I got an email yesterday telling me times have never been better to refinance my home. They swore that they could get me a number that was more than double my current rate.
this post was submitted on 02 Nov 2023
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I chuckle evily whenever I get a call from my mortgage company asking me if I'm happy with my mortgage. At 2.25% darn right I'm happy being below the current risk free rate of return.
Never been better for banks maybe. I refinanced during the pandemic and went from a 30 year to a 15 and barely changed my monthly payment.
That's normal. You either cut years or cut monthly payment. Very rarely both unless rates are actively dropping.
A 15 yr saves you six figures over a 30 yr iirc so congrats!
I mean they are literally just taking your money and telling everyone it’s a good thing. Fucking wild man. My buddy has a second property that went up from $1700 a month to $2700. Insane. That some private entity can one day decide people have too much money and just literally take it.
And capitalism is the way???
There seems to be a lot of context missing because this does not make sense. A private entity has no say in what you pay after you purchase a property. Unless there is a private entity doing tax assessments. Which I'm hoping would be extremely unusual but I'm only familiar with the process in my area.
ARMs can go up. Generally not a great mortgage to get
That has nothing to do with private entities.
Probably the payment went up because of the taxes or insurance. Or maybe they didn't have an escrow account and didn't pay taxes or insurance and it was force placed.
If you have a variable rate it could also go up for that reason. But most people when rates were low had fixed rate mortgages.
Could be fixed rate that expired and had to be renewed, but with a new rate.
In the US a fixed rate does not expire. At the end the loan has been repaid. I do not know of they are in the US.
How does that work? You take a loan, negotiate a rate (say 3%) upfront, and you have this rate as long as the loan is not payed?
Yes, though I'm not sure what you mean by not paid. You have monthly payments for the loan.
I meant payed off.
So if I borrow $100.000 at 3% interest rate, I will 3% for the entire duration of the loan? Even if FED increased the rates to something else?
Yep. That's why people who got these historic low rates are going to be very resistant to moving. Myself included.
break even?
makes it sound like like they're talking to investors not residents.
i dread to think how their "anslysis" works.
cant bear to do any more than skim this article though.
My house is an investment in the sense that I'm putting money into a giant hole as opposed to an infinite hole like renting. But no, I don't view it like I would a stock.
Back in the 50s to 70 we teeated hoises more like food. No one bought up all tge bread at a grocery store in hopes of selling letter at a high profit. During this time houses inflated mostly along side wages.
The the dark times came. The risr of the secondary real estate market ment people couldcquickly trade mortgages* like stock. This decoupled house prices from wages and turn te whole 2nd market into a new stock market
*technically they are not mortgages but mortgage back securities
You can just click through to the actual Zillow report instead of Yahoo's article about it: https://www.zillow.com/research/years-to-profit-33215/
They discuss the analysis right there.
Just 13 years?
Was about to say. Why kind of not 30 year fixed loans are they offering now?
Even paying an extra 1/4 of my mortgage monthly only reduces it to like 22 years vs 30 lol.
It isn’t the amount of time it takes to pay off the house. It is the time it takes not to loose money on selling a house. The number was about 5 years when I purchased my home. You take the selling price of your home subtract the mortgage, taxes, and realtor fees. It now takes 13 years before you can sell your house and break even. This just makes investing in homes worse. It also makes buying a home more risky and inflexible.
Ahhhh now I get what you mean. Thanks for the clarification.
Why does it not crash?
Too many companies with deep pockets buying everything up to rent and then never selling. Once a company buys it, it's pretty much off the market forever unless that company goes bankrupt but then they either get a bailout or another company buys that one for cheap.
It never will. If it so much as dips, the ultra wealthy will buy up everything they can find, inflating it once again.
Regulations could stop it easily, but profits are apparently more important.
Along with what the other comment said, all the people that are buying that aren't corporations can actually afford the house they're buying largely due to the WFH change so they all moved out of cities with their large salaries and moved to low cost of living places, took all the affordable housing and since there's no economic collapse they will continue to be ok (thankfully I guess?) so there won't be a housing crisis other than the unaffordability crisis which isn't a crisis to capitalists it's just a feature of their market based system.
The solution "the market" chose was neofeudalism... Can't buy, only rent. "I take your income forever and continuously raise the rent until you can't afford it and then the next schmuck moves in. Where you go, who cares? Not my problem." Lovely society we have...
When will the bubble burst?
I don't think it will burst. It'll just slowly deflate as new houses come onto the market and demand eases. The main problem (at least where I live) is that there just aren't enough houses being built. I don't think we'll see a sharp price drop anytime soon because there are so many people waiting to buy.
You may be right. I saw an article about a year ago that said the only way they saw out of the housing crisis was to build like crazy. And that makes sense but if the economy takes a nosedive then the buying may stop which could cause a crash. No one can predict the future, but markets do fall apart sometimes.
I wonder this too, but I'm coming to believe that as long as investors are throwing money at housing and people need it, it might not burst. With enough wealth concentration, maybe it just all gets progressively bought up and rented out at insane prices, with growth coming from speculation among massive institutional investors.
But I haven't really thought of this deeply or looked into whether it's sound.
This is what you're seeing now where mega corps are buying up trailer parks and all the low end housing. Theyre cranking up the prices on these to justify cranking the prices on the mid range stuff and so on up the $ ladder.
There are no more low end housing being built anywhere. It's all 350k and up being built.
Thats the main problem really. The shitty stuff got priced where mid stuff used to be and there's no supply for first time buyers to use to build equity.