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My first mortgage (not in this area) had an interest rate of 7.5%! That was the going rate at the time, many years ago. Of course I refi-d it down as opportunities occurred.
My first mortgage (not in this area) had an interest rate of 7.5%! That was the going rate at the time, many years ago. Of course I refi-d it down as opportunities occurred.
4% is still not a huge deal.
Same, and we were the envy of our friends.
I think my sister had a 15% mortgage on her first house!
My first mortgage (not in this area) had an interest rate of 7.5%! That was the going rate at the time, many years ago. Of course I refi-d it down as opportunities occurred.
4% is still not a huge deal.
4% is a huge deal when prices double. You may be able to afford 4% on a $250,000 loan but can you afford 4% when homes double and the same house needs a $500,000 loan? We are getting hit on both ends. It is not just prices soaring. It is not just rates soaring. It is both going up at once. Worse still, everything not home related is going up with inflation, so you have less to begin with.
4% is a huge deal when prices double. You may be able to afford 4% on a $250,000 loan but can you afford 4% when homes double and the same house needs a $500,000 loan? We are getting hit on both ends. It is not just prices soaring. It is not just rates soaring. It is both going up at once. Worse still, everything not home related is going up with inflation, so you have less to begin with.
Rates going from 3% to 4% can be a deal breaker.
So instead of looking at a 500k home, your person in the scenario should be looking at cheaper homes they can afford, maybe a further commute, maybe a smaller house, but there are options for almost everyone.
My first house cost me 300k and was 768 square feet. This was 15 years ago. You survive, you build equity, and you upgrade. Maybe you even move to a lower cost of living state/area. Choose right and you'll reap the benefits just like everyone here is currently.
One thing is for sure, the current situation is not unique by any means.
My first mortgage (not in this area) had an interest rate of 7.5%! That was the going rate at the time, many years ago. Of course I refi-d it down as opportunities occurred.
4% is still not a huge deal.
First mortgage I had was at a rate of 12% and the builder bought it down would have been 13.
My first mortgage (not in this area) had an interest rate of 7.5%! That was the going rate at the time, many years ago. Of course I refi-d it down as opportunities occurred.
4% is still not a huge deal.
Yes!
The mortgage on the first home we bought in 1974 was 8.5%. We then bought another home in 1988 and the mortgage on that one was almost 11%.
This increase is negligible for the people buying these homes right now. So I don't believe that would be a reason right now for the market to stall.
I also believe that if a person has a hard time right now with the interest rate going up to just 4% then they probably would have a hard time even submitting an offer that would be accepted by the Seller in this market. They just aren't going to have the funds needed for an attractive DD Fee, bid over asking and the cash on hand should the house not appraise for the contracted price.
I think if people with limited funds really want to own a home right now then they are really going to have to think about moving a lot further out. In order for us to buy our last home in the SF Bay area (we wanted new, at least 3000sf and not in the millions) we had to buy 60+ miles from our jobs. Anyone that knows silicon valley traffic knows that this 60+ miles is not an hour or so drive. But for us, at that point and time in our life, the trade off was worth it.
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