Higher interest rates crush mortgage application volume, down 9.4%

a reply to: Darkmadness

I would also advise to buy an apartment if you can. Think of buying a two-bedroom and rent a room out for $500-$700/mo is low for around here. You got that money coming in plus save what you can when the value goes up you sell and buy a house with a rental.

I bought my first house this year and man there's nothing like it. Mone has no rental but I will make money off it when I sell. I closed in May, if I sold right now I would make $50-70,000 profit because prices have rose that much since the spring.
Whenever you can, make that move.
MARK MY WORDS, the next four years the rates will rise sharply. I have heard Trump state they're artificially way too low. He expects them to be much higher. Buy right now.

a reply to: VinylTyrant

$50-70,000 profit because prices have rose that much since the spring.

See.. this is exactly what scares me about the market because I KNOW that incomes haven't gone up in the same %.

That to me is exactly like the stock market trend that's been happening since Trump took office.

NOT good.

a reply to: Darkmadness

True, but at the same time as another poster pointed out, depending on where you want to buy the demand keeps prices moving up. I do expect a fall soon, happens about every 7-10 years. The last was 2007-2008, we are ripe for another.
If you have rentals and a decent job you can hold on for the down swing and in four to eight years, at the peak you sell.
About 2011 was the latest low in prices. Whoever bought them can make a small fortune selling right now. Seven years of sitting on that property, there's houses I know of you would make more than double or possibly triple what you bought for.

a reply to: Darkmadness

Also I would say seriously think about moving or buy where markets are strong and rent. Nothings easy , but when I see people here illegally and making a killing it hurts me to think of Americans who struggle or think they can't own. And those guys pay their taxes and don't collect anything, have no education and both make over $100,000/yr.
Its all possible.

a reply to: Darkmadness

This thread was an interesting read. My two cents on the topic in general....

I understand/sympathize/empathize with people that aren't able to purchase a home at this very moment. While it may not be as difficult at it appears to some.... it is also not necessarily a walk in the park. Even with FHA (and other) loans which ease some of the down payment burden, there is still a considerable amount of money that people need to have saved up. It's not just the down payment but all the other costs associated with closing (the lawyers fees, paying a surveyor if warranted, inspections, funds required by the lender to be held in escrow). I suspect there are a lot of people out there who are in the situation my wife and I were in for many years where our income would allow us to cover a mortgage/insurance/taxes but we had difficulty amassing that large up-front cost.

That being said.... I shake my head in disbelief when I hear people smugly say, "Meh, it's not worth buying/owning a home." I'm not sure if that is a lack of understanding or simply cases of "sour grapes."

While I don't agree with people who say "If you're paying rent your throwing your money away" because we all need to a place to live.... there is some truth to it in the sense that as a renter, you are essentially paying the landlords mortgage and with each rent payment, the landlord gains a little more equity while the renter really gains nothing (in the big picture sense of the word).

We purchased our first home a few months ago so beyond the down payment we've only made a few mortgage payments. However, I do need to point out that with each mortgage payment we make, I smile knowing that we've gained that much more equity in the house and that the balance shifts a bit more in ownership from the bank to ourselves. As people who grew up poor it is a remarkably good feeling to have (and one that early on we were never really 100% certain we would ever experience).

Another thing about owning, as mentioned by someone else in this thread, is that you have that much more control over your life. No more can you have a landlord call you and say that you have to be out in X-weeks or months because they are selling the house or their son is coming home from college. Beyond the Building Department (which can be a pain to work with but ultimately most rules are reasonable), nobody can tell you what repairs or modifications you can or cannot make. Nobody can tell you what types of pets you can or can't have. Nobody can tell you that you can or cant install a pool or a fence.

To incorporate the comments of another poster in this thread, all of the above really does get compounded when you have a child (or children). That added stability is even more important to the parents (and I believe the child/children pick up on that as well). I am NOT saying that anyone that rents and has kids is a bad parent. I'm NOT saying that at all.

