Housing Crash Part II

Nice article in the New York Times outlining it.

Low interest rates have people refinancing, but there's a total lack of new houses -- for a number of reasons -- making it extremely difficult to find a decent house to buy, especially young and first time home buyers.

www.nytimes.com...

a reply to: Edumakated

The vast majority of people are better off taking an ARM instead of a fixed rate mortgage.

Yes and no.
The problem will be when housing starts to crash, the ARMs will go up, but the value of houses will go down.
Many people will be stuck.
Just like what happened in 08. In Florida people literally abandoned their houses they were so underwater.

An Arm is OK if the person knows they are going to move and have enough equity in their house and can sell quickly.

What really caused the last one was the subprime loans and anyone with a breath could get one. Not the same anymore...The level of paperwork is crazy now. I'm 800+ credit and it was a bitch, so so what if you refinanced your house its not like you and millions are going to stop paying because you really couldn't afford it in the first place, so doing a variable loan rate that just pays the interest and then the interest shoots up is kind of another thing that allowed people to just walk away from their homes.

a reply to: AugustusMasonicus

Plus my mortgage isn't the bulk of my monthly payment, it's my property taxes.

I feel your pain brother, or at least, I used to.

BTW - What state do you live in?

When I first moved back east from CA (work related move to CA) my wife and I bought a nice Dutch colonial in Katonah, NY - which is in Westchester county. Katonah is an amazing town, BTW. No chain fast food restaurants allowed - and no chain drug stores either. You have to eat and/or shop at a locally owned store or go to the next town over if you want those.

In any event, they did a reassessment of my house/property after we bought it and my taxes jumped to over $23K per year. Are you kidding me?

I decided to move 20 minutes north to Danbury CT. I got a far nicer house, 4 times the land (from a 1/2 acre to 2 acres) and my taxes were a shade over $3k per year! That was both school and property taxes. We felt like we hit the lottery!

First mortgage in CT was at 11%. Re-fi'd at 7% and again at 4%. The bank that held our mortgage did the re-fi's too as they didn't want to lose our business.

Well if it holds for 3 more years I'm good since that is about the time I sell my house, then I can jump back in on the low end again.

originally posted by: TrulyColorBlind

originally posted by: Edumakated
a reply to: JAGStorm
You still have some crappy FHA and VA loans at the margins

Could you please explain what you mean by this statement? I was thinking about getting a VA loan and am curious as to what that might entail. Thanks in advance.


TCB

Both fha and VA aren't as strict with borrower qualifications. FHA you can buy with 3.5 percent down. However, you combine that low down payment with bad FICO scores it is a recipe for disaster. Most lenders will do an FHA down to 580 FICO which basically means the borrower hardly ever pays on time... these are borrowers who are basically a broken furnace away from foreclosure in many respects.

VA allows 100% financing. Great loans but again, they will go down to 580 Ficos.

These loans essentially have replaced the subprime loans of early 2000s.

VA is the best loan available. Especially if you have a disability rating then you have no funding fee.

a reply to: JAGStorm
What folks don't know with these type of equity loans , there may be a huge surprise in store.
It's called a "balloon" payment.

a reply to: JAGStorm

You do know what "VARIABLE" means, don't you? In 1999, my 30 yr rate was 3.575 fixed, we paid it off in 15 years, saved about $80,000 in interest.

a reply to: JAGStorm


Demand Fixed , or Walk away .

originally posted by: Zanti Misfit
a reply to: JAGStorm


Demand Fixed , or Walk away .

Oh it is fixed, I wouldn’t do anything else.

W3e don't owe anything on our house, and won't be borrowing against it anymore. It is nice not having a house payment. We got a loan on our car so we could feel like most people, having debt makes you normal these days. We were feeling left out. We could have paid it off, but the interest rate was low.

VA loans are a mixed bag. If one has iffy credit and low income probably a good idea. If your credit is good, decent down payment VA is not the way to go. The rates VARY region to region and better rates are out there with good credit. One way to use Veteran benefits BEFORE buying is find the most Veteran friendly state like TX for example. If you are 50% disabled and have a Purple Heart hate to say this but you are an idiot not living in a state like TX. Discount on property taxes and free tolls for starters. There is also the TX landboard, cheap loans! Many other benefits. Not all states are equal on those grounds. Look into it, do research but TX was the way to go for me.

Dude, I could have written that exact statement word for word in Florida in 2004.

If I knew what I was doing I would be watching out for a new investment tool like the Credit Default Swap.

If the Big Short movie was correct....nothing changed.





a reply to: PraetorianAZ

a reply to: Edumakated

I’d say having a fixed rate of 2.75% at 30 is pretty damn good right now. Rates won’t stay that low, in fact they are already going up.

That’s why there was/is a hot housing market right now.

originally posted by: Riffrafter
BTW - What state do you live in?

I'm in Essex County, New Jersey, where I get to help pay for the school budgets of towns I don't live in.

In any event, they did a reassessment of my house/property after we bought it and my taxes jumped to over $23K per year. Are you kidding me?

I have you beat.

I decided to move 20 minutes north to Danbury CT. I got a far nicer house, 4 times the land (from a 1/2 acre to 2 acres) and my taxes were a shade over $3k per year! That was both school and property taxes. We felt like we hit the lottery!

First mortgage in CT was at 11%. Re-fi'd at 7% and again at 4%. The bank that held our mortgage did the re-fi's too as they didn't want to lose our business.

That's a beautiful part of the state, I really like NW CT.

A fixed rate of 0.5% for a run-time of 15 years is the normal right now in Germany.
Just renegotiated my old mortgage and got this.

I started with 3.9% and paid dozens of thousands just in interest on the old contract. Was not the best experience I had, but one or two decades ago 7% were the norm.

Sorry I disagree! The first crash occurred because wall street created several types of super risky loans. I was a lender back in 2006-2008 timeframe and what caused the bubble imo was the loans like the following:

100% financing no doc, stated wage earner with lower credit scores, option arm (neg am) almost all of which where tied to libor and they where 2/28 or 3/27 so after the initial fixed period as the indexes went up people got stuck with much higher payments after the fixed period.

What we are seeing today in increased values is due to natural supply and demand. Tons of demand and limited supply some of which is due to covid!

a reply to: JAGStorm

a reply to: AugustusMasonicus

I have you beat.

Wow. I hesitate to ask...actually I won't ask.

That's a beautiful part of the state, I really like NW CT.

Me too. I'm actually as far NW in Danbury as you can be. I'm closer to New Fairfield than I am to downtown Danbury. I was also less than a 1/2 mile from the NY border - Brewster.

I'm in Essex County, New Jersey, where I get to help pay for the school budgets of towns I don't live in.

Ouch!

Parts of NJ are really beautiful too. From much of Sussex county in the west to every shore town from Avon-by-the-Sea to Cape May. And Princeton is beautiful - almost like it's own country.

I still go to LBI every September right after Labor Day. Rates drop 50% or more for weekly rentals.

I’m a MLO and I feel Ike you have no idea what you’re talking about. You have to have good credit to take advantage of that offer and it’s not even that great. We were seeing rates as low as 2.875 fo the last 2 years but things started to look weird last week. We are nowhere near another 2008. Rates are up slightly, that’s all.

a reply to: peter_kandra


Nobody uses libor anymore. In fact it’s being phased out at the end of this year.