Homelopnik

"Arrivederci" (arrividerci) 08/12/2016 at 12:43 • Filed to: None

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Sorry that this isn’t about cars, but I just need to vent for a minute. I work in strategic initiatives for a large bank’s mortgage lending group. Just recently, our bank released an internal forecast for what both we and the industry figure the market is going to do and how rates are going to move.

My wife and I recently got married and don’t have a ton of savings. Our salaries are aggressively average, but we haven’t saved very well up until this point. We’ve come up with a budget that should allow us to save quite a bit each year, if we can adhere to it. However, at this point, we don’t have enough for a 20% downpayment. After one year of saving, we should be able to without completely draining our accounts.

Back to the forecasting - so, of course, the forecast shows that over the next 12-14 months, interest rates for mortgages will climb about 1-1.2% and house prices will continue to climb during that time. FML. The difference equates to about $200 increased monthly cost based on rate alone, not accounting for possible inflated housing prices. Over the course of the loan, that would be about an extra $70k wasted.

The alternative(s) of course are a really cheap house now to take advantage of rates, and even do a 15-year note or something like that, or wait, pay more and also buy a less expensive home, but something nicer than you could get now.

I know it’s just a forecast and not guaranteed, but just a little disappointed this morning my fellow Oppos. If you made it this far, thanks for reading. Here’s a GT350R for your time:

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > Arrivederci 08/12/2016 at 12:52

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One-time gift from relatives to bump your downpayment? You could then pay them back once you get settled.

bob and john > Arrivederci 08/12/2016 at 12:52

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you know what terrifies me? the fact that the canadian housing market hasn’t popped yet. and when it does, SO. MUCH. SHIT. with be flung around its not even funny.

I’m glad my parents OWN their house. But it worries me when it will be time for ME to get a place of my own (21 right now)

Ah well. first to get the rest of my life on track

OPPOsaurus WRX > Arrivederci 08/12/2016 at 12:53

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when we bought, we didn;t have 20% which gave us a Private mortgage insurance fee or sum dumb shit. I did a little work on the house and between that and overall house value increases we were able to refinance and get rid of the PMI along with a lower interest rate dropping like $400 a month off our payments.

Ash78, voting early and often > Arrivederci 08/12/2016 at 12:57

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I was fortunate to do a 80/15 piggyback loans (a 5/1 ARM with a HELOC behind it, and 5% down). This was back in 2004 while the crisis was being created, but I’m a responsible borrower and we stayed on top of it. When the rate adjusted in 2009, it actually went down. Then down again. Since then, we actuall refi'd 2 of our 3 mortgages with retired family members to help provide them some income while giving us a competitive rate. This doesn't always work for everyone's situation, but there are a lot of retirees out there with mid-6-figures in the bank, earning 0.25% interest when they could be earning 3.5%+. Win-win. Just get it all in writing...

Spaceball-Two > Arrivederci 08/12/2016 at 13:00

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I work in finance for commercial and residential real estate and the market in my area is scarily over inflated in valuations. My wife and I refi’d our house this year and I magically gained over 100k in equity. I’ve worked in this field for a while now and I even I know this shit is going to go down.

Highlander-Datsuns are Forever > OPPOsaurus WRX 08/12/2016 at 13:03

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I’m in the same boat, I need to re-fi and get rid of that pesky PMI.

415s30 W123TSXWaggoIIIIIIo ( •_•))°) > Arrivederci 08/12/2016 at 13:12

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I’m in SF so I’m just totally fucked!

Spaceball-Two > 415s30 W123TSXWaggoIIIIIIo ( •_•))°) 08/12/2016 at 13:16

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Seattle.

High five!

The Lurktastic Opponaught > Arrivederci 08/12/2016 at 13:19

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Are there any first time home buyers programs you can take advantage of?

Also: if you’re looking to relocate, and can negotiate well, companies will occasionally buy down points on a home purchase if you commit to 2-3 years as a part of a relocation package. In my experience, this tends to apply to extremely large Fortune 100ish companies only.

AfromanGTO > Arrivederci 08/12/2016 at 13:21

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Ok here goes. If you are approved for an FHA loan in some cases you have to put only 3% down. The housing market prices are decreasing right now in urban areas. Now there are a few areas of growth, but that is not the case for most of the country. Also the Fed has not increased or decreased their rate, so mortgage rates will remain low until otherwise. We are beginning a downward trend of housing prices. Most multi million dollar homes are dropping a few million of the price, and homes under a million have been decreasing from 20-200K depending on it’s price range.

Wherever you got that forecast from is wrong, and must be trying to get you to hurry up and buy. You are better off waiting longer, and letting the prices drop more.

jimz > Arrivederci 08/12/2016 at 13:22

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I work in strategic initiatives for a large bank’s mortgage lending group.

do you leverage synergies? or synergize leverages?

