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Mortgage rates high or low isn't the whole problem. Vast numbers of Americans still cannot obtain financing and or have difficulty or pay a higher rate for various reasons.
Right now for the most part banks aren't interested in making loans they will hold. This means everything must confirm to Fannie/Freddie Mac standards. Also in the wake of being taken to task for causing the last housing crisis obtaining a mortgage today is only slightly less invasive than a colonoscopy. *LOL*
If you are self-employed be it as a doctor or hairstylist getting a mortgage is difficult if not in some cases nearly impossible. Banks like and want persons who *earn* their money from an employer with a nice and neat wage record that can be confirmed in writing.
This is one of the reasons you are seeing so many all cash deals. But on the flip side something new is growing; persons paying all cash for a home then promptly pulling out equity via loans. In the past persons often preferred to keep their money in investments and not tied up in real estate. Now some just pay cash then take the money out as credit.
we have seen financing easing up a lot. at the peak of the downturn we had potential buyers pre-approved , commitment letters given and then were told the bank had no money to loan.
while lenders have been stricter money has been freer. we had a deal go through last month for 18 million bucks which we were partners in.
Mortgages are not that difficult to get at all...they are just not being given away fraudulently or to anyone with a social security number as before. But if you are gainfully employed, have the funds and verifiable income to afford the home, good credit, and the required down payment, which is exactly all the things people should have always had when applying for a mortgage, then there is no problem and it isn't "difficult or impossible."
They are not making mortgages difficult to get, they are simply instituting the requirements they historically always had. If this means Mr. Jones who only has 5% of the purchase price available as a down payment to buy a home is denied because he doesn't have the required 20% down, that is a GOOD decision, and not "impossible to get a mortgage". It means you cannot currently afford the place you want to buy!
The only challenge I have seen is low-ball appraisals in some cases, which will squash a deal.
my step son got a 400k mortgage while on employment. yes he had some dough in the bank but he could have spent that freely the next day.
my daughter just closed two months ago on a co-op in howard beach. except for extensive paper work because of a lack of long term history they had no problem getting a mortgage..
we rent but going forward i am watching for the lines to cross where buying a co-op will be cheaper than the combo of renting and earning the income we are on the money we have not spent yet on the co-op.
being we are retiring and i am no longer really that aggressive of an investor the money isn't generating as much as it used to offsetting the rent.
figuring a muni bond i may give up 15k on the 300k i would be spending on the co-op but our housing costs would fall to only 12k a year with no mortgage..
a few more rent increases and the trade off may be worth it.
the point is it isn't just the view of where you think real estate is headed but is renting or buying the better value.
Some people have mentioned that if interest rates go up, rents will go down in the city. Can someone explain this to me?
I assume that if interest rates go up it will be more expensive/harder for people to buy and many will choose to rent instead. I understand how home appreciation will stagnate because of higher rates, but for those that own already and want to hold on to their home for the next 10+ years, wouldn't that just put them in a great position to rent out their property?
rates go up because the economy is doing better . when things do better and markets do better prices on things rise . then inflation rises . before long things level out again and no one is the better or worse for it.
people also develop the we better buy now before we can afford less house when rates and prices go up putting upward pressure on things. historically we get our best appreciation when mortgages are in the 6-7% range.
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