
<< <i>Here were our WF re-fi rate quotes from last week:
15yr: 3.375%
20yr: 3.875%
30yr: 4.125% >>
That was last week
No doubt, what a difference from a week ago....up 60 basis points in one week. It's likely the lows have been put in, imo.
<< <i>
<< <i>Wow what a jump. My wife and I purchased our first home back in October at 3.75%. >>
congrats
Thank you! Best decision we ever made.
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<< <i>I got a 3.75% 30 years, a couple of months ago. I can afford to pay it off much faster but what's the point? At some point, inflation will pay off a nice chunk of my loan for me! >>
Paying off debt faster avoids you paying an interest sum that exceeds the original principal. However, if you have a fixed rate, that means the mortgage is the same for 30 years straight. Your job would give you cost of living raises, so the mortgage will be a smaller and smaller portion of your salary. Its at that time you can increase payments to pay down the principal? Is this what you are talking about?
I am just curious in understanding this.
A home also builds equity over 30 years, due to inflationary price increases. This is also a bonus.
I always thought its best to pay down debt fast unless the extra money can be used for a better investment like gold was for 12 years prior to this year.
BST: Tennessebanker, Downtown1974, LarkinCollector, nendee
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<< <i>I got a 3.75% 30 years, a couple of months ago. I can afford to pay it off much faster but what's the point? At some point, inflation will pay off a nice chunk of my loan for me! >>
Paying off debt faster avoids you paying an interest sum that exceeds the original principal. However, if you have a fixed rate, that means the mortgage is the same for 30 years straight. Your job would give you cost of living raises, so the mortgage will be a smaller and smaller portion of your salary. Its at that time you can increase payments to pay down the principal? Is this what you are talking about?
I am just curious in understanding this.
A home also builds equity over 30 years, due to inflationary price increases. This is also a bonus.
I always thought its best to pay down debt fast unless the extra money can be used for a better investment like gold was for 12 years prior to this year. >>
Historically, stock market returns have been much much higher. When the Fed eventually raises rates, we will at least see a 5% interest rate paid on savings accounts and CDs. If I can make more money in interest than I'm paying on the loan, it would make no sense paying it off early. I could just take those extra payments, stick it in a bank account and make more money. Besides, the 3.75% isn't really 3.75% because you get a tax deduction on mortgage interest (at least for now). And inflation will eat away at the principal over time. So, unless we expect deflation for a long time, I see no reason to pay it off early.
Of course there are no guarantees that I will make money in stocks. However, I'm willing to take that risk. I don't plan on just sticking that money in a savings account.
But, to answer your question, no I won't ever increase payments on the loan regardless of how high my income goes. In nominal terms, yes I will be paying about as much interest as the principal (I don't recall what the total interest is for the life of the loan, but it's up there). But in real terms, that interest will become insignificant over time. Now, I wish I could borrow $1 million or $100 million or even $1 billion for 30 years at 3.75% fixed. I would take it without thinking twice.
A reason why I am OK with not building up equity in my house assuming home prices stay the same or go lower. I can rent my place for an absolute minimum of 25% more than what my total house payment is.
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<< <i>This is an extremely interesting topic for me. I'm a younger guy so I'm trying to figure out what to do with my "extra" money. Savings accounts seem nearly pointless. I put some into PM's but with what's left... should I be dumping it into my 401k or pouring it into my mortgage? >>
For younger folks, a Roth 401K is a great choice. I was stupid when I was younger and didn't take advantage of that. But starting this year, I'm maxing it out. That's 17.5K you can put away and not pay any taxes on it in the future. My reasons for doing that:
1. You can put more money away into a tax advantaged retirement account with a Roth 401K. 17.5K in after tax dollars vs with a traditional 401K 17.5K in pre tax dollars.
2. If you income is projected to rise in the future, your tax rates might go up. I think marginal rates will also go up. So, you might be better off paying taxes now.
3. My cost of living is low and I have plenty of money left over, so I can afford to max out my Roth 401K.
And, if you qualify to contribute to a Roth IRA, you should definitely do it. What you put into it can be withdrawn at any time without penalties. So, there is no reason not to contribute. Limit is $5500 for 2013 and deadline to make the contribution is April 15, 2014.
