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Low Mortgages vs High property prices

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Terrel L. Shields

Thread Starter
Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
I'm no math whiz but the Boom is Real Estate est. at 7.4% rise in home prices since Jan. 1 and the interest rates which are at 6.22% is about a net wash from the 6.8% "enjoyed" about the turn of the year. If 30 yr. fixed rates at 6.8% on $100,000 is compared to $107,400 at 6.22% then the monthly payment upon purchasing the hyper inflated house is a net loss of $7 a month or so ($648.25 vs $655.79) and the break even payment of $648.25 is $106,165. Thus my spin is housing is increasing only what the people can afford for a payment. Good time to refinance, but you are not getting one whit better deal in a purchase.

The crunch will be when interest rates return to levels near 8%. 30 yr. loans or not, people refi or take second mortgages on average about every 3 years. I believe I read somewhere that the average tenure in a house is 5 years. If you think you are being pressured now, wait until interest rates rise and slows the home price rise with it. Needing to borrow more or get better terms with better LTV ratios, we will be the "deal killers" unlike anything most of us have ever experienced. I just can't wait for the games to begin.

ter
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
What I'd be interested in is finding out what people are quoted as the intrest rate @ time of first phone call & the intrest rate they are paying @ time of signing the note. Most everyone I talk to that actually follow the math (& have purchased or refi'd in past three years) have decided not to refi after they find the final number. Seems like most refinances are people with heavy debt. The HONEST Mortgage guys are saying that the rate given is 7.25 to 8.50 with heavy debt to income being 9.5 to 10.5 Less than 1 a month get below 7 Any one else checked into this in thier area? Many of the low life Mortgage Co's are charging as much as 7,000 in closing cost That kinda closing charges rolled into the loan U can give a point less in intrest. Very interested if other parts of the country have what the TRUE refinancing cost & average intrest is.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Karl:

An astute buyer of loan services will most likely wind up getting a loan commitment (verbal or written) and beat up their original lender, as I did...

I pointed out to the lender that DESPITE the stated $8,000 in fees on my (potential) mortgage broker refi, that paying off my loan 10 years faster and winding 'up' the 8 grand in equity return after a miserable 53 payments (4 and 1/2 years) with paying the calculated P&I instead of my current monthly repayment amount seemed like a good deal!!! and IF I elected to continue payments at my former monthly payment that figure dropped to 3.5 years...!!

Told him to put up or shut up and lose the loan!

Instead of hacking up 8 grand to line the brokers pockets :evil: :roll: , I spend 1K, refi'ed through the original lender and have a happy monthly 250% of what USED go to principal instead of the ugly amount that existed before, and reduced the payment schedule by 10 years!!!

Unfortunately most buyers just look at their monthly instead of their total debt struture, and forget that they may not want to pay 'rent' for the remainder of their life :roll:

Funny thing is, that despite my ability to discuss loans and terms (in the longer sense and seriousness) in a fairly intellegent manner, what 'closed' my refi deal with the bank was the line about the monthly payment, as the rest of the garbage didn't impress the guy much at all - proving that lenders are as much idjidts as buyers of loans!!! 8O
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
Lee Ann My point exactlly the ones that can do MATH R doing OK in this market. However the few that can do math I hink are a very small amount in the total number of buyers & Refi's. When a person pays 30,000 more for a home cause they liked the builders trailer & the sales girl seemed so nice. Those R the ones that worry me WHEN the Real Estate Market goes on the downturn of it's cycle. 2,700 +/- homes in this town 160+/- are Multi Families 102 of those have been built in past 16 months. Almost every sale of the multi's have been between relatives 35 confirmed homes have been repo'd in past 16 months. Anybody else seeing this in there area's. OH we have a program in this County that if U have a job U can get a down payment GIVEN to U if U meet certain qualification (These qualifications ARE NOT for those who have anything for back up). NO PAYBACK of DOWN PAYMENT & what is the first mail a NEW HOMEOWNER recieves?? Hint it is plastic.
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Karl:

Car loans are as bad or worse... if you got a pulse they will sell you a car....

My stepson, a reasonably decent kid, but not the brightest turnip on the cart, just bought a brand new pick 'em up at 8.9%, full boat on the price and they sold him every gidgit, gadget and up the sale whos-it in stock... and a 6 year repayment :evil:

Oh and the kid got fired from his job the next day, but that's another story... Guess he will learn that (even in joking) calling an older co-worker trailer trash isn't a great idea... seems to me that since she was flipping him off in public, and calling him things nearly as bad the honors were about even, but he is getting an edumecation anyway...

I went in and told the car saleman he oughta be ashamed of himself: despite the fact that the young man is over 18, and appears to be a functional adult, his coming in with a $1,000 check from his mommy (dearest) and trading in a perfectly functional if not beautiful older jeep pick-up was no reason to toally sucker the kid.

I found three errors in the contract, and they "accidentally" charged him the 4wheel drive fees and surcharges :roll: Wonder how many accidents a week they have around there when the buyer is wet behind the ears.
We renegotiated the loan 6 ways from Sunday, cut out the fluff, lowered his payments $150 a month.

Didn't take but 35 minutes to 'fix' the deal.

He is still going to be upside down on the thing forever 8O , but at least he isn't getting QUITE as soaked. :twisted: I should make him pay ME the difference and stick it into savings for him :idea:
 

Terry Russell

Senior Member
Joined
Feb 24, 2002
Professional Status
Appraiser Trainee
State
Montana
Lee Ann,

Some states have laws in place similar to lemon laws. Montana is 72 hours to realize you got caught and bought. Some states have no such statute, others have up to seven days. It may be too late for this info but I thought I would toss it out there.

Aside: I sincerely apologize for the post that incensed you and others. I must say that it was not intended to offend, I am not that way. Lesson learned. Ok?

Terry
 

Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
Terry:
What I had them over the barrel on re: my step-son was that they had his name wrong, and several other minor glitches, some of which would likely stand up in court :twisted: as a 'invalid contract'

I inquired, about the 'cooling off' period which exists in most states. In the great State of KS, no matter what kind of scam you run into, if you (as the buyer) go into someones place of business and sign a contract: LEGALLY you are entirely responsible for the repayment according to whatever terms exist. Period, no renegotiation, etc. If you got ripped off too bad so sad! :eek:

If you, the buyer, CALL a seller of goods and services and invite them into your home, same rules apply. 8O

ONLY if the seller solicts you the buyer off the street or by coming to your door do you get 48 hours to come to your senses. :(

I kind of wondered at a small claims court when all the judge wanted to know is "Is there a contract?"!!!!

-----

:lol: :lol: and speaking of coming to your senses, glad the fine folks on this forum have assisted you to the right and light of how not to get into hot water or flame...

Really, the women on this forum can take a little ribbing and even inadvertant sexism quite tamely, but when we blow the whistle you better listen, or someone will pin your ears back! A wise man recants immediately, or as in your case asks in honest bewilderment "Whad' I DO?!?" :? An since some of us are or have been married we are USED to THAT question :lol: :lol: :p

All direct apologies and "larnin' esperinces" are certainly interesting to watch! No smoke comin from these ears, t'was just a warning shot across the bow! 8)
 
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