As far as investments go.... I WISH I had money to properly invest in real estate. Just watching what has been going on in the towns near me (tons of "luxury apartment" buildings going up where small strips of storefronts used to be) I've looked at some empty lots that are going for anywhere from $200,000 to $400,000. It's only a matter of time before developers get the right local politician to change some more zoning and they will make millions upon millions. So, if I were to own even one of these $200,000 lots the developers (from my experience working with/for them) will easily and quickly purchase them for two to three times that price (if not more).

As far as OUR house as an investment.... I don't really look at it as a money making scheme. Based on our geographic location it's reasonable to assume that despite the ups and downs in the market, overall the value of the home (even without our improvements) will go up over time. That being said, when the next crash happens and if my house becomes "worth" less than we purchased it for.... I won't lose one minute of sleep over it. It is still OUR house. Our little piece of this Earth. Our little kingdom. Again, we would be paying rent to cover someone else's mortgage so at least not little by little we are investing in ourselves.

Best of luck to all.

a reply to: eluryh22

Good post thanks.

When you consider:

1. The horrendous amount of interest payments over 20 or 30 years.
and
2. That you can't take the home with you to heaven.

It's great that interest rates are increasing. Not buying a home will force a lot of people to live higher quality lives! Get a cheap apartment...travel the world...enjoy your life!

It's rising and will rise much more once Trump starts all his plans to enrich the bankers by jacking up interest rates, getting rid of the fed and the stupid gold standard.

No one will be able to buy a house, and anyone who has debts with rates that can change (credit cards, adjustable mortgages) will be paying a fortune in interest.

a reply to: carewemust

1. The horrendous amount of interest payments over 20 or 30 years.

I'm always curious why people think that rents (that typically increase in somewhat regular intervals) don't have the landlord's interests payments incorporated. Same as with property taxes. Whether or not people own a house/apartment... they are paying interest to the bank and taxes to the gubment.

2. That you can't take the home with you to heaven.

Absolutely correct. You can't take it with you when you go. However, it's nice to have a place to host family gatherings or have friends over and build up memories in a familiar place. A place that you essentially have complete control over.

Although you can't take it with you... depending on the "death tax" laws at the time... it may take some legal/fiscal maneuvering... but you can leave it to your kids so that they can continue the climb up the financial-class ladder that you had started (or continued from your parents before you).

Not buying a home will force a lot of people to live higher quality lives!

I'm not saying you're necessarily wrong but I'm not understanding the logic. As has been discussed in this thread, provided one can come up with the up-front costs... the difference in month-to-month costs between renting and owning comparable places is negligible. So how does renting "allow" for people to have such a higher quality of life, let alone "force" people to...?

Get a cheap apartment...travel the world...enjoy your life!

I can't possibly argue against that philosophy. Just as I have my dreams/goals/wishes... so does everyone else. If people want to travel and venture throughout the world and play it on the fly as they go... God bless 'em.

I would only provide a caution that while being broke and adventurous is (seemingly) amazing in ones twenties or early thirties.... being broke later on in life gets very tiresome and very old very quickly.

Again, and I do mean this sincerely, to each his/her own. (I just don't want people that didn't prepare for their future to come knocking on my door decades later saying that I owe it to them to take care of them).

originally posted by: CB328
It's rising and will rise much more once Trump starts all his plans to enrich the bankers by jacking up interest rates, getting rid of the fed and the stupid gold standard.

No one will be able to buy a house, and anyone who has debts with rates that can change (credit cards, adjustable mortgages) will be paying a fortune in interest.

Rates will definitely rise because (I suspect) they have been kept artificially low (just like "unemployment numbers" are kept artificially low).

But the rest of your post confuses me. If Trump wants his banker friends to make tons of money... and (as has been claimed by many within this thread) the banks/bankers make insane amounts of interests off of mortgages....then why would "they" make it impossible for people to purchase homes. They will give up all that essentially free money for nothing?

The bit about rates that can change, changing... you're completely correct (as far as I can tell).

