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Mortgage rates scream buy, but who is listening?

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posted on Jul, 3 2010 @ 09:54 PM
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Mortgage rates scream buy, but who is listening?


finance.yahoo.com

An odd scene has been playing out lately in the offices of mortgage brokers and bankers around the country.

Mortgage rates have sunk to levels not seen in more than a half-century -- a seductive 4.58 percent for an average 30-year fixed loan. Yet brokers and lenders report not a flood but a trickle of customers.

So what's going on?

Call it a tale of the haves and have-nots.
(visit the link for the full news article)




posted on Jul, 3 2010 @ 09:54 PM
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I thought this might be of interest for some of you. It highlights the lack of work for Mortgage and Real Estate Brokers in this current market. my mother sold real estate and worked in mortgage processing prior to the Dot-com bubble of 2000. She taught me quite a bit and coached me through the home purchase I made recently.

I'm lucky in that my husband is in the military. The market where I live hasn't been hit too hard. Some areas have seen prices go down, but this is actually one of the few cities where prices have gone up for the last two years. It does help that the market never really caught on fire and ran up around here. We were able to finance through the VA and you don't need a down payment to do that if it's your first loan.

Others aren't so lucky though. In this new environment, Banks are wanting good credit and they are demanding larger down payments. Many people who would want to buy cannot do so because of poor credit or lack of funds for down payments and closing costs. This is a case of extremes though. Years ago the banks were letting almost anyone get a loan, now it's lockdown mode. Somewhere in the middle is preferably, but I think it's a fear reaction. Considering the amount of foreclosures coming down the line it's probably justifiable though.

finance.yahoo.com
(visit the link for the full news article)



posted on Jul, 3 2010 @ 10:03 PM
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It reminds me of the "Wizard of Oz."

"There's no place like home.................there's no place like home........"

Many people do not qualify to have a home, so the illusion is real. There is no place like home!

As many more people are now loosing out on unemployment benefits, they will have no home.

Beans and weanies, to people who try to sell homes, too!

Bad, all the way around!



posted on Jul, 3 2010 @ 10:30 PM
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reply to post by Blanca Rose
 


online.wsj.com...=yahoo_hs

They say credit-card numbers got better too, but not for any good reason though. This reminds me of a last year when balances declined but only because of write offs.

I have a twofold opinion about this. Everyone blames the banks. Yeah, they were giving money to people they shouldn't have given it to in any normal circumstance. Then you have the people who took these loans. They should have done their research. So we've got two wrongs, no rights here. They you have Wall Street who was happy to perpetuate the myths and make money off of everyone knowing the bubble would burst. Such a mess.



posted on Jul, 3 2010 @ 11:04 PM
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reply to post by antonia
 


Many, who do have good credit, still aren`t buying because they are not sure how long their jobs will hold out. Would you want to put it on the line and borrow a bunch of money, only to have your job taken away from you a little later? They don`t want to be put in to that position.



[edit on 3-7-2010 by FiatLux]



posted on Jul, 3 2010 @ 11:05 PM
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I am a Real Estate Agent in Florida. During the $8,000 tax credit the gov passed we were doing pretty good. As soon as it was up it fell off the cliff. Fortunately, I sell new homes for a builder and have 4 developments, 3 on an island in N.E. Florida and we still have been selling, but only the higher priced properties > $300K. The regular $120K to $200K has been a ghost town. I look out for the tumbelweeds sometimes. It is the best time to buy with real low prices and the lowest rates in years. In 1980 it was around 17% APR. Most young people don't remember those days. Back then you could assume someones mortgage and that is virtually over now. The banks would rather get you locked into a new loan and forbid assumable mortgages. Just another way to fleece the buyers. We are practically giving houses away because builders are all hungry as are the sub-contractors. Now would be the time if you are fortunate enough and secure enough to believe in your future because it isn't going to get any better price wise. However, I sit there and wonder how some people can get into such a large obligation at the point we are with not knowing what the future holds. There seems to be unending problems and bad forcasts in the news every day. Still some do, but if I didn't have another business (Computer/Network Repair), then I wouldn't be able to stay in the Real Estate market. I have seen most of the 20-30 year veterans leave and take jobs elsewhere 9-5 because they can't afford to make it in Real Estate.

