Is this new construction worth the price? (townhouses, airport)
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ARM's are a risk. They work out if the rates are similar in 5 years to the present rates. They work out badly if the rates are way up in 5 years.
The present home mortgage interest rates are historical lows..... REEEALY low. (They never have been this low in my adult life of almost 50 years.)
It's funny that given the amount of time people spend in a home before moving most would actually save tens of thousands in interest and have way more principal with a five year ARM. It looks like this one only resets every six years. If it's a 2% increase cap the break even worst case scenario is like year 13. I agree if the reset cap is 5% that's a bad deal.
Mortgage rate hasn't been over 5% in a decade. You could refi if the rates hit that anyway. 10% "in the late 70's and early 80's'" might as well be the 1870s with how relevant that is to today's world.
It's funny that given the amount of time people spend in a home before moving most would actually save tens of thousands in interest and have way more principal with a five year ARM. It looks like this one only resets every six years. If it's a 2% increase cap the break even worst case scenario is like year 13. I agree if the reset cap is 5% that's a bad deal.
Mortgage rate hasn't been over 5% in a decade. You could refi if the rates hit that anyway. 10% "in the late 70's and early 80's'" might as well be the 1870s with how relevant that is to today's world.
So My realtor actually recommended me to wait it till 60 days for the 30 year fixed rate because he doesn't believe the rate will jump that much. Also, to lock it now i need to pay 10k in points. he said i can always refinance and paying 10k to lock now is too much.
Also, does which loan i pick matter if i decide to rent out the place 10 years from now if i buy a SFH? It would become investment home then right?
Yeah so the reason is the lesser sqft unit sold out and that price increased to almost the base price of this so they increased price accordingly, with not a single sale registered yet. It does make sense in a way so people who paid more for lesser sqft don't feel screwed over.
So I guess price is fair and its only going up...
This is interesting...did they only sell certain size houses at first?
My builder has been releasing 3-5 houses each time, and the floor plans available depend on which homes they're releasing. When i first expressed interest, I was put in line for a particular model (floorplan), and called as it came available.
As others have said, it's normal for there to be price increases as houses are released for sale.
This is interesting...did they only sell certain size houses at first?
My builder has been releasing 3-5 houses each time, and the floor plans available depend on which homes they're releasing. When i first expressed interest, I was put in line for a particular model (floorplan), and called as it came available.
As others have said, it's normal for there to be price increases as houses are released for sale.
Yes, so there are 2 plans, one plan is only at the edge of a row of house while the other are a number in between. They sold the in between first (i am not sure how many ) then they started selling the outer ones. When I went on 2nd day, they sold one of the edges and there were only 5 left, so essentially they are selling 3 row of houses.
As a point of reference, the initial price for the 2 floorplans are 515,615 respectively. Now its 620,695. FWIW i paid 685 (not incl options) on the 2nd end unit.
Mortgage rate hasn't been over 5% in a decade. You could refi if the rates hit that anyway. 10% "in the late 70's and early 80's'" might as well be the 1870s with how relevant that is to today's world.
Spoken like a future failed prediction..... No offense, but I don't trust your your crystal ball any more than mine LOL. No one anticipated the 10-15% mortgage interest rates back then either.
Keep in mind that with the projected historically high gov't debt as a % of GDP, due to more massive gov't spending proposals, inflation is highly likely. Other price pressures like lumber price indices, recovery of oil prices, and house pricing pressing are all going to contribute to inflationary pressures. I am not sure what other changes will counter those upward price pressures; I can't see any miracle increase in productivity that would help, for example.
The current monetary policy thinking to fight inflation is higher interest rates. The last time this debt as a % of GDP was this high was at the end of WWII, and inflation went up to similar levels that we saw in the early 1980's..... So looking back at mortgage interest rates over just 10 years is meaningless. The continued low mortgage interest rates in that time have been to stimulate the economy; that is not guaranteed to stay that way.
Also, does which loan i pick matter if i decide to rent out the place 10 years from now if i buy a SFH? It would become investment home then right?
As for fixed rate or ARM, I don't think so. The one thing to look in the fine print for is the use of the home. The last time I checked into this, 10 years ago, most mortgage terms will say it is only for your personal residential use, or words that effect, and they can call the loan if it becomes a rental property.
How often that gets enforced and under what circumstances, IDK. For example, most homes on the Outer Banks of NC are financed with standard mortgages for primary home use, and yet are used as short term rentals. IDK if the mortgage industry just turns a blind eye on that or what, and if it makes a difference between short term (vacation) or long term rentals. Just be aware that technically there is a distinction and if you do it properly with a mortgage with provision for the home being a rental, you commonly pay and extra 1/2 to 3/4% mortgage interest rate.
Since renting is just an idea for now, I would not change your mortgage thinking on the off chance of renting that far in the future. IMHO, if that time comes, then a bigger area of research and decision is how you are going to manage it, which has a lot to do with you have to treat it for tax purposes. IRS rules tend to push you towards treating it as a passive investment, unless you directly, and very actively, manage it yourself. (Or hold a realtors license...)
