OT: Mortgage Rates

[🏀]

Anyone got expertise in this field?

I'm floating right now on a house purchase. Just did the paperwork last night, so until the underwriters are done I can float.

Should I lock now or wait a little?

[4everwarriors]

Chill Bro, and respect the process.

[🏀]

Chill Bro, and respect the process.

Alright, I'm done. Too much Scoop today.

[nyg]

Reached out for my brother for you.  Not a banker, but a big bond trader on Wall Street, knows his stuff. 

He said pull the trigger now, but your call. 

[🏀]

Reached out for my brother for you.  Not a banker, but a big bond trader on Wall Street, knows his stuff. 

He said pull the trigger now, but your call. 

That's the sense I'm getting.

Really appreciate that call though.

[checkmarq]

If you lock now, most banks will allow you to float down by up to a quarter of a point if rates fall in the next 90 days. I would lock now if you are truly worried, but rates shouldn't raise by much if anything in the next 3-6 months.

[Sir Lawrence]

That's the sense I'm getting.

Really appreciate that call though.

What is the rate?

[Benny B]

Lock now.  Any volatility in interest rates over the next 90 days will skew higher barring a catastrophic economic event.

[🏀]

What is the rate?

4.625 on a 30-year fixed.

[Hards Alumni]

4.625 on a 30-year fixed.

That high already?

LOCK.

[🏀]

That high already?

LOCK.

AHHHH!

[Coleman]

Ugh, this worries me. I want to buy, but am waiting until after I get married in May of 2015.

I worry rates are going to be ridiculously high by then.

[4everwarriors]

Shotgun weddin's can be done for a whole lotta reasons.

[Marquette Gyros]

That high already?

LOCK.

+1. Wow. Glad I pulled the trigger last year.

[MUWarrior2007]

Ugh, this worries me. I want to buy, but am waiting until after I get married in May of 2015.

I worry rates are going to be ridiculously high by then.

Had the same worry, and we're getting married in September of 2014.  We pulled the trigger and are moving in April.  Couldn't risk the rates going any higher.

[MU Fan in Connecticut]

+1. Wow. Glad I pulled the trigger last year.

Me too.  Locked in at 3.75%.

[ZiggysFryBoy]

3.25% mofos.  30 year fixed.  Refied 2 years ago.

Down from 5 1/8 in 2005 when we bought.

We're looking to move but don't want to give up the basically free loan.

[Spotcheck Billy]

3.25% mofos.  30 year fixed.  Refied 2 years ago.

Down from 5 1/8 in 2005 when we bought.

We're looking to move but don't want to give up the basically free loan.

5.25% mofos. 30 years fixed. paid off in 18 years. 1.5 years ago  

kind of missing that tax write-off

[MU Fan in Connecticut]

Me too.  Locked in at 3.75%.

I did get rid of 3 years of the mortgage also in the refi with a smaller monthly payment.

[Sir Lawrence]

Ugh, this worries me. I want to buy, but am waiting until after I get married in May of 2015.

I worry rates are going to be ridiculously high by then.

Ridiculously high was in 1981 when I first bought.  These rates now are like the price of gasoline then.

[🏀]

3.25% mofos.  30 year fixed.  Refied 2 years ago.

Down from 5 1/8 in 2005 when we bought.

We're looking to move but don't want to give up the basically free loan.

That's where I'm at now. The value on some houses is just too good to pass up in my neck of the woods.

[rocky_warrior]

Ridiculously high was in 1981 when I first bought.  These rates now are like the price of gasoline then.

I'm not old enough to have bought a house then, but I remember people being excited to get DOWN to ~8%.  Crazy compared to these last few years.

4.625 on a 30-year fixed.

On (apparent) good recommendation from my banker, I locked at 4.5% 30-year fixed on Monday night (3/24 - the same day the offer was accepted).  Long term, 4.625 is a GREAT rate (see comment to Sir Larry...), so even though I'm wishing I could still buy at the 3.25% of last year, take the 4's and run (or rather...lock).

[Jay Bee]

Anyone got expertise in this field?

I'm floating right now on a house purchase. Just did the paperwork last night, so until the underwriters are done I can float.

Should I lock now or wait a little?

It depends on your specific situation and appetite for risk.