One last thing (and perhaps this is something someone with more knowledge can shed some light on).... why in the world would anyone ever get an adjustable rate mortgage? I'm not being fresh or anything. I'm really curious. The product exists so it must have a purpose but I can't figure it out.

One of the greatest things about purchasing our home was that although taxes may go up (and down as we file grievances)... in general our mortgage payments will stay the same essentially forever. Using past history as an indicator of the future... over the years our salaries will increase but our mortgage will remain (basically) the same. Who in their right mind wouldn't go for the fixed?

Again... I'm sure there is a reason so I'm asking the question to gain some insight.

There's nothing wrong with purchasing a tiny little sugar shack for your first home.

That's how most of us first started out in home ownership.

It's a wise investment and helps you to take your first step in home ownership because of the affordablility. And over time, that equity enables you to slowly work your way up the ladder into a nicer home for yourself. Another important thing to note is that with today's low interest rates, the mortgage on a small sugar shack would be less than half (if not a third) of what you would pay for renting someone else's property.

You become the king of your own castle, no matter how small that castle may be.

Why would anyone prefer to line someone else's pocket rather than lining their own pocket ?

Everybody needs a roof over their head, so why not have a roof that benefits you and yours ?

originally posted by: eluryh22

originally posted by: CB328
It's rising and will rise much more once Trump starts all his plans to enrich the bankers by jacking up interest rates, getting rid of the fed and the stupid gold standard.

No one will be able to buy a house, and anyone who has debts with rates that can change (credit cards, adjustable mortgages) will be paying a fortune in interest.

Rates will definitely rise because (I suspect) they have been kept artificially low (just like "unemployment numbers" are kept artificially low).

But the rest of your post confuses me. If Trump wants his banker friends to make tons of money... and (as has been claimed by many within this thread) the banks/bankers make insane amounts of interests off of mortgages....then why would "they" make it impossible for people to purchase homes. They will give up all that essentially free money for nothing?

The bit about rates that can change, changing... you're completely correct (as far as I can tell).

One last thing (and perhaps this is something someone with more knowledge can shed some light on).... why in the world would anyone ever get an adjustable rate mortgage? I'm not being fresh or anything. I'm really curious. The product exists so it must have a purpose but I can't figure it out.

One of the greatest things about purchasing our home was that although taxes may go up (and down as we file grievances)... in general our mortgage payments will stay the same essentially forever. Using past history as an indicator of the future... over the years our salaries will increase but our mortgage will remain (basically) the same. Who in their right mind wouldn't go for the fixed?

Again... I'm sure there is a reason so I'm asking the question to gain some insight.

Adjustable rate mortgages save most people money. They also can adjust down depending on market. Typical arms are fixed for 5, 7, or 10 years . If your time horizon is shorter you are better off with an arm. The average mortgage is only 7 years old. In other words, people move or refinance every 7 years so they get zero benefit from a 30 year fixed rate.

originally posted by: Darkmadness


Thus... I am part of generation own nothing, no job, no retirement yadda yadda.

It's because young kids are lazy.

Long gold, long silver and oil.

For many years I have held the view that the powers that be do not want any of the masses to own anything. I think TPTB has as their intention to have virtually all wealth in the hands of the elite and to keep the masses in a state of dependence on them. Evidence of this the use of copyright law to stop people from owning anything. Ie, you do not own the car you buy because you do not own the copyright on it, The same with the clothes you wear and just about anything else.

I think this goal of theirs will be achieved by having a welfare system that we, the people, cannot do without but which we also cannot live on either. Gotcha right where want you!

Note; that Chinese workers earn sweet fa compared to US workers as per as measured using an affordability index that has integrity in it.

They will achieve and maintain this situation through cheap nasty platitudes such as 'The kids/people of today are lazy etc.

If you don't plan on buying a home, I suggest you consider buying gold every opportunity you get. The 'price' of gold may appear to rise and fall but in reality the price of gold should be read in reverse. Ie, if gold is $1,000 per ounce then it really means that $1.00 is worth one thousandths of an ounce of gold.

