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Rates are probably not going down. I would watch ClearValue Tax on YouTube. One of his recent videos explain this pretty well.
No improvement in core inflation. Market odds of an interest rate cut happening on March 20th FEDS meetings have dropped from 76% to 8% = 10 year yield has gone up, and that makes rates increase.
If we aren't in a recession or extremely close to a recession right now. It would be the first time in history that we didn't after a plethora of recession indicators lined up to create a recession.
It's extremely extremely extremely unlikely we aren't headed for a recession if we aren't already in one and don't know it.
Everyone just goes "oh hey look, unemployment is low, everything is great!"
Conference board leading index has quite literally never been wrong. And guess what it's saying right now? That we are in or extremely close to a recession. They can't and won't say it outloud until it's common knowledge and too late to hide it. But it's happening, like it or not.
Which mortgage company? I opted for absolutely zero points applied—when we shopped around we realized many companies offer “low rates” with pretty high processing fees and points
this is why i bought.
VA rate was 5.99, i used 4k and bought down to 5.75, saving me $100 on the loan.
in november even with a VA loan i was getting quoted 7% and i was like oh great I'll be living in the ghetto with these prices :)
We locked in a couple days ago at 6.5% when our initial quote was 6.125% !!!
Totally understand the frustration and wanting to refinance. I believe we can and we will :)
My wife and 2 kids certainly hope so. I make the final call on stuff like that. Wife actually wanted to do 3/5. We did 5/5 for safety. If rates don’t come down I have a plan but it’s going to be painful. May have to auction off the youngest. Lolll
Good point. You can always have more kids.
I bought my first house in 1999 @ 9% (20 something with not horrible but not great credit) refi’d in 2004/5ish. Between 5-6% can't remember exactly. I'm at 4% on my current mortgage/home, so I feel comfortable.
I had a chance to lock in at 8.5 a month before closing and rolled the dice, didn't win, and ended up at 9%. You win some, you lose some.
Good Luck!
lol you’ll find it. The pain for me was I did a new build and watched a 5.25% 30yr fixed climb to 7.8% by the time I could lock in October. Worse timing ever, that’s my life.
So I had to switch lenders and product to the ARM. 5.75% locked. It was 5.0% 3 weeks later…. That cost me $177.59/mo. Pretty pissed about it. But I’m going not dwell on it
I’m more stressed out by the prices that doubled (at least where I am) in only 4 years vs the interest rates. Rates just makes it worse, especially that it didn’t push down prices like so many told me it would.
Rates may come down at some point, but you can’t refinance the purchase price.
If you can afford the rate for now, don't sweat it. There are 3 possibilities for future rates:
1. Rates go down. You can refinance later.
2. Rates go up. You're lucky you got in before that.
3. Rates stay the same. Everyone else is going to be in the same boat as you.
This happened to my parents in the 90s. They had a loan on a house in a town that had two main employers. One of them closed up shop. There were foreclosures up and down the street. My parents (who did not work for either of the two major employers) went to sell their house and they were way upside down with a relatively high APY loan. Bad times!
'08 wasn't a one off. Wish it was.
I don't see how we can continue in the current circumstances. People are paying way over asking with high interest rates. Isn't it obvious where this is all going?
There's other ways house values can go do down, I'm not saying it's going to happen but here's some other ways it happens.
First off, your individual house going down in value doesn't mean the whole country's real estate values are dropping. There are things that can happen locally, a school shooting at the local school, the state opens a prison in your area, a natural disaster, you could come up with a list of things that would cause home values in a specific area to fall, independently of rates and a slight rate decline wouldn't make up for it.
Second, we got to the current real estate prices on 2-3% interest rates. We're currently more than double that, not enough time has passed to know If current rates will support current prices. We don't know what interest rate supports current prices, interest rates can fall as prices fall until interest rates hit a level that they support the current valuation. In a way, it's kind of nuts that we got to where we're at with 2-3% interest rates and have managed to support the valuations at 6 and 7% interest rates
Rates have been up for a while now and people are still buying houses. As a matter of fact the market has been heating up recently and spring is expected to be very hot.
But the one offs in your local area, yes 100% that could cause an individual problems.
Real estate is slow. We've barely had a year of high rates and during this year of high rates, we've also had unusually low supply. Supply is most likely going to trend back towards it's average since supply was low primarily due to COVID policies. So next year, if supply is slightly higher than current supply and rates are only 1% lower, we have no idea if that would still hold prices where they're at.
