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If someone has a crystal ball, please lend it to me . Make your own judgment about where the interest rate will go and think about what will happen if price increase too much compare to the amount of money banks are willing to lend. Price increase is due to 2 things: either buyers get richer with pay increase (data shows that did not happened since 2008) or the lending banks allow buyers to borrow more money. There are many ways to allow buyers to borrow more money such as increase the duration - Japan with multi generation loan is the outlier but every countries have increase the duration from 15 years in the 1900 to 30 years in the 2000 - reduce the interest rate (post 2008 crisis), increase the monthly amount to an unsustainable state (pre 2008), pay interest only (pre 2008 and today).
Yeah, I'm with you here.
It seems to me like another bubble, though maybe less of one than 08.
Jobs are still hard to find, raises are still hard to get.
I feel like if I can keep saving for another year or two, maybe the bubble bursts a bit and I'll be sitting pretty. If you're of the camp where the bubble exists because jobs are increasing and people are making more money, then by that logic I should be doing fine anyway, and should be able to save even more money. Either way I would be sitting pretty.
Patience is a virtue and I'm willing to wait to do it right.
Still, it's tempting...
As an aside, I'm a huge plant nut, and I have no space for gardening in my tiny apartment. I was at Homewood today just browsing, and woahmygod. They are gonna make so much money off of me once I have a place to plant things.
Man, what a really bad article, bunch of always true statement like, 5 minutes before his death, he was still alive. Or bunch of statement that goes against a long mortage and the guy list it as a positive. I guess this guy is making money by selling long mortgage , and he is making a killing.
1 - True with or without a long mortage. So that is not a positive for long mortage. However, if you have to move and the market value is below what you own, you are in big s..., you will have to foreclose.
2- True, however, you will build less equity the longer the mortage duration. So that is a negative for a longer mortgage
3- Cheap compare to what, a credit card loan. Unless you have 300K roll over on your credit card loan yes, the mortage is cheaper. What a bull**** argument. 200K 30 years 4% you will pay 140K in interest over 30 years. 200K 30 years 4% you will pay 190K in interest over 50 years. By the way this example is wrong as the longer the duration the higher the interest rate. So, this is worst. Last point, if you can buy cash you pay 0 interest up to your death, this is real money saving . The argument does not prove that a longer mortage is better than a shorter mortage. Again 5 minutes before his death, he was still alive.
4/5- Yes this is tax deductible, but the comparison is wrong, on a mortage at fix rate you know how much you will have to pay and the interest rate is based on you risk. There is no way you can find a investment with the same return at the same risk. The only way is to invest in the financial instrument that is baclup by your mortgage. Guess what, there are a lot of intermediaries between your payment and the final receiver on the financial instrument, They do not work for free. There is no free lunch
6- No more true, it was true in the 1970, now since the 2000, central banks have reduce inflation to nothing, some economist even argue that the new technology revolution will bring deflation by price reduction. So, we might see the opposite result, it will become more expensive with time. Again, if you have a crystal ball, you will not have to worry about mortage.
7- Explain that to homeowners underwater, they cannot sell without going bankrupt. Another man believing that housing can only go up.
8-9 Come on man, the only one I know use a mortgage instead of paying cash is the CEO of facebook, because due to tax advantages and the fact that he can pay back anytime he got a 1.x% something variable interest mortgage on a multi million home. I am not sure we are all in this situation. I hope for everyone we are. go back to 4/5, same issue here, there is no free lunch. It is true for some, mostly wrong for most of us.
I am done,
Next time check the source of what you post. Some are well known analysts and present facts or believes, some are just presenting BS and present them as fact.
Yeah, I'm with you here.
It seems to me like another bubble, though maybe less of one than 08.
Jobs are still hard to find, raises are still hard to get.
I feel like if I can keep saving for another year or two, maybe the bubble bursts a bit and I'll be sitting pretty. If you're of the camp where the bubble exists because jobs are increasing and people are making more money, then by that logic I should be doing fine anyway, and should be able to save even more money. Either way I would be sitting pretty.
Patience is a virtue and I'm willing to wait to do it right.
Still, it's tempting...
As an aside, I'm a huge plant nut, and I have no space for gardening in my tiny apartment. I was at Homewood today just browsing, and woahmygod. They are gonna make so much money off of me once I have a place to plant things.
Yes and No, there is another factor that make locals, here, on the losing side. People moving from north or west with large enough down payment. They are able to get this down payment because they come from very high priced housing market from the north or the west and due to chance or luck or something else were able to build equity before moving down here. A small equity in percentage on a million home is a big down payment on a 400K home, and a million home on the west coast is a crappy tiny house. Here at 400K you can get a big mansion, hey almost . So they pay less in monthly mortgage and move up as MI homes like to say . I think they do not care about 20 or 30 more above market price if they can buy. Here you have a reason for price increase above what the bank is willing to lend.
If anyone has data about the local buying behavior and the transplant buying behavior, it will give some great insights.
"The Benefits of Having a Big, Long Mortgage" : Much depends on how long you will live in your house. What is the average time someone owns their house though. Used to be 7 to 8 years, then they move for various reasons. Corporate transfer, larger family, divorce, death of husband or wife, need larger house, need smaller house, relocation to different area by choice; and so on.
(My relative out in CA said 50 yr. mtgs. have been the norm for quite awhile. Jumbo mortgages all day long. She has one.)
that is explaining the housing price difference to places like NC.
Recently purchased my first home, and I'm feeling very lucky because I a) have limited needs/wants compared to most house hunters and b) found a house this year.
Have to agree with the warnings about Coastal. I had actually read in these forums that they were difficult/overworked, but the rate was great and I convinced myself to ignore it. Hoped it was "one bad apple" agent, or unfair blame (for the applicant's own circumstances).
Unfortunately, no amount of diligence and promptness on my part seemed to help... continual miscommunications and slowness. After I lost out on a house due to the latest headache had to cut my losses and switch.
Did you borrow directly from them, or was your loan sold to them?
Purchase or refi?
It isn't that they always fail borrowers, just that they make the process more stressful than it already needs to be, before they fail some of their borrowers.
Bofa is the absolute worst lender. Buyers had better not even think about using a pre qual from them in a multiple offer situation. A close second would be Quicken loans. I've heard from a builder that they will not even consider a Quicken pre qual.
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. Make your own judgment about where the interest rate will go and think about what will happen if price increase too much compare to the amount of money banks are willing to lend. Price increase is due to 2 things: either buyers get richer with pay increase (data shows that did not happened since 2008) or the lending banks allow buyers to borrow more money. There are many ways to allow buyers to borrow more money such as increase the duration - Japan with multi generation loan is the outlier but every countries have increase the duration from 15 years in the 1900 to 30 years in the 2000 - reduce the interest rate (post 2008 crisis), increase the monthly amount to an unsustainable state (pre 2008), pay interest only (pre 2008 and today).