Employee contribution rate: 1% to 100%
$1 to $17500
Roth 401(k) contributions permitted: Yes
Catch-up contributions permitted: Yes
Maximum annual employee contribution: $17500
Changes to employee contribution rates permitted: First day of the Month
All employee contributions are automatically 100% vested.
Employer Matching Contributions
Years of Service Vested Percentage
0 0
1 0
2 20
3 40
4 60
5 80
6 100
This is what I "picked"
Transamerica Stable Value Option - 14%
JPMorgan Government Securities Ret Opt - 9%
Putnam Dynamic Asset Alocation Growth Inv - 5%
Fidelity Advisor Equity Income Inv - 31%
Transamerica Partners Stock Index Ret - 5%
Morgan Stanley Growth Opt Ret - 5%
Transamerica Partners Mid Growth Ret - 5%
Transamerica Partners Small Core Ret - 10%
Dreyfus International Value Inv - 5%
Ivy Science & Technology Inv - 5%
Edit: There's also a profit sharing plan where my employer deposits a nice sum into this each year.
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Thanks Bernanke... I have something tapered for you.
The key is also to minimize lifestyle inflation. My goal is to keep my total spending on fixed bills at the same level that I'm currently at. I think I spend about 20% of my gross pay (that's on the higher side of my estimation) for bills every month and I plan on keeping it that way. I do however spend quite a bit on enjoying life. Travel, good food and entertainment.
Also note that staying healthy can keep you wealthy in retirement. If you're not well informed on this subject, do some research on the internet. Some of the things that are widely believed to be healthy habits are just myths. I'm currently working on this. I certainly don't want to spend my later days popping pills and being bedridden.
There is no "REAL" recovery in housing . We have put in 2 foundations in the last 5 weeks. One is a huge luxury house that the owner can probably pay for out of pocket and the other is a spec house where the builder inherited some land from his family and carved out 8 lots. His plan is to build then sell one at a time . He got the land for nothing but he will probably go bankrupt somewhere around house 2 or 3 .
Whats interesting about the spec house is that 20 years ago the lot would have been unbuildable because its a wet area . Now you are allowed to build if instead of digging a hole you set the foundation and septic system right on the existing grade and then cart in fill to bring the ground level up 6 or 7 feet. Its legal but it results in ugly houses on barren looking lots. In the late 1990's and 2000's these houses sold grudgingly and back then the fill was very cheap because of the big dig and the cranberry bog owners selling off tons and tons of gravel for short money. This place would have sat 6 months to a year at the height of the boom but if rates spike up look out it could sit 2 years now .
The big house we started is also going to be a flameout but it will be a few years out . That guy has been to the job twice once with his wife and once with his au pair , who looks a lot like tiger wood's ex-wife . He actually looks like Jim Rickards , by the way . We started a pool on how long before a for sale sign goes up because of the divorce . Even though its probably an $800,000 house ( a million and a half 8 years ago) as ugly as its going to be it won't sell for that in that neighborhood when the dividing up assets phase kicks in.
Nothing we build anymore looks good on the land. Its a shame really 30 or 40 years from now people will look at these houses and shake their heads . . Its all profit driven architectural excess or value added gimmickry. Everything is just awful on so many levels.
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<< <i>
<< <i>I got a 3.75% 30 years, a couple of months ago. I can afford to pay it off much faster but what's the point? At some point, inflation will pay off a nice chunk of my loan for me! >>
Paying off debt faster avoids you paying an interest sum that exceeds the original principal. However, if you have a fixed rate, that means the mortgage is the same for 30 years straight. Your job would give you cost of living raises, so the mortgage will be a smaller and smaller portion of your salary. Its at that time you can increase payments to pay down the principal? Is this what you are talking about?
I am just curious in understanding this.
A home also builds equity over 30 years, due to inflationary price increases. This is also a bonus.
I always thought its best to pay down debt fast unless the extra money can be used for a better investment like gold was for 12 years prior to this year. >>
Historically, stock market returns have been much much higher. When the Fed eventually raises rates, we will at least see a 5% interest rate paid on savings accounts and CDs. If I can make more money in interest than I'm paying on the loan, it would make no sense paying it off early. I could just take those extra payments, stick it in a bank account and make more money. Besides, the 3.75% isn't really 3.75% because you get a tax deduction on mortgage interest (at least for now). And inflation will eat away at the principal over time. So, unless we expect deflation for a long time, I see no reason to pay it off early.