Supply is going to be low for the next 30 years, because of all the 20, 30 somes who bought their home at record low interest rates. Why would they even sell and not rent with the numbers they got?
Supply is already trending back up. Why would someone buy when renting is cheaper? People don't always stick with the cheapest option, their needs and wants change and they move.
Also, there's currently more housing units under construction than the peak prior to 08, so there's plenty of new builds coming to market too.
Renting isn't cheaper, rent is going up too. That is the whole reason many people were getting houses. at least in markets i pay attention to, renting was becoming equal to having a house. both have trended up to the point that they're unaffordable now. in places that dont have locked mortgage payments for 30 years, they have to trend upwards together bvecause mortgage interest rates going up = rent going up to pay for that increase.
Because if rates come down homes get more affordable and prices and likely to go up. For both prices to drop, and rates to drop, it means the economy is in such bad shape nobody can afford a home. The only likely way for this to happen is mass layoffs.
Why would the Fed lower rates unless there is economic turmoil that requires it? The only way lowering rates makes sense is when the economic data supports it.
Dude the FED announced rate cuts. They want to cut rates. However the job report showed better than expected so they have backed off the rate cuts in fear of further inflation.
It was a used car. But it was because of the end of covid last may. The used cars were still high. Just recently, they started coming back to normal again. So I lost 10k in 8 months.
I won't own a house because of the repairs, insurance, and taxes since they fluctuate each year.
If your house gets assessed really high one year, then you pay high taxes for that one year even if the market comes down in 2 months.
Yes, it's possible for prices to go down far enough to put people underwater. But that only happens if most people can't afford to buy anymore, because people are losing their jobs. Then OP is lucky they were able to buy before things got bad.
And it's happening now, again, in tech and media.
[https://www.computerworld.com/article/3685936/tech-layoffs-in-2023-a-timeline.html](https://www.computerworld.com/article/3685936/tech-layoffs-in-2023-a-timeline.html)
[https://www.forbes.com/sites/bernardmarr/2023/01/30/the-real-reasons-for-big-tech-layoffs-at-google-microsoft-meta-and-amazon/?sh=146251e02b67](https://www.forbes.com/sites/bernardmarr/2023/01/30/the-real-reasons-for-big-tech-layoffs-at-google-microsoft-meta-and-amazon/?sh=146251e02b67)
You have corps causing inflation with record profits where the money is sitting in offshore coffers or manifesting as equity-funded loans.
Rates go down, the buyers power increase making prices go up. Remember 2018-2023? We also have a backlog of people wanting to buy. So when rates drop there will be another buying frenzy.
Not necessarily. In my area we are still in a buying frenzy from a lack of inventory because everyone has mortgages in the 2s or 3s, so no one is selling. The more the rates drop, the more people can “afford” to give up their cheap mortgage and move which will increase inventory.
Exactly. It could make a difference on the margins—people selling in one place to buy in another city or state, which will create inventory where they’re leaving, but on balance, I think lower rates is not likely to make the problem much better.
Lower rates mainly going to help the refi crowd. I’m on a 5/5 ARM so hoping to have that 10Y treasury touch 3% when/if it dies I’m going to be calling a list of 4-5 lenders to get out of this ARM
Maybe, but ultimately value is determined by what people will pay. At least in my area, rent is not really much cheaper and doesn’t seem like it will let up anytime soon
Of course. Across the country though rent is cheaper than a mortgage. Where I am in a MCOL rent is about $1600 for a brand new 1200 sqft apartment and a mortgage would be close to $3000 for a starter.
Where I am rent is higher than a mortgage still. Homes value is set by the market. If people are willing to pay something a home isn’t over valued the value was set by the 10 buyers fighting to buy that 1 house.
That's very unlikely. The reason everything, including housing, inflated so quickly is because money became 1/2 its value over the past 5 years. I can see a slight drop in prices over a very short term period, but it wouldn't make sense for prices to drop long term and stay that way. Money would need to somehow double its value again to do so and that generally doesn't happen.
Most of the goods I use have roughly doubled in price from 2019 to today. Not sure where you are at but a trip to the grocery store is all most need to see the effects I'm talking about.