You essentially ax'd if rates are likely to rise or fall. Not even a mention of your timing (i.e., anticipated closing date, any provisions in the purchase agreement which require you to have funding finalized by a particular date, etc.). The answer to that is no one here knows.

It's a tricky time. Next week there are some data that could move things... if economic data is weak next week, we may see rates rise - but not necessarily.

This past week 4.50% was the most common execution price out there on 30-yr notes and from Monday rates actually improved (though they took a hit yesterday). 4.50%, though, is the rate I'd DEMAND for this past week, though.

Depending on the specifics of your timing and any related pricing changes re: lock period, I'd probably recommend floating for a bit. You can pull the trigger whenever. This coming week we could very well see most executions rise from 4.50% to 4.625%. But things would have to get really eff'd (and they always could, but...) to get yourself into a situation where your only options are above 4.625%.

Be confident. Float if the decision is between 4.625% or floating. (If you were in at 4.50% I'd tell you stay there.)
If rates rise past 4.625% next week, I'll pay you $20. If you're able to secure a rate in the future of less than 4.625%, you pay me a small commission equal to the rate differential X loan amount x 77%.

Another thing to consider: pricing on a float-down provision.. again, really need to know how far out you are on this transaction. But, you may be able to find a good price on the ability to float down if rates fall (which, again.. your rate is already high... maybe you have crappy credit like ZFB. He only got a good rate because the house is in his mom's name).

[reinko]

I live in a high cost of living area (Boston)... Without 20% down (which a minimum out here is at least $70K),  seems like such a bigger risk to go out and buy, versus renting.   Obviously the Mrs and I have to then maximize things like savings and retirement in the money we save from a mortgage.   Any other thoughts from folks that live in areas of the country like this (NYC,  DC,  Seattle,  SF...

[Coleman]

I live in a high cost of living area (Boston)... Without 20% down (which a minimum out here is at least $70K),  seems like such a bigger risk to go out and buy, versus renting.   Obviously the Mrs and I have to then maximize things like savings and retirement in the money we save from a mortgage.   Any other thoughts from folks that live in areas of the country like this (NYC,  DC,  Seattle,  SF...

This is pretty common in big metro areas. Sounds like you are doing the right things.

Home ownership is not always the best financial move in every circumstance, although as Americans we are programmed to think so. You have to look at the cost vs renting, and I'm some metros such as NYC, renting is significantly less expensive.

I rent right now and it's the right decision. I am still saving large chunks every month in my 401k, Roth IRA, and also taxable accounts. A mortgage can be a nice forced savings plan but it's not the only way to save or invest. Plus  I know too many people who bought, then wanted to move 3 or 4 years later to a new city and had to take a loss on their house. So they actually lost quite a bit of money. It's not smart to buy until you are ready to lay roots for 10+ years IMO

[Skatastrophy]

I'm hoping that interest rates skyrocket. One of the main reasons I went for an FHA loan was for the rules around transferring/assumption of the mortgage.

When (if) rates start climbing again, it should be very easy for me to sell my house because I can offer the buyer cheap money

The wife and I recently realized that home ownership is not for us. Being DINKs and never really wanting kids, I'd rather be more mobile than being stuck in one area of one city. Additionally, homes are much more expensive than just the mortgage. The upkeep + the time investment to maintain a home... I'd rather be doing a lot of other things with my time & money.

I guess it's nice to know all of that in my mid 30s. It's an expensive way to learn a lesson, though

[🏀]

Everything is pointing towards a large increase.

[Marquette Gyros]

I live in a high cost of living area (Boston)... Without 20% down (which a minimum out here is at least $70K),  seems like such a bigger risk to go out and buy, versus renting.   Obviously the Mrs and I have to then maximize things like savings and retirement in the money we save from a mortgage.   Any other thoughts from folks that live in areas of the country like this (NYC,  DC,  Seattle,  SF...

Who says you need 20% down?  We're not exactly in the type of rural area where you can get 2,000 square feet for $100k, but found an undervalued property in a perennially strong neighborhood.  Plus, we were able to lock at 3.5% last year. 

So we're paying PMI of $200/month, yeah, but that will go away soon -- and it's a small price to pay for the opportunity to build equity in a major U.S. city.