Edit to add: I live near 3 miltary bases and that brings people into my area as well. The gov extended the $8,000 tax credit for military another year.

[edit on 3/7/10 by spirit_horse]



posted on Jul, 3 2010 @ 11:07 PM
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reply to post by antonia
 

Yep, the mortgage rates scream buy, buy, buy! And interest for home loans are rather low. However, I don't know any of my friends or acquaintances who could even get a cheap loan from a bank for a cheap house. That's the reality of it all. And, I suspect, one day talking heads will say, see how inexpensive it was to buy a house with a loan in the 20teens? Stupid people not jumping onto these opportunities back then. lol

This is an example of the story of my life.
I couldn't afford a new car in the early 70's, when the interest paid for a car loan could be expensed on the personal federal income tax return. Then, when I finally was able to purchase a new car using a loan, that deduction was discontinued. lol

Yes, my wife and I have a credit card. We don't use it. We pay it down until, soon, there will be no debt left. Meanwhile, interest rates have dropped, even the banks pay very little interest to the Fed. What about the credit cards? We got a letter from the bank that controls the card. They asked us to sign a form that would allow them to charge us 26.9 percent interest, as a base figure, plus some other sort of level of interest based upon some confusing bs. We said, no. Of course. Our interest rate is much lower than that, but we can't use the card anymore. Oh, wah.lol

As the banks got bailed out, and interest rates from the fed dropped, credit card interest has risen. Makes no sense to me. But, then, again, I am not thinking like the folks at a bank, am I.lol



posted on Jul, 3 2010 @ 11:11 PM
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reply to post by spirit_horse
 


Good prices do not guarantee that those people will still be working two years, or even six months down the road. This economy would have to get one heck of a lot better before many will put their necks on the chopping block like that. That is to great of a gamble to risk.



posted on Jul, 3 2010 @ 11:24 PM
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Originally posted by antonia
reply to post by Blanca Rose
 


online.wsj.com...=yahoo_hs

They say credit-card numbers got better too, but not for any good reason though. This reminds me of a last year when balances declined but only because of write offs.

I have a twofold opinion about this. Everyone blames the banks. Yeah, they were giving money to people they shouldn't have given it to in any normal circumstance. Then you have the people who took these loans. They should have done their research. So we've got two wrongs, no rights here. They you have Wall Street who was happy to perpetuate the myths and make money off of everyone knowing the bubble would burst. Such a mess.


Some friends and I were talking just the other day about the banks. Do you remember back in early to mid 08? There wasn`t much worry about the banks, but when you get to late fall early winter, it was as though someone pulled the rug from under everything, and almost every bank was in trouble. Most people did not see it coming, and were caught in the middle of the crash, and it hasn`t improved hardly one bit from that time on. People are gun shy with banks, and who can blame them?



posted on Jul, 3 2010 @ 11:26 PM
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We haven't even reached the bottom of the market yet. The little government patches were just painting over the rust.

Why get in on a overpriced mortgage now when it may fall 20% by next year?

Largest tax hikes in history are also 6 months away.



posted on Jul, 3 2010 @ 11:36 PM
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reply to post by FiatLux
 


That's why I said:
"However, I sit there and wonder how some people can get into such a large obligation at the point we are with not knowing what the future holds. There seems to be unending problems and bad forcasts in the news every day. "



posted on Jul, 3 2010 @ 11:44 PM
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No one cares about lower mortgage rates because no jobs means no income and therefore one can not be qualified to buy a house.

Simply, don't buy ANYTHING if you can NOT afford to pay.