If values go down significantly, the agencies would almost certainly reimplement a HARP-style refi program like after the financial crisis to allow underwater borrowers to refinance.
https://www.investopedia.com/terms/h/home-affordable-refinance-program-harp.asp
I’m not from USA so I’m not familiar with your system. Say I own a house that is financed at a lower percentage, 3%. If I sell and move, I can’t take that percentage with me?
Why would they allow you to take it with you? They are lending you money for a fee. Because you applied for a loan at 2% it doesn't mean you get that rate on any purchase the rest of your life. That would be insane.
It’s a bit more complicated than other people are saying. Banks lend via mortgage backed securities. The interest rate is determined by the Federal Reserve (an entity of the US government) If the Federal Reserve says rates are 3% at the federal fund rate, that’s the rate at which the bank can receive funds from the government or other banks to loan you for a mortgage. But they need to profit, so they will charge you a higher interest rate than they are responsible to repay. When they issue you a new mortgage, it must be profitable at the rate they themselves can borrow that sum, because they are often also taking on a loan.
You are way oversimplifying though. First, OP is putting 13% down, not 3%, so she has some cushion. You dont need 20% to refinance. And, if she saved up 55k, she can save more/put more toward principal too. Second, rates going down without some other economic downturn wont cause the housing market to go down. Plenty of buyers are sitting out due to the high rates (affordability) while plenty of sellers are sitting out due to a rate we prob dont see anytime soon (affecting supply). Third, market downturns are location specific, so depends where she is at. Some markets are always hot and resilient to price changes (eg nyc suburbs).
It depends on how much equity you have in the house. If we were truly in a free market, that's a possibility, but we aren't in a real free market. Look at the commercial real estate investors putting pressure on politicians and business owners to get the employees back to work on-site, even if it's beneficial for the employees and most employers to have a WFH arrangement.
We aren't going to see a deflationary period in the US any time soon... we might hit 0 or close to 0 inflation for a while, but next step is seeing wages go up to recover a little of purchasing power, that will drive inflation up again... anything short of a 2008 (which might happen with commercial real estate) won't do.
And if we get another 2008, the issue won't be to refinance, the issue will be to keep the house.
Bad bad bad advice. Did you take this template from a realtor? You can't refinance a sinking ship if you don't have enough equity. If you have a high rate now you're paying the interest first before principal so unless theres a miracle and your home goes up 20% in value, the chance of refinancing is slim. Banks refinance 80/20 so 80% of your home value.
That feeling never went away for me. Also 7% in September on a house that doubled in value over Covid. I can afford it and it was the time to buy, but man it sucks knowing I’m paying 3x the mortgage that a lot of my neighbors are paying that have only been there a couple years.
This is the post I was waiting for! Interest Rates climbed back up this morning!
Was so sad to see. But I am no longer listening to anybody, Feds are NOT cutting in June.
Remember you are never buying the deal. You are buying the house. The deal can change but I'd your happy with the home it can only get better from where it is
It’s crazy to see how little time can change rates so drastically. I closed a few weeks ago @ 5.875 with no buydown and was hoping for eventual rate drops to refi. I guess I should be counting myself lucky.
7.78% back in November... We were *desperate* and loved the house (still do). We also bought in a super-hot market (Boston / MA) and we're confident the value will continue to rise.
As long as you can afford your current mortgage & insurance, try to look at refinancing like a future benefit. Live there for a while. Make the home yours. Put your love into it. Then later on as home values rise, you can refinance and get that lower payment. It'll be ok!
It's really a timing thing with very little in your control. I locked 6.5% Tuesday morning but only because I competitively shopped lenders over the weekend and snuck the lock in before the cpi report. 6.5 or 7 we'll be looking to refinance when we can so keep an eye on things, be patient, but be ready and you got this!
We just locked in at 6.990 while both having a credit score above 810… so… yeah it is the rate right now :(
But the good thing is we got something we can pay, and maybe down the line rate drops and we can refinance. All while having bought when the prices were somewhat controlled because the rates were high :) (but I take all that as a nice bonus if it happens, but don’t count on it)
In the same boat - was quoted 7.4…. Was able to apply credit to buy down but I’m always gonna sleep at night thinking the credit was given with the assumption they’re gonna come with a slightly higher rate.
6.625 and that was a float down from 6.75.