I totally agree that buying a house isn't always the best financial decision, especially if your money can do more for you in the market.  But I shudder at the amount that I've paid in rent since graduating, and I'm happy to be on the other side now.

[Jay Bee]

Roth IRA

Don't make very much, eh?

[MU Fan in Connecticut]

So we're paying PMI of $200/month, yeah, but that will go away soon -- and it's a small price to pay for the opportunity to build equity in a major U.S. city.

This is something I started paying after my refi last year.  I'm at $75/month.  I never had to pay in the previous 13 years of home ownership.  The "value" of my home went down.  The worst part is I only need to pay it for about 18 months and I should be better than 80%-20% by the end of 2014 so in some ways it feels like I'm getting ripped-off.

I still eliminated 3 years of my mortgage and am paying $25 less a month even with the PMI after the refi.

[Chicos' Buzz Scandal Countdown]

Don't make very much, eh?

sort of douchey comment, eh?

[Coleman]

Don't make very much, eh?

Guess not.

[Benny B]

NM

[Jay Bee]

Be confident. Float if the decision is between 4.625% or floating. (If you were in at 4.50% I'd tell you stay there.)
If rates rise past 4.625% next week, I'll pay you $20. If you're able to secure a rate in the future of less than 4.625%, you pay me a small commission equal to the rate differential X loan amount x 77%.

30-years trending down to 4.37% today on the Daily Mortgage Rate survey, down from 4.54% at the beginning of the month.

4.375% should be easy to execute if you followed my advice. If your crib is $300k, please pay me $577.50. (25 bps X $300k X .77).

[ChicosBailBonds]

Me too.  Locked in at 3.75%.

3 5/8% 

Money is so cheap today compared to 30 years ago.  Giving it away, even with rates going up of late, in relative terms stuff is dirt cheap

[g0lden3agle]

sort of douchey comment, eh?

JB's like everyone's favorite gambler friend/relative that likes to brag about all their big winnings and tear down those that down win as much as him.  Never mention how they don't talk about the losses tho...

[Spotcheck Billy]

JB's like everyone's favorite gambler friend/relative that likes to brag about all their big winnings and tear down those that down win as much as him.  Never mention how they don't talk about the losses tho...

that's why he's asking for handouts: the losses

[Jay Bee]

30-years trending down to 4.37% today on the Daily Mortgage Rate survey, down from 4.54% at the beginning of the month.

4.375% should be easy to execute if you followed my advice. If your crib is $300k, please pay me $577.50. (25 bps X $300k X .77).

May update. Down to 4.12%. 4.625% less 4.125% available now = one-half of one percentage point. 50 bps X $300 X .77 =  $1,155 due to me. A small cost for the gigantic savings I have earned for you.

[GGGG]

3.25% mofos.  30 year fixed.  Refied 2 years ago.

Down from 5 1/8 in 2005 when we bought.

Was the original loan 30 years?  If so, was the lower interest rate worth the seven additional years of mortgage payments?

[ChicosBailBonds]

Was the original loan 30 years?  If so, was the lower interest rate worth the seven additional years of mortgage payments?

I asked the same question of myself, so I just pay more each month and I'm still going to have the loan paid in about 22 years rather than 30.  I just liked the flexibility of not having the higher nut of a 15 year or even 20 year. You can always pay more, but if you get in some kind of bind, got to the lower required payment the 30 year requires.

[Jay Bee]

I asked the same question of myself, so I just pay more each month and I'm still going to have the loan paid in about 22 years rather than 30.  I just liked the flexibility of not having the higher nut of a 15 year or even 20 year. You can always pay more, but if you get in some kind of bind, got to the lower required payment the 30 year requires.

[ZiggysFryBoy]

Was the original loan 30 years?  If so, was the lower interest rate worth the seven additional years of mortgage payments?

we almost went 20 year for a lower rate, but we wanted the flexibility to pay more some months and the set price other months. 

[ChicosBailBonds]

we almost went 20 year for a lower rate, but we wanted the flexibility to pay more some months and the set price other months. 

Ding ding!!