Besides, only the wealthiest people can put large down-payments in cold hard cash. Who has that much cash on hand?

Also, the banks own the house. So what's the use of putting large amounts of your hard earn CASH into something like a house mortgage? It's like paying a large rent for all we know!

[edit on 2010-7-03 by pikypiky]



posted on Jul, 3 2010 @ 11:49 PM
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One thing to add to this. Years back, it was seen as a good thing to buy a home because it creates equity and you will always be able to get your investment out of it with some left over. If the last few years have shown anything, that was a faulty assumption. Now buying a home just as well may work out to be a liability due to factors outside the buyer or lender's control.

Like any investing, it is a gamble at heart. However if I were to look at it completely as just the home I want to live in for decades to come, the whole equity/liability would mean little to me. My monthly mortgage is simply the price I pay to have what I want.

I too am in the military and until I retire, I will not purchase a home as I see no benefit to it. I will simply rent and let someone else worry about the details.



posted on Jul, 3 2010 @ 11:58 PM
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I'm waiting till the other shoe truly drops. I really think prices could still drop 40 - 50% from here as bad as things are likely to get.

Only things that have been holding the market up to the level its at, are Freddie and Fannie financing uncreditworthy borrowers at up to 125% of home value, ridiculous tax credits, banks holding foreclosures so they don't have to declare losses, artificially low interest rates, and the American people somewhat being fooled into believing the economy is recovering.

All of these factors have ended, are starting to end, or will end in the near future. I think anyone that buys now is really not paying attention, prices have to drop unless the government decides to turn the printing press on full blast, which I doubt will happen.



posted on Jul, 4 2010 @ 08:52 AM
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Originally posted by pikypiky
No one cares about lower mortgage rates because no jobs means no income and therefore one can not be qualified to buy a house.

Simply, don't buy ANYTHING if you can NOT afford to pay.

Besides, only the wealthiest people can put large down-payments in cold hard cash. Who has that much cash on hand?

Also, the banks own the house. So what's the use of putting large amounts of your hard earn CASH into something like a house mortgage? It's like paying a large rent for all we know!

[edit on 2010-7-03 by pikypiky]


It would depend on where you are at. I actually met a man the other day who was under thirty, worked at Sams club and just paid 140,000 dollars cash for a house. He had just squirreled away money for years. He's not the only non-rich person I've met who has done something like that. It is in no way shape or form impossible, it simply requires a discipline most people don't have.

As for it being a large rent, yep it is if you think about it in the terms of "I'll never pay it off". If you pay it off it's yours and no one can kick you out, tell you that you can't have dogs or what color you can't paint your kitchen. I actually tell a lot of people to rent though depending on where they are. Rents are cheaper than mortgages in a lot of the country. Where I am at it's not true. A 3 bedroom house will cost you about 750 a month on average to rent. I'm gonna pay 480 a month for a three bedroom. It's a lot cheaper to buy around here. It all depends where you are and what the market looks like where you are. And of course do your research so you don't buy something over priced.

Certainly if you don't think your income will be steady for the next few years, don't buy anything.



I too am in the military and until I retire, I will not purchase a home as I see no benefit to it. I will simply rent and let someone else worry about the details.


I wouldn't have let my husband do it if I thought we were leaving soon. He got his Air Assault wings years ago however, once you get those around here, well you never get out of here. You'll come back again and again and you will never be gone more than 2 years. I know a lot of people who have never been stationed anywhere else and they've been in 10 to 15 years.




[edit on 4-7-2010 by antonia]



posted on Jul, 4 2010 @ 09:09 AM
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[color=C6AEC7]I kinda mentioned this in another thread, but it is relevant here. My hubby and I both lost our jobs at the end of 2008. At the time we had a mortgage on a lovely wee house we had bought just a few years earlier, one which we felt settled in and assumed we would live in for as long as we wanted. Our jobs, we thought, were stable - we worked at the company for ten years.

