MR

Interest rates are back to being low, in the 5s. Anyone here want to gander their thoughts on how long this will last. Do you think rates could skyrocket back to 7os and 8os highs of 9 percent and beyond?. Where I live housing is expensive, but it's just now swinging the other way and coupled with low rates, it's becoming a buyers market. Only problem is, although I within $1100 of being fully out of credit card debt. THat should happen by March. I still have a car loan and student loan. The SL in itself isn't the big deal. It's at under 4 percent fixed, but the car loan will go on for at least another four years unless I double up my payments and try to pay it off early. At any rate, I feel the need to build up my savings (3 months worth) before I even dream of home ownership. My fear though is that by the time I'm finshed with all that interest rates are going to fly right back up.

Anyone else here have the same concerns that's thinking about buying a house? Sorry for so many of the off topics. This is Melodic and not Suze Orman. LOL.

scarygirl wrote:Interest rates are back to being low, in the 5s. Anyone here want to gander their thoughts on how long this will last. Do you think rates could skyrocket back to 7os and 8os highs of 9 percent and beyond?

Who knows... I refinanced my first house twice within a year due to dropping interest rates, and went from a 7% 30-year loan to a 5.5 15-year loan. The equity I built up helped us get into this place. I'm currently on a 30-year at 6.125%, but pay ahead to get it knocked out in 20. Makes a HUGE difference in the amount of interest you will pay over time, which is obscene if you look at it. If I could refinance here, I'd do it. Some places offer "no closing cost" refinances, which can be great.

Housing market in the Uk is ridiculous, you got to either be in an extremely well paid job or someone just happens to give you a few grand to place a depiosit on a property over here. house prices have in some places quadrupled.

My sis bought a house a few years ago for 90 grand it's now worth 300 grand almost! and interest rates are so high people are just not buying like they did it's beginning to a slow very much so.

Even renting has become ridiculously expensive too!

I feel sorry for the young ones just setting out to get their first home, they'll be lucky to get anything more than a two up two down at the rate our housing market is going.

scarygirl wrote:Interest rates are back to being low, in the 5s. Anyone here want to gander their thoughts on how long this will last. Do you think rates could skyrocket back to 7os and 8os highs of 9 percent and beyond?. Where I live housing is expensive, but it's just now swinging the other way and coupled with low rates, it's becoming a buyers market. Only problem is, although I within $1100 of being fully out of credit card debt. THat should happen by March. I still have a car loan and student loan. The SL in itself isn't the big deal. It's at under 4 percent fixed, but the car loan will go on for at least another four years unless I double up my payments and try to pay it off early. At any rate, I feel the need to build up my savings (3 months worth) before I even dream of home ownership. My fear though is that by the time I'm finshed with all that interest rates are going to fly right back up.

Anyone else here have the same concerns that's thinking about buying a house? Sorry for so many of the off topics. This is Melodic and not Suze Orman. LOL.

Well as someone who owns a mortgage company, I can tell you that you're probably not going to see rates "skyrocket" back up, anytime soon. You'll probably never see rates near 9% again, in your lifetime. You'll always hear a lot of people talk about the exorbitant 19+ percentage interest rates of the early 1980's. What they fail to mention is that there was a HUGE Savings and Loan scandal that had CD accounts paying out consumers 13%. It was all pie in the sky numbers that really didn't mean anything, and none of it was real. Not to mention, the most important fact is that a new car cost more today than most houses cost back when interest rates were so artificially high!

What has happened in the housing market really isn't much of a surprise to those of us in the industry. Lenders made some REALLY BAD decisions, over the past 5 years. They were lending 100% to VERY marginal (credit wise) borrowers. Most lenders thought the cost of housing was going to keep going up, when most people with any amount of common sense knew the bottom was going to fall out. Most respected economists don't see the housing market bouncing back for at least the next year and a half, and who knows, beyond that. The other thing going on in the economy is that consumer spending is way down, which could lead to a recession, which will surely keep housing costs in check! I know you said that housing was "expensive" where you live, but if your profile is accurate and you do in fact live in North Carolina...NC has one of the more affordable median cost of a home in the country! The only exception would obviously be any coastal locales, which are ALWAYS more expensive, regardless of which state you live in. I can tell you from first hand experience that North Carolina is EXTREMELY affordable when compared to the Northeast, California, Nevada, Arizona, and Florida, and that's even with the plummeting values in all of those aforementioned states!

The best advice I could give you is that if you're going to purchase a home, put a minimum of 10% down, and 20% would be FAR more advantageous! You MUST look at a home as a long-term investment, so what the market is doing in two years shouldn't matter that much to you, unless you plan on purchasing a condo, which most people don't live in, long-term.


John from Boston

Rip Rokken wrote: Some places offer "no closing cost" refinances, which can be great.

Don't EVER fall for the "no closing cost" option. It's simply illogical. All that happens with a "no closing cost" loan is the lowest rate you're entitled to, based upon your FICO score, is jacked up. This is done to cover the closing costs. Essentially what happens is that most consumers end up paying back $15K-$20K over the life of their mortgage for a "no closing costs" mortgage, when it makes MUCH more sense to simply have the closing cost disclosed to you on a Good Faith Estimate, and simply roll them into the mortgage or pay for them out of pocket! As I've always told people...you don't work for free, and neither does anyone else. If someone tells you there is "no cost", you should immediately figure out just how little sense this makes, when you know the attorney or title company isn't sitting down to sign your closing documents with you, free of charge, just because they think you're a swell guy! As my mother always told me...If something is too good to be true...it always is!