[LloydMooresLegs]

In the same house for 24 years, and we aren't done paying it off because when we did a big addition 9 years ago we did a construction loan and then refi.  Three years ago we paid down a chunk of princ to get below jumbo.  At that time we went for the 15 year for the lower rate (3.25) and pay more each month to be done in 10 (now 7) years.  I can see either way when measuring flex vs. lower rates, and, obviously, the less the spread the more the 30 year amortization makes sense.  As our plan was to pay down more anyway, the decision was easy.

Very pleased, especially compared to the 1990 mortgage, when we went with the 23/7 ARM to get a 10.25 (I think)---got lucky then when rates went down enough that we refi'd to a 7.25 30 year around 5 years in.  At the time of the construction refi, we went with a 20.  So we have had an ARM, a 30 (twice), a 20 and a 15.  Conventional and jumbo. 

Financial advisor who is coonservative now trying to convince us to just pay it off now rather than putting some "bonus " funds in the market.  I like that he is independent enough to give that advice when it is against his direct financial interests.  Haven't yet decided.

[4everwarriors]

Doable, hey?

[LloydMooresLegs]

Doable, hey?

boom

[Jay Bee]

Financial advisor who is coonservative now trying to convince us to just pay it off now rather than putting some "bonus " funds in the market.  I like that he is independent enough to give that advice when it is against his direct financial interests.  Haven't yet decided.

 

I'd need a decent look into your finances, but am happy to provide you with advice. Please share with me everything about your finances via PM or email.

-----------

Chicos...  how much do you have left on your house (principal) today vs. value at time of purchase? Where you are, I'd venture to say your house is like the divorce rate - closer to 50% (appreciation since you purchased) than 30%, but somewhere in that range.

[LloydMooresLegs]

oops...

[MU82]

In the same house for 24 years, and we aren't done paying it off because when we did a big addition 9 years ago we did a construction loan and then refi.  Three years ago we paid down a chunk of princ to get below jumbo.  At that time we went for the 15 year for the lower rate (3.25) and pay more each month to be done in 10 (now 7) years.  I can see either way when measuring flex vs. lower rates, and, obviously, the less the spread the more the 30 year amortization makes sense.  As our plan was to pay down more anyway, the decision was easy.

Very pleased, especially compared to the 1990 mortgage, when we went with the 23/7 ARM to get a 10.25 (I think)---got lucky then when rates went down enough that we refi'd to a 7.25 30 year around 5 years in.  At the time of the construction refi, we went with a 20.  So we have had an ARM, a 30 (twice), a 20 and a 15.  Conventional and jumbo. 

Financial advisor who is coonservative now trying to convince us to just pay it off now rather than putting some "bonus " funds in the market.  I like that he is independent enough to give that advice when it is against his direct financial interests.  Haven't yet decided.

3.25% obviously is cheap money, plus there can be tax saving in having a mortgage, as I'm sure you know. If you have something else to do with the cash in which you are confident you can earn better than 3.25%, it's hard to argue against that as a financial decision.

However ...

We were faced with a fairly similar choice when we moved in 2011. We could have gotten a mortgage at near historically low rates and used our cash for other things. But we chose to pay all-cash for the house. Owning a house always has been more about financial things, and we take great comfort in knowing that we own our place free and clear. It's something called SWAN -- Sleep Well At Night.

So there is no "right" answer or "wrong" answer, because so much about homeownership (and paying for homeownership) that comes down to personal philosophy, comfort level, risk tolerance, etc.

[LloydMooresLegs]

3.25% obviously is cheap money, plus there can be tax saving in having a mortgage, as I'm sure you know. If you have something else to do with the cash in which you are confident you can earn better than 3.25%, it's hard to argue against that as a financial decision.

However ...

We were faced with a fairly similar choice when we moved in 2011. We could have gotten a mortgage at near historically low rates and used our cash for other things. But we chose to pay all-cash for the house. Owning a house always has been more about financial things, and we take great comfort in knowing that we own our place free and clear. It's something called SWAN -- Sleep Well At Night.

So there is no "right" answer or "wrong" answer, because so much about homeownership (and paying for homeownership) that comes down to personal philosophy, comfort level, risk tolerance, etc.

That's exactly right.  On the benefit side, there is a smaller and smaller income tax benefit as the deduction is eaten away.  On the SWAN side, it is comfort of outright ownership vs. more ready cash just in case...