AfromanGTO > Spaceball-Two 08/12/2016 at 13:24

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Hey high five! Where are you located at? You should see the market I am in with over inflated values. I had a listing appointment for a 2 bed/bath, and they wanted 1.3 mil for it. When the identical units in the same building go for 400-600K. lol

fintail > Spaceball-Two 08/12/2016 at 13:26

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Bellevue here.

The idea of buying a detached house within a reasonable commuting distance AND having a debt load I would want to assume is some kind of fairy tale. I wonder how long animal spirits, televised RE propaganda, and speculation/money laundering can keep the train on the rails.

Spaceball-Two > AfromanGTO 08/12/2016 at 13:31

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Seattle. It’s getting nutty here. I got my appraisal for the refi and laughed out loud. My little shit box house built in 1959 that I’ve been slowly remodeling over the last 6 years is in no way worth what the report stated. A neighbor recently flipped a house on the block. There was a 9 way bidding war. All cash offers.

Party-vi > Arrivederci 08/12/2016 at 13:32

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Have you purchased a home before, or has she? You may be able to get an FHA home loan with 3.5% down, and you could be given the option to buy out your PMI. My wife (then fiance) and I purchased a home this way and only spent 10% of the purchase price in cash when everything was said and done. We did choose to roll the closing costs into the loan, but we came out ahead I think. Not having to pay PMI every month is a great boon, especially since the buyout for it was less than 24 PMI payments.

AfromanGTO > Spaceball-Two 08/12/2016 at 13:38

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Wow! The West Coast is crazy! Here in Miami it is the exact opposite. Properties are on the market for a year and a half before they sell, and are dropped in price a few times. There is so much inventory that most large apartment complexes have a surplus of a 100 (in the very large complexes) that they don’t even list.

Spaceball-Two > fintail 08/12/2016 at 13:39

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Not sure. I have customers who watch house flipping shows on tv and think “Hey I can do that!” Then they call me and tell me their out of money and the contractor has liens on the house and they need help. Ugh.

I used to work in Bellevue, now in Kirkland and the Eastside is becoming an area that I try to avoid.

Spaceball-Two > AfromanGTO 08/12/2016 at 13:41

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Average list time here is less than 30 days. Problem is there is no inventory.

AfromanGTO > Spaceball-Two 08/12/2016 at 13:45

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That’s a great problem to have! The list time here is so much longer than that. Everything is overpriced and the market has slowed down big time. With the exception of cheap rentals. There is no cheap rentals here. A studio with over 500 square feet listed for around $1,000 will be gone in 2 days. A rental that cost more the $2,500 will be on the market for 6 months.

Arrivederci > OPPOsaurus WRX 08/12/2016 at 14:03

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I absolutely do not want PMI. I had that on the first house I bought years ago and really hated wasting that money.

Arrivederci > AfromanGTO 08/12/2016 at 14:04

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My first house was a FHA loan. I only put down 3% and then was stuck with PMI. I really don’t want to make that mistake again.

The forecast comes from both internal analysts (not me) and from the Mortgage Bankers Association . You may not agree with their assessment, but I do - interest rates are still historically low, and if the economy remains stable, the Fed will eventually increase rates, and mortgage rates will follow. While the two aren’t directly related, if the Fed makes it more expensive for banks to borrow money, you better believe we pass that along to the consumers.

Housing prices here are generally very cheap and have been trending up for the last few years. I only see that slowing when rates start to climb. Then values will probably drop as the buyer pool retracts.

That said, I hope you’re right! :D

Arrivederci > Ash78, voting early and often 08/12/2016 at 14:05

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Something along those lines could be an idea, but rates have to go up. Having an ARM that’s going to reset or having to try to refi later down the road is a little frightening (to me).

Arrivederci > Party-vi 08/12/2016 at 14:06

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I have, but she hasn’t. I think my original mortgage was FHA too. I didn’t know that you could buy out PMI. That’s an option to consider.

Arrivederci > The Lurktastic Opponaught 08/12/2016 at 14:07

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I honestly haven’t met with any of our brokers yet. Before getting myself worked up further, that may be the best bet to see what options they can lay out.

Arrivederci > ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) 08/12/2016 at 14:07

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That’s an option as well - my wife’s parents are pretty well-off, so they could sling us that cash pretty easily. I just don’t want to take money from my in-laws.

Arrivederci > jimz 08/12/2016 at 14:07

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All of the above, baby! :)

fintail > Spaceball-Two 08/12/2016 at 14:13

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Those shows are the propaganda, and they have a huge fanbase. I know a number of people who are addicted to it.

The Eastside, not so good for reasonable housing costs or fun traffic. Good for car spotting, sometimes, or a place to find a time machine, go back 30 years, and buy for nothing.

When a friend of mine had a bidding war on a condo in Everett, and houses in Kent are becoming expensive, things are getting crazy.

Spaceball-Two > fintail 08/12/2016 at 14:16

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My dad had a house in Juanita. He bought it for less than what I paid for my last car. That was 1976. There are 5 houses on that lot now. I'm in Bothell now and it's starting to get crowded.