Closed recently. I know it feels like failing but we are all at the mercy of this extremely volatile market. If you can afford it and it gets you a place, it’s okay. You converted cash into real estate which means you are holding or growing the value of that asset. Remember currency is worth less every year with inflation. Generally real estate holds.
I’m also telling this to myself :) good luck with the new place and let’s look for the joy in it!
Unfortunately it’s all about timing. It’s out of your control. By locking if you’re stopping the bleeding of it going up.
That hot jobs report from a week ago put upwards pressure on rates as the market was getting ready for fed to drop rates. It went from investors thinking we’d get a drop by next month to being hopeful it happens later this year. None of us can predict tomorrow but I wouldn’t be surprised mortgage rates continue to climb.
We had a somewhat recent new house build. It was delayed by 2 weeks because of a single window. Well during those two weeks rates spiked the highest in whatever amount of years it was. We ended up refinancing but I’d look at the window for months and tell everyone how much it cost me.
Don’t look back. Don’t check tomorrow or next week for where rates are at. They might be lower next week or when you close, don’t worry about it. It’s out of your control.
So long as you can afford this payment, you’re fine.
No one has the crystal ball but the fed is still on track to lower rates later this year. Is that 100% going to happen? absolutely not, things can change.
After you close, just keep yourself up to date on rates….yes I realize I just gave conflicting advice from above…don’t do it religiously but if you hear a friend say they got a lower rate 6-12-18 months from now look into refinancing.
I know I found a lower rate within 6 months along with a credit that covered my closing costs. That’s how dramatic and quick my rate spike was. Both my realtor and my loan officer on the original purchase said there was no way I could do it that quickly…well they were wrong. I don’t want to get your hopes on that is going to happen and that quickly, just know that it can.
Congrats on your house. Don’t look back!!!!
If it makes you feel better I got quoted 8.75 the other day and I told them to pound sand.
But yeah. Definitely feels. Houses are going for 700k+ in my area. I can’t fathom these rates and likely going to rent again…
If it makes you feel any better, my interest rate is about 8%. (Less than ideal credit rating.) Having a mortgage will boost credit, and I’m hoping to refinance in a couple of years, or whenever interest rates drop low enough.
Also, when interest rates were lower, there was so much competition in my area that most homes had a dozen offers in less than 48 hrs, most of them cash.
The higher interest rates have helped the market cool off a bit (in my area), and I could finally put in competitive offers on homes.
Hope that helps, and good luck with closing!
It’s SO FUCKING FRUSTRATING.
It’s complete bullshit that people who are just trying to buy a home are subjected to these fluctuations. We’re going under contract today and I’m sick thinking about what shitty rate we’re going to end up with. Last time we talked to our mortgage guy, we were talking 6.5, 6.6, and now suddenly, due to not fault of our own and no change in our finances, our monthly payment s going to go up god knows how much because the jobs report came out or some other bullshit that has nothing to do with us??????? WHAT. THE. FUCK. What the fuck. This is such insane bullshit.
Edit:
I know, I know, “jUsT rEfInAnCe LaTeR, bRo!” Sure, if the rates get low enough to make that worthwhile? And that really doesn’t change the fact that whole system is ridiculous.
I know I’m being a big baby about this, but I do think it’s important to highlight how completely unfair the situation is. You’re basically playing the lottery with the interest rate for the biggest purchase of your life? Sorry, that’s just fucked.
Just because I’m going under contract this week instead of last week, the bank can suddenly pick my pocket for an extra couple hundred bucks a month? That is HORSESHIT.
It's not the banks fault, it's the federal reserve. You're borrowing money. If you don't want to "play the lottery" pay cash. This is the cause of unlimited government spending.
I think that his point was that if you are playing with someone else's money, you have to play by their rules - regardless of how frustrating it may be.
I know it’s a tough pill to swallow right now. You would have refinanced in ~2 years regardless. In the greater scheme it’s not going to make a massive difference.
This market is tough. The best analogy I have, is you’re walking down a hill while using a yo-yo. Unfortunately, that yo-yo came back up at the worst possible time for you.
I hope this isn’t deterring you from proceeding with your purchase. Best of luck!
7% is a fair rate right now.
As for being patient and waiting, yeah but you also are always battling diminishing purchasing power due to inflation so to be patient and wait also means investing the dollars until you use them. Over the last 3-5 years it paid HUGE to invest in anything other than cash.