After redundancy, we held onto that house for as long as we could, using our savings to pay the mortgage while we looked for new jobs. But after several months, we realised it was futile and we had no choice but to sell. We were very close to repossession but now are thankful that we made it through and came out the other side with nothing financially, but no debts either. We were lucky that way.

Now, after relocating and getting new jobs, we are privately renting (not easy when you have pets) but we dont envisage ever getting a mortgage again - for two reasons.
1. We simply cant afford it just yet - have no money for a deposit.
2. We dont want to find our dream home, buy it, then have to lose it in a few years time if things go belly up again. Its not worth the heartache. We still get sad thinking of the wee house we lost.

So, I suspect that we are not the only ones who are simply reluctant to buy a house at the moment. The economy is too unstable. Thats probably why there is such a low take up of mortgages. Doesnt matter if the rate was negative
still wouldnt be worth the risk now.

Once upon a time, hubby and I thought owning our own house brought stability and security. It certinaly does not. We feel kinda relaxed now, if thats the right word, because we know if our jobs go in the future and we have to relocate again, all we need to do is give a months notice on our rental and go. No worrying about repossession or if anyone will buy the house.

I guess in recent years there has been a big emphasis on owning your own home, as opposed to several decades ago maybe, when it was socially acceptable to rent and the average person didnt feel a big desire to own property.

Maybe things are changing and will go that way again. At the moment though there still seems to be a bit of a stigma, about not being a home owner. Like people think theres something wrong with you if you dont own a house. Which is a dang shame, really.

Sorry for kinda long post



posted on Jul, 4 2010 @ 09:14 AM
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It's a great time to buy if you're not already a home owner, still have a job, and are in the market for a home. Low rates and lots of homes to choose from at bargain prices (at someone else's expense, but that's another issue).

Aside from those foreclosing, I believe many people who already own homes have hunkered down to wait it out...wait for values to increase again to at least to within a stone's throw of what they owe or paid. Whether that will ever happen is anybody's guess, I suppose, but this is what it seems like is happening here.

Our subdivision of 400 homes used to have about a 10% turnover rate every spring. About 40 homes would go on the market and sell within a few months. The past three years, only three have gone on the market. One finally sold after three years. There are currently 2 still for sale...one listed this spring that no one has even looked at and another that's been on the market two years, with one ridiculously low offer.

At least 20 subdivisions within a 5 mile radius have approximately 400 brand new homes standing empty, so if people do buy, they go for the brand new homes now being practically given away at rock-bottom prices and super low interest rates. Add this to all the foreclosed homes standing empty, and you have a glut on the market.

And the bitch of this is that they're still building. They just spent $2 million taxpayer dollars (Reinvesting in America funding) to move an intersection at the top of our subdivision 50 yards so that AT&T and/or a builder who is planning on starting development of 400 new homes didn't have to spend it. Is the builder nuts? The people in the area tried to stop this in lieu of the market situation at numerous town and county board meetings but to no avail. The only thing accomplished was that the builder agreed to put in "less expensive" homes. None of this makes any sense to me.

And as for refinancing to these low rates? Good luck. The usury is continuing. All the programs in place to bail people out in this area have so many loopholes about financial situation and want to tack on so much money on top of what is already owed that the lower interest rates don't matter. Most people wind up in no better shape and are giving up.



posted on Jul, 4 2010 @ 09:21 AM
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reply to post by spirit_horse
 


What about the Oil Spill in Florida, especially along Northwest Florida (Pensacola, Destin, Panama City) and soon other parts of FLorida? Won't housing prices plummet for all the homes within an hour drive of the beach?

Florida is a pretty shaky market. The budget is in rough shape and the infrastructure is starting to suffer, not to mention the cuts that are being targeted for education. Add to that the Oil Spill and it sounds like a bad situation, especially considering much of Florida's workers/economy depends on the service and tourism industries, both being affected drastically right now.

What are your thoughts on that?



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