John from Boston

It's always a good time to buy a new home. When I bought my condo in 2001 everyone was telling me it's a "seller's market." I said "Fuck you, I want prices to keep going up...that's why I'm buying the damned thing." Who wants to buy a house and not have it appreciate? Right now, I'd put my money into a bond fund until home prices start going back up or interest rates begin to rise. Buying a home now isn't a bad investment, I just think you can make a bit more money elsewhere.

Saint John wrote:It's always a good time to buy a new home. When I bought my condo in 2001 everyone was telling me it's a "seller's market." I said "Fuck you, I want prices to keep going up...that's why I'm buying the damned thing." Who wants to buy a house and not have it appreciate? Right now, I'd put my money into a bond fund until home prices start going back up or interest rates begin to rise. Buying a home now isn't a bad investment, I just think you can make a bit more money elsewhere.

If you're using your home as an "investment vehicle", I would agree with you. I definitely don't agree with your assessment that it's a bad time to buy a home right now. The reality is that there are ENDLESS deals on the market right now, and you can almost name your price in some markets! With home prices lower than they've been in over 5 years in many markets, and interest rates heading back toward historic lows, I think it's a SUPERB time to buy a primary residence! It's the best it's been, in at least 5 years! Even if home values plummet another 5%-8%, which will happen in some markets, you can easily recoup that through the super low interest rates right now, and bidding 25% less than the current asking price. The people in the strongest position of strength right now are those who can buy, who don't have anything to sell, because the market for sellers right now is ABYSMAL!

Without boring you with an IRS lesson, the tax benefits you reap from buying a home and paying your mortgage will ALWAYS be better than paying someone else's mortgage (i.e. rent). I certainly would NOT be buying "investment property" ANYWHERE in this country right now, but EVERYONE needs a place to live. If I were in the market right now for a primary residence, I would have a field day finding a great deal!


John from Boston

scarygirl wrote:At any rate, I feel the need to build up my savings (3 months worth) before I even dream of home ownership. My fear though is that by the time I'm finshed with all that interest rates are going to fly right back up.

You'll be alright. The intrest rates won't shift that dramatically in three months time. If you're just now starting the property search, then what you need to do in these next three months is figure out what exactly you can spend versus what you can get approved for. Also take into consideration properties that need rennovating and you might find that you can get the property and your rennovation budget all taken care of. By the time you get the house brought up to date you might could sell it for a sweet profit. Of course, unless you take out a 12-month note you'll probably end up with capital gains tax. (I've never been sure about that part of the real estate world... I just did interiors!) If you're looking for a home to stay in for the long haul, then what's the hurry anyway... the best way to approach buying a home is to take your sweet ass time and make sure you're getting the right property.

Lower the interest rate as much as you like. If wages are stagnant and the economy in a recession it amounts to no new purchases. The reason why home sales set precedence is that other purchases are made in correlation to it. A new house may require a new oven, dishwasher, microwave... Existing homes may require new appliances but most opt for extensions or expansions. With unemployment at a high, do not expect this to happen. Most are on borrowed time (credit card debt). Hollywood can stimulate our economy by airing more reality shows. “Flip My Foreclosure” sounds like winner.

Enigma869 wrote:Don't EVER fall for the "no closing cost" option. It's simply illogical. All that happens with a "no closing cost" loan is the lowest rate you're entitled to, based upon your FICO score, is jacked up. This is done to cover the closing costs.

Thanks for the advice and info! I did actually know at the time what they were offering me was not as low as I could get, and figured it must work somehow as you describe. Still, I dropped my interest rate a full half-point without paying anything, and then refinanced it again within the year. Yeah, definitely not the best deal I could have gotten, but it did allow me to do it at the time. My logic then was that without a lot of cash on hand for the closing costs, I'd just have to roll them back into any loan I could get at a cheaper interest rate. With your info, I'm sure I would have ended up paying much more in interest if I'd stuck with it, but I'm still glad I did it at the time. I'll be more careful in the future, so thanks!

To answer another's question, I live in coastal NC. That's why housing is so expensive. I also draw a salary that is not conducive to home ownership. I imagine I'll wait.

scarygirl wrote:I also draw a salary that is not conducive to home ownership. I imagine I'll wait.

Draw an extra 0 or two on the end of it, and that should take care of it! I might try the same...

Rip Rokken wrote:

scarygirl wrote:I also draw a salary that is not conducive to home ownership. I imagine I'll wait.

Draw an extra 0 or two on the end of it, and that should take care of it! I might try the same...

LOL. Well, I am legally in charge of payroll. Surely, my boss won't notice an extra 0 or two.

scarygirl wrote:

Rip Rokken wrote:

scarygirl wrote:I also draw a salary that is not conducive to home ownership. I imagine I'll wait.

Draw an extra 0 or two on the end of it, and that should take care of it! I might try the same...

LOL. Well, I am legally in charge of payroll. Surely, my boss won't notice an extra 0 or two.

You should be fine as long as you draw them to the right of the decimal point.