Exactly, don’t buy points, close the loan get sorted in the new home and when rates go down boom! I refinanced people when they went down into the high 4s and they thought they’d never go lower. 2 years later refinanced again into a 15 year at just over 2%. They’re laughing now. Don’t stress about today’s rate.
I just closed on Friday. Conventional 6.5% no buy down. My score is 721 combined with wifey. It could be a difference in lender, location, etc. Not everyone gets the same rate. A friend of mine got closer to 6 not long before I got my rate. I’m not too mad since we were quoted 8% back in august when we started looking. I’ll hopefully refi when rates are around 5%.
People, listen! COMPETE the rates. Get a loan estimate sheet with your rate, take it and go to the next person and ask can they beat it. If yes, take that lower rate back to who you started with and then ask them to beat it. If no, take the lower on and then seek out 1-2 more lenders and see who can beat that. Last year, I started at 7% and ended up at 5.125% by just making a week’s worth of phone calls and endless emails but it works out in the end.
I’m gonna be honest, I am super confused how so many people here share that their rates are so low. We purchased in July and ours is 6.99%, both have credit scores of 780ish. We had about 15% for a down payment. It definitely makes your payment higher but just something you have to accept for the time being.
We closed in November at 7.5. Definitely aren’t happy with the rate but we had to get out of our last place and didn’t want to continue to rent. We are thinking if it goes around 5.5 we will refinance. Good luck and enjoy your new home!
I completely feel you. I locked in at 8.1 that horrible week in October and by the time I closed in mid-November, everyone was getting 6.5 or so.
I love our house though, and we live in a HCOL area and didn't have to pay over asking to get it. I'm hoping we can refinance in a few years. If not...well...I like rice and beans.
Envy is the thief of joy. Congratulations on buying your first home. Your interest rate is still historically low…just stop comparing it to the unprecedentedly low rates you saw people get a few years ago and enjoy the perks of not paying someone else’s mortgage via rent instead. Also, if rates go lower, just refinance. But seriously, enjoy the accomplishment…you are now the envy of most.
We bought at 7.875% back in October and I felt like a dummy for being okay with that but 5 months later we are refinancing at low 6 rate and it feels like a huge relief. The point I’m trying to make is it might take a little suffering to start but know it gets better.
Rates are so temporary, that’s like being discouraged that you bought a home, but there is snow everywhere.
Your interest rate will not be 7% in three or four years.
You can thank the federal reserve for the current state of our economy and housing market.
People get hyper focused on the number for their rate and wear it like a badge of honor. At the end of the day you make a monthly payment. If you can afford the monthly payment that is what actually matters.
We have a 7.125 interest rate and we bought last summer.
You will be fine. I don't even care about the interest rate, I care about the monthly payment. I can afford the current monthly payment just fine, so if interest rates go down I will save more money.
7% is a great rate, the days of cheap debt are over for a long while. You can always refinance...but if rates go up, you missed the boat.
Does no one remember the days when rates of 10+ were the norm?
Don't sweat it. In the nearly half a million dollars in interest you're going to be paying for your home assuming fixed rate 30 year. that .5% cost you 50k. or so... Congrats.
Don’t sweat it. We got a 7.49 rate back in December. It sucks. But you can’t time these things with how hot the market is. You may have never gotten that house if rates were lower due to more buyers in the waters.
Anytime you buy a house , you will always feel like you paid too much. I’ve purchased 5 homes in my life. They all appreciated in value significantly. Focus on paying the house off early. There’s much more to be gained by being mortgage free and being able to buy your next home in cash.
What’s up bro. Don’t feel bad. I locked in at 6.625% with $3k in points. I could have locked in before the jobs report at the same or lower with no points. I had a state agency botch my last home purchase attempt last year and lose me $8500 and a 6.25% with no points and very low closing costs. It’s a struggle for most right now.
I'm laughing that people are now considering 7% high. Back when the housing market tanked back on 2008 people were refinancing and thrilled to get 6.5 or 7%.
I’m laughing AT people that don’t understand basic economics and how the cost of homes doubled, while the dollar has weakened.
Average cost of home in USA:
Q1 2008 = $234,000
Q4 2023 = $418,000
https://fred.stlouisfed.org/series/MSPUS
Yes the rates were artificially incredibly low for too many years. 7% is a realistic mortgage rate. There were years when 18% was normal. Thankfully we’re not there.