Of course there are no guarantees that I will make money in stocks. However, I'm willing to take that risk. I don't plan on just sticking that money in a savings account.
But, to answer your question, no I won't ever increase payments on the loan regardless of how high my income goes. In nominal terms, yes I will be paying about as much interest as the principal (I don't recall what the total interest is for the life of the loan, but it's up there). But in real terms, that interest will become insignificant over time. Now, I wish I could borrow $1 million or $100 million or even $1 billion for 30 years at 3.75% fixed. I would take it without thinking twice.
A reason why I am OK with not building up equity in my house assuming home prices stay the same or go lower. I can rent my place for an absolute minimum of 25% more than what my total house payment is. >>
In all of the years that I had mortgage payments, I don't ever recall even once getting a message from my bank saying that I could skip a payment because Mr. inflation paid it for me. No matter how you slice it, it's an obligation that has to be paid. For most, it's a fixed amount that doesn't increase with inflation like many other things like food, clothing, fuel, etc. do.
For some of us there is a good measure of peace of mind in having a paid off property. Once paid for, you own it and almost nobody can take it from you as long as you pay your property taxes. Tomorrow is NOT guaranteed for being alive, being healthy or being employed. As for interest, if you're in the 28% tax bracket it always made little sense to me to give a mortgage banker a dollar for the privilege of getting 28 cents back from Unka Sugar.
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<< <i>
<< <i>I got a 3.75% 30 years, a couple of months ago. I can afford to pay it off much faster but what's the point? At some point, inflation will pay off a nice chunk of my loan for me! >>
Paying off debt faster avoids you paying an interest sum that exceeds the original principal. However, if you have a fixed rate, that means the mortgage is the same for 30 years straight. Your job would give you cost of living raises, so the mortgage will be a smaller and smaller portion of your salary. Its at that time you can increase payments to pay down the principal? Is this what you are talking about?
I am just curious in understanding this.
A home also builds equity over 30 years, due to inflationary price increases. This is also a bonus.
I always thought its best to pay down debt fast unless the extra money can be used for a better investment like gold was for 12 years prior to this year. >>
Historically, stock market returns have been much much higher. When the Fed eventually raises rates, we will at least see a 5% interest rate paid on savings accounts and CDs. If I can make more money in interest than I'm paying on the loan, it would make no sense paying it off early. I could just take those extra payments, stick it in a bank account and make more money. Besides, the 3.75% isn't really 3.75% because you get a tax deduction on mortgage interest (at least for now). And inflation will eat away at the principal over time. So, unless we expect deflation for a long time, I see no reason to pay it off early.
Of course there are no guarantees that I will make money in stocks. However, I'm willing to take that risk. I don't plan on just sticking that money in a savings account.
But, to answer your question, no I won't ever increase payments on the loan regardless of how high my income goes. In nominal terms, yes I will be paying about as much interest as the principal (I don't recall what the total interest is for the life of the loan, but it's up there). But in real terms, that interest will become insignificant over time. Now, I wish I could borrow $1 million or $100 million or even $1 billion for 30 years at 3.75% fixed. I would take it without thinking twice.
A reason why I am OK with not building up equity in my house assuming home prices stay the same or go lower. I can rent my place for an absolute minimum of 25% more than what my total house payment is. >>
In all of the years that I had mortgage payments, I don't ever recall even once getting a message from my bank saying that I could skip a payment because Mr. inflation paid it for me. No matter how you slice it, it's an obligation that has to be paid. For most, it's a fixed amount that doesn't increase with inflation like many other things like food, clothing, fuel, etc. do.
For some of us there is a good measure of peace of mind in having a paid off property. Once paid for, you own it and almost nobody can take it from you as long as you pay your property taxes. Tomorrow is NOT guaranteed for being alive, being healthy or being employed. As for interest, if you're in the 28% tax bracket it always made little sense to me to give a mortgage banker a dollar for the privilege of getting 28 cents back from Unka Sugar. >>
I didn't mean that in the literal sense, but I'm guessing you're just messing with me. As inflation goes up, the pricinpal in real terms goes down (in nominal terms it's unchanged) and hopefully wages will go up. The fact that the moment you can't afford to pay property taxes, you lose the house means that you don't really "own" it. You just have 100% equity in the house. Traditionally, they drill it into our heads that somehow owning your house is supposed to make you feel better. I don't buy that for even a second. I only look at it as an investment with zero emotional attachment.