Spoken like a future failed prediction..... No offense, but I don't trust your your crystal ball any more than mine LOL. No one anticipated the 10-15% mortgage interest rates back then either.
Keep in mind that with the projected historically high gov't debt as a % of GDP, due to more massive gov't spending proposals, inflation is highly likely. Other price pressures like lumber price indices, recovery of oil prices, and house pricing pressing are all going to contribute to inflationary pressures. I am not sure what other changes will counter those upward price pressures; I can't see any miracle increase in productivity that would help, for example.
The current monetary policy thinking to fight inflation is higher interest rates. The last time this debt as a % of GDP was this high was at the end of WWII, and inflation went up to similar levels that we saw in the early 1980's..... So looking back at mortgage interest rates over just 10 years is meaningless. The continued low mortgage interest rates in that time have been to stimulate the economy; that is not guaranteed to stay that way.
hmmm... so would spending 10k to lock it now or wait 2 more months to do 60 day fixed for no $?
hmmm... so would spending 10k to lock it now or wait 2 more months to do 60 day fixed for no $?
Most everyone's crystal ball is equally cloudy LOL. All I can do is what you can do... read the predictions and forecasts. You're talking about a short term prediction (60 days) so that makes reading the online predictions more reliable.
The best I can see from reading such articles from 3-4 sources is that the predictions are for rate rises late in 2021 or in 2022 if inflation starts to go up too much. So waiting seems like a good bet to me... but it is a bet, not a certainty. Ya spins da wheel and see if it comes up red or black....
BTW, you formerly said 1 point (~6k) to buy down the rate from 3.25 to 3. Is the extra $4k in that $10k paid now to lock the rate now?
And FWIW:
With the most simplistic way of computing the breakeven point for that 1/4 point buydown is 74 months on my calculator, not 3 years.....not sure why we are getting that difference.
If you have an investment account working at nominal rates, then $6k put there will get you roughly $40 per month, compounded over 6 years. Using that same $6k for a 0.25% buydown will get you around $70 per month (which includes a SWAG at present value). (This makes sense to me; I worked it in detail for a mortgage over 30 years ago and a buydown of 1/8% in rate per point paid up front was the break-even range over the medium term.)
But over the very long term, $10k will pay off as well or better in a decent investment account than buying down 1/4% point. So if you keep the $10k now, you have some options of what to do with it: Invest, have a bigger emergency fund, etc.
My bottom line is to not sweat this decision too much, and don't lose sleep over it. Either way, the rates are darned good, and if inflation heats up as expected, then all those future payments are going to be a lot less costly anyway, in terms of real $ value. Average inflation over the last 30 years has been 2.6% per year, and a mortgage interest rate of 3-3.25% is so close to inflation that real mortgage interest costs are suuuuper low. If inflation heats up like it did a couple of times in the past, then your effective mortgage interest rates could go negative for working folks with inflation adjusted wages and a roughly 3% interest rate. That's pretty crazy IMHO....
Most everyone's crystal ball is equally cloudy LOL. All I can do is what you can do... read the predictions and forecasts. You're talking about a short term prediction (60 days) so that makes reading the online predictions more reliable.
The best I can see from reading such articles from 3-4 sources is that the predictions are for rate rises late in 2021 or in 2022 if inflation starts to go up too much. So waiting seems like a good bet to me... but it is a bet, not a certainty. Ya spins da wheel and see if it comes up red or black....
BTW, you formerly said 1 point (~6k) to buy down the rate from 3.25 to 3. Is the extra $4k in that $10k paid now to lock the rate now?
And FWIW:
With the most simplistic way of computing the breakeven point for that 1/4 point buydown is 74 months on my calculator, not 3 years.....not sure why we are getting that difference.
If you have an investment account working at nominal rates, then $6k put there will get you roughly $40 per month, compounded over 6 years. Using that same $6k for a 0.25% buydown will get you around $70 per month (which includes a SWAG at present value). (This makes sense to me; I worked it in detail for a mortgage over 30 years ago and a buydown of 1/8% in rate per point paid up front was the break-even range over the medium term.)
But over the very long term, $10k will pay off as well or better in a decent investment account than buying down 1/4% point. So if you keep the $10k now, you have some options of what to do with it: Invest, have a bigger emergency fund, etc.
My bottom line is to not sweat this decision too much, and don't lose sleep over it. Either way, the rates are darned good, and if inflation heats up as expected, then all those future payments are going to be a lot less costly anyway, in terms of real $ value. Average inflation over the last 30 years has been 2.6% per year, and a mortgage interest rate of 3-3.25% is so close to inflation that real mortgage interest costs are suuuuper low. If inflation heats up like it did a couple of times in the past, then your effective mortgage interest rates could go negative for working folks with inflation adjusted wages and a roughly 3% interest rate. That's pretty crazy IMHO....
Hope that helps....
Yeah thanks for the info. Yes the 10k includes the lock which is the discrepancy *i think*, but either way it says 10k$ in the points. I guess i will roll with wait it out and see how it goes. worst case i can try to refinance later...
the ask rice is 670k. I am a bit surprised because it was 611k when they released price and for first appointments it jumped to 670k. Not sure if this is still good price for the sqft?
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