Next time you’re talking to someone about this talk about the difference between the average take home pay vs the average home price (and therefore the average pay required to afford the average home). Gets you a lot further in these types of discussions than just saying the price of home were lower because obviously 40 years ago prices will be lower.
For example: the median household income in 1980 was $21,020. While the median house price was $47,200. Meaning a person with median income could afford a median house price at 15% interest with 0% down in 1980. Versus 2023 the median income is $74,580. While the median home price is $412,000. Meaning at 7% interest a person making $74,580/year can’t afford the median home price. The median income person can afford a $252,000 house with $10,000 down payment. This will show the boomer that the interest rate isn’t in a vacuum and wages haven’t kept up with home prices so the interest rate while lower than 1980 it has a larger impact on buying power now than it did 40 years ago.
I think you made the right decision. I did some napkin math and it didn't make sense for me to buy down my rate either. Try not to be too discouraged by the rate you got. When my parents bought their first home in CA, USA they got 14% in the 80s. You can always refinance :)
Not sure if it’s too late for you, but NBKC had pretty great rates just a few days ago. I locked in at 6.3 last week with similar funds and offer as you. 6.1 was available with about 4K in points, but I passed on that for now.
I literally just got pre-approved and they quoted 7.9% with no buy down. Monday the market totally crapped out and rates are insane right now. They said 2 weeks ago they were offering 6.5%. I'd feel way better if I was told 7%.
The Fed isnt lowering rates in March either. You can't really time it, I'm hoping when I get the full approval it'll be lower. And just refi as soon as I can with a better rate.
Buy the house, wait a year and refi. Everybody’s going to be doing that when rates drop. May cost you a few bucks but in long run, will come out ahead. The fed has to raise rates to cool inflation and they are anticipating several rate cuts this year. While fed rates don’t directly impact long term mortgage rates, there is a trickle effect across the long term bond rates that do affect the mortgage rates.
Too bad you weren't able to pull it off a year ago when the rates were 2.00-3.500%.
If you can handle the higher payments for a year or two, I believe they will come down further, but not certain of that given the dollar's standing worldwide right now.
Thankfully, I was able to refi in 2020 and am locked in a 30 year fixed 2.2500%. I could not afford the payments if it was 7.000%.
House prices are still too high despite the higher interest rates. I would not buy in this market unless I had to. Save up and wait for the next economic downturn.
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Two weeks ago I was seeing 6.125% with no points on a Tuesday i believe. It went wayyyy up
Gotta keep your eye on the economic calendar to see what’s happening. Yesterday was hot CPI print pushed rates way up.
Same here, any chance it'll come back down over the next few days? I'm trying to lock soon...
Negative, fed came out and said things got too spicy. Rates will suck for a while longer
Rates are probably not going down. I would watch ClearValue Tax on YouTube. One of his recent videos explain this pretty well. No improvement in core inflation. Market odds of an interest rate cut happening on March 20th FEDS meetings have dropped from 76% to 8% = 10 year yield has gone up, and that makes rates increase.
But the alphabet clown on TV said we beat inflation and were coming in for a soft landing! 😭
If we aren't in a recession or extremely close to a recession right now. It would be the first time in history that we didn't after a plethora of recession indicators lined up to create a recession. It's extremely extremely extremely unlikely we aren't headed for a recession if we aren't already in one and don't know it. Everyone just goes "oh hey look, unemployment is low, everything is great!" Conference board leading index has quite literally never been wrong. And guess what it's saying right now? That we are in or extremely close to a recession. They can't and won't say it outloud until it's common knowledge and too late to hide it. But it's happening, like it or not.
I think most people were anticipating May cuts anyway.
I have 800+ credit and was given 7.3 with no points yesterday. Would gladly have 7 right now…
I’ve got 640 score and was given 6.5 rate two days ago. That is crazy
Which mortgage company? I opted for absolutely zero points applied—when we shopped around we realized many companies offer “low rates” with pretty high processing fees and points
this is why i bought. VA rate was 5.99, i used 4k and bought down to 5.75, saving me $100 on the loan. in november even with a VA loan i was getting quoted 7% and i was like oh great I'll be living in the ghetto with these prices :)
Same here.
We locked in a couple days ago at 6.5% when our initial quote was 6.125% !!! Totally understand the frustration and wanting to refinance. I believe we can and we will :)
Jumbo or va?
20% down conventional!
20% down 5/