For this reason gold preserves purchasing power in times of both high and low inflation. If you have gold you dot have to worry about inflation. Inflation is the destroyer of personal savings.

The banks own the money supply so they can ramp up inflation anytime they like and as often as they like. They can organise booms and busts at will. There is no law in any land in the world that sets minimums and maximums amounts of credit banks can create.

originally posted by: Edumakated
I work in mortgage finance. Rates rose sharply but are still low historically. If you can't afford the home at 4%, you can't afford the home at 3.5% imho.

Doesn't that depend on the size of the home? Some people go for the most they can buy at the time, because the larger the initial investment, the bigger the payoff as real estate values rise. This is actually what gets people into trouble, when interest rates rise. It's not that they couldn't afford "a home", rather they leveraged up to the "largest home" they could afford in the moment.

dont let this internet garbage scare you out of a home .
MY son is 22 bought his first home (yea it can be done you dont need to be 30 )
3.1 FIXED rate no early payment pentile 720 a month covers it all 3 bed two bath nice place you would be paying HIM
1200 a month to rent it .Nice neighborhood as well .
O lets not forget teh fact when he has it payed off in 15 years he never pays rent again .
property tax ooo 900 - 1000 a year yea dont buy a house just pay a million over your life to rent and when you die your kids have nothing .
who is this post trying to fool the housing market is a BUYERS market and will be for another 20 years because of teh banking fesico .
yea go ahead pay 900 a month for taht crappy apartment you live in when you can have a 3 bed room house for 110 k
Stop running up credit card bills maybe your credit will rise . My son only has one other bill a car payment which he has dobbled payments and will be done in January . You can do it as well its not as hard as you think (stop wasting money on usless things pay off 1 credit card keep it use it pay it off every month and your credit will be 700 in two years just like my sons.
So funny when i bought my home i got 5.3 fixed and man that was good 3.1 omg lol yea pay rent.
in 10 years taht rent will pay for a house in 20 you bought 3 but own nothing.
The guy who does own it he loves you .

originally posted by: AMPTAH

originally posted by: Edumakated
I work in mortgage finance. Rates rose sharply but are still low historically. If you can't afford the home at 4%, you can't afford the home at 3.5% imho.

Doesn't that depend on the size of the home? Some people go for the most they can buy at the time, because the larger the initial investment, the bigger the payoff as real estate values rise. This is actually what gets people into trouble, when interest rates rise. It's not that they couldn't afford "a home", rather they leveraged up to the "largest home" they could afford in the moment.

If your budget is that tight where a 50bps or even 100 bps rise in interest rates makes it unaffordable, you can't afford the home. It really is that simple. First off, your property tax bill will go up probably more within a year or two of owning. Second, owning a home is expense in the sense that as the owner you are responsible for upkeep and repairs. You have lawn service, utilities, cable, internet, and god knows what else to keep the place functional.

The problem is mortgage underwriting does not look at all these other expenses when qualifying for a home. People always qualify for more than they can really afford.

I see people all the time who stretch to by these McMansions and yet they can't afford to furnish the house. Literally in a $800,000 house with Ikea furniture and futons. Or they can't afford to buy window treatments. Far too many people are one broken furnace away from foreclosure. God forbid they have to come up with $5k for some unforeseen repair.

well now we are talking about fools . my son could easly have maxed to up it to 250 300 k even.
But out of the six i had hes is smart enough to listen . and in a years time he will be even set against any kind of job problem .
right now he relies on his job next year his job will relie on him (he will be a subcontractor by then )
and will dobble his earnings as well .
Buy the time he is 40 he will be working because he wants to not because he has to .
Hard heck yes got to start younger and younger still possible ? well yes but there is luck involved as well .
strangly enough in his case bad luck helped more then any other luck.
after all no matter how good you are it has to be there to get . and most places it just isnt there.
renting to me is a no other options thing . Stuck in a crappy city jobs in and out low wages what choices do you have?
Moving to another crappy city?