As far as investments go, 3.75% is a really amazing rate to borrow money at, ignoring the tax credit. If prices do rise significantly and rents drop so much that it makes more sense for me to give up the 3.75% loan and rent instead, I'll do it without hesitation.
After the deduction, my rate is really 2.7%. So, if I can make more than that in an investment, it makes economic sense to only make the minimum monthly payments on the mortgage.
And even if you don't pay more the minimum, you still get 100% of the upside if there is any price appreciation.
<< <i>
<< <i>I got a 3.75% 30 years, a couple of months ago. I can afford to pay it off much faster but what's the point? At some point, inflation will pay off a nice chunk of my loan for me! >>
Paying off debt faster avoids you paying an interest sum that exceeds the original principal. However, if you have a fixed rate, that means the mortgage is the same for 30 years straight. Your job would give you cost of living raises, so the mortgage will be a smaller and smaller portion of your salary. Its at that time you can increase payments to pay down the principal? Is this what you are talking about?
I am just curious in understanding this.
A home also builds equity over 30 years, due to inflationary price increases. This is also a bonus.
I always thought its best to pay down debt fast unless the extra money can be used for a better investment like gold was for 12 years prior to this year. >>
I wish I had a job that gave me cost of living raises instead of furloughs and across-the-board pay cuts. It's a different time.
U.S. 30-year mortgage rate soars to 4.46 percent, the highest since 2011
Rates hit a record low in November 2012
Some fear rising rates could stall the housing recovery, causing renewed economic woes
Mortgage rates have suddenly jumped from near-record lows, adding thousands of dollars to the cost of buying a home.
The average rate on the 30-year fixed loan soared this week to 4.46 percent, according to a report Thursday from mortgage buyer Freddie Mac. That's the highest average in two years and a full point more than a month ago.
It is also largest spike in weekly rates in 26 years and some fear rising rates could stall the housing recovery and lead to renewed economic woes.
mortgage rates going up
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>Housing sales drive the economy. You buy a house, you buy appliances, you buy furniture, you make minor or major renovations. I think things are about to get worse again before they get better. >>
it sure does look that way. lets hope not for a while
<< <i>It is also largest spike in weekly rates in 26 years and some fear rising rates could stall the housing recovery and lead to renewed economic woes. >>
Short term it may increase sales, then stall. (Just a thought)
Market has become warm to hot again in my area and north towards San Francisco with homes going for over asking price and multiple offers over asking price. Still not the frenzy we have seen nor will we see again. Good homes going for good prices. Problem homes languishing.
PMM rates rising is another nail in the coffin for home sales. Together with tougher (IMO reasonable) qualification criteria coming in 2014, if you are one of those who likes to live on the edge and can only qualify for that "big box" at a 45/55 ratio, better buy now.
I could never understand why one would want to be so home poor - but you see it all the time.
If you are not in the "high end" of the market, and in the NE that would be $1m+ (those unaffected by the economic situation); you are going to have a tough time selling those McMansions in the $450k-$800k range. Big supply, Low demand.
I guess I got there just in time.In april I bought my first house with a 30 yr @3.25%.Lost everything last october in hurricane Sandy with no insurance so I guess I am due for some good news.
As for PMS,I have been buying rolls like crazy.ASEs,libertads,phils et al @$22 or so were just too tempting.Bought a few rolls of CMLs @ $21.10 and now I need to take a break.
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<< <i>I got a 3.75% 30 years, a couple of months ago. I can afford to pay it off much faster but what's the point? At some point, inflation will pay off a nice chunk of my loan for me! >>
Paying off debt faster avoids you paying an interest sum that exceeds the original principal. However, if you have a fixed rate, that means the mortgage is the same for 30 years straight. Your job would give you cost of living raises, so the mortgage will be a smaller and smaller portion of your salary. Its at that time you can increase payments to pay down the principal? Is this what you are talking about?
I am just curious in understanding this.
A home also builds equity over 30 years, due to inflationary price increases. This is also a bonus.
I always thought its best to pay down debt fast unless the extra money can be used for a better investment like gold was for 12 years prior to this year. >>
But, to answer your question, no I won't ever increase payments on the loan regardless of how high my income goes. In nominal terms, yes I will be paying about as much interest as the principal (I don't recall what the total interest is for the life of the loan, but it's up there). >>
That brings to mind a description I heard someone use many years ago about being "house rich and money poor."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
A) Each generation must sell to the next and since the seniors have not been letting go of thier homes new ones were built. There is a huge glut of homes. When they die who will buy.
C) Rates go up and prices go down. At best rates will stay the same but when they move there is only one direction for them.
Not too sure we will see the same sales volumes and values as the last 50 years during the next 50. Unless we get a huge surge in rich immigrants the next 15-20 years in Real Estate may not be too great.
What was it Yogi said about predicting the future?
A) we won't see 5% passbook saving rates within a min. of 10 yrs.
to your monthly P.I. AND mark the payment "to be applied to principle", follow up
on this because it has to be applied to principle and servicing lenders screw this up.
I. E. You have a 30 year loan with 28 years remaining. You double up on the payment next
month, you now have a 14 yr mortgage. Do two printouts and you will see.
<< <i>Just a couple of thoughts from an old warhorse,
A) we won't see 5% passbook saving rates within a min. of 10 yrs.
to your monthly P.I. AND mark the payment "to be applied to principle", follow up
on this because it has to be applied to principle and servicing lenders screw this up.
I. E. You have a 30 year loan with 28 years remaining. You double up on the payment next
month, you now have a 14 yr mortgage. Do two printouts and you will see. >>
Or if your lender will co-operate have half of your payment taken out every 2 weeks instead of once a month. This will accomplish the same thing even faster.
<< <i>
<< <i>Just a couple of thoughts from an old warhorse,
A) we won't see 5% passbook saving rates within a min. of 10 yrs.
to your monthly P.I. AND mark the payment "to be applied to principle", follow up
on this because it has to be applied to principle and servicing lenders screw this up.
I. E. You have a 30 year loan with 28 years remaining. You double up on the payment next
month, you now have a 14 yr mortgage. Do two printouts and you will see. >>
Or if your lender will co-operate have half of your payment taken out every 2 weeks instead of once a month. This will accomplish the same thing even faster. >>
Equates to 13 monthly payments a year and knocks years off the back end of your mortgage.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>
<< <i>Just a couple of thoughts from an old warhorse,
A) we won't see 5% passbook saving rates within a min. of 10 yrs.
to your monthly P.I. AND mark the payment "to be applied to principle", follow up
on this because it has to be applied to principle and servicing lenders screw this up.
I. E. You have a 30 year loan with 28 years remaining. You double up on the payment next
month, you now have a 14 yr mortgage. Do two printouts and you will see. >>
Or if your lender will co-operate have half of your payment taken out every 2 weeks instead of once a month. This will accomplish the same thing even faster. >>
Equates to 13 monthly payments a year and knocks years off the back end of your mortgage. >>
Interest is generally charged on the unpaid balance and with the 2 week deal, your principal/unpaid balance reduces every 2 weeks instead of once a month. Sort of like compounding in reverse.
<< <i>Just a couple of thoughts from an old warhorse,
A) we won't see 5% passbook saving rates within a min. of 10 yrs.
to your monthly P.I. AND mark the payment "to be applied to principle", follow up
on this because it has to be applied to principle and servicing lenders screw this up.
I. E. You have a 30 year loan with 28 years remaining. You double up on the payment next
month, you now have a 14 yr mortgage. Do two printouts and you will see. >>
Make that "principal," so that the lender does not screw you by applying it to something else since they have no "principles."
<< <i>You are a PRINCE T. D. for pointing out why I should not rely on spell czech. >>
He is a Princey/Princely Pal aint he?
<< <i>My wife and I purchased a home 6.5 years ago, 30 yr fixed at 6%. We refinanced recently (last year?) at 3.5%. Refinancing ain't free though, and even though it's been a year, it'll probably be another two before we break even. >>
Late last fall we actually got called by Wells Fargo. They were doing a special where we paid $0 for refinancing. We closed with a 15 year at 2.875% and actually did pay absolutely nothing.