WiscoProud > Arrivederci 08/12/2016 at 14:18

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Do you have decent 401k balances? You can take a loan from them for the purpose of buying a house and you pay yourself back with interest. Otherwise, if you have some money saved up, you can always just deal with PMI and pay the amount you were going to save onto the mortgage until you get to the 20% threshold to get PMI removed.

Party-vi > Arrivederci 08/12/2016 at 14:20

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You should talk to your real estate agent about that option.

Ash78, voting early and often > Arrivederci 08/12/2016 at 14:27

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Yes, right now is still the time to lock in a 30-year fixed. If you decide to pay it off as if it were a 15-year note (comparable payment), you’ll have it paid off in about 17 years, give or take. I’ve crunched the numbers every which way and still believe a 30-year fixed with good payment discipline (and the lowest possible down payment) is the best credit product of all time. So much risk for the bank, so little risk for you. FWIW, this is a hobby of mine, but I'm also a veteran of risk and loss analysis in banking, too — both consumer and commercial.

someassemblyrequired > Spaceball-Two 08/12/2016 at 14:47

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Yeah Seattle is nuts right now - clown on my street is trying to sell his right next to the freeway house for 50% more than he paid for it TWO AND A HALF YEARS AGO. Probably smart as inventory seems to be ticking up a bit.

Spaceball-Two > someassemblyrequired 08/12/2016 at 14:48

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He’ll probably get it too!

fintail > Spaceball-Two 08/12/2016 at 14:49

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Reminds me of a friend’s family - west of Market in Kirkland, 1980s house, cost 120K when new, per zillow is at 1.2MM now. I also know of a house near me that sold for 53K in 1988, and just sold again for 1MM even - land value. One generation or two hit the jackpot here, and the rest, well, good luck.

I couldn’t even do a Bothell-Bellevue commute, I’d go nuts. I have a friend who lives there, north of 405, hellish commute sometimes. So I get to deal with either an apartment or condo, which in my local experience has all the freedom of an apartment with all the cost of a house.

someassemblyrequired > Spaceball-Two 08/12/2016 at 14:50

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No doubt. We were only supposed to be here two years, so didn’t buy. That decision singlhandedly sent Seattle pricing on a rocketship ride. At least our landlord hasn’t been a jerk about rent increases.

Spaceball-Two > someassemblyrequired 08/12/2016 at 14:53

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It’s to the point now where what you pay in rent is about even with a mortgage.

someassemblyrequired > Spaceball-Two 08/12/2016 at 14:56

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Yep couldn’t make mortgage payment with rent (and forget about taxes/insurance) and I don’t have 120K tied up earning no interest.

The Lurktastic Opponaught > Arrivederci 08/12/2016 at 14:59

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The brokers and a good mortgage person can work wonders.

ADabOfOppo; Gone Plaid (Instructables Can Be Confusable) > Arrivederci 08/12/2016 at 15:16

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I totally understand, but if it can accelerate your purchase, you’ll save far more over the term of the loan than the small amount of humble pie paying back in-laws for their charity. But that is entirely up to your family to decide. Money and relatives can be a sticky mess.

prjct92eh2 > WiscoProud 08/12/2016 at 15:23

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Came to say the say thing. That’s what we ended up doing for our first house to avoid PMI.

notsomethingstructural > Party-vi 08/12/2016 at 15:34

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You can’t buy out PMI since like 2012 or so. Thanks Obama.

Party-vi > notsomethingstructural 08/12/2016 at 15:50

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Whaaaaaaaa really? Guess I got lucky. Damn.

ETA: I purchased my home in 2013. Maybe the legislation did not take effect until after?

ETAA: Single payment mortgage insurance still seems like a thing.

notsomethingstructural > Party-vi 08/12/2016 at 15:56

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Could have been. I applied for two loans, one in 2011 where I could, and one in 2013 where I could not because those restrictions were in effect. “Have 20% down? No? PMI for you.” Boom, done.

MontegoMan562 is a Capri RS Owner > Arrivederci 09/06/2016 at 16:30

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My recommendation?

Do a smaller % down conventional loan. Less down, yes but gets you in on the rate you want and faster. They offer conventional’s all the way down to 5% these days.

If you go smaller payment don’t go 15 year. I always recommend a 30 year that you can pay more if and when you can but you’re not committed to it. This advice saved a friend of mine’s ass recently. He bought a home 3 or 4 years ago that was a great deal and completely comfortable to swing a 15 year mortgage....then his taxes went up, and up, and up, and up. The taxes have more than doubled and he’s selling the house because he can’t really afford it anymore with the 30 year mortgage. He’s well over 800 a month in just taxes. Insanity.

Just my two cents. I think my current mortgage is a 15% down conventional.

Dru > Arrivederci 09/13/2016 at 15:02

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This seems to be more of a west coast phenomenon. Here in coastal SC, home values have been creeping up slowly, to the point my little 3 bed ranch gained a minimum 10% value from 2013-2015. But lots of retirees come here. They sell a mediocre house for 400K in New Jersey and find out they can live in a mini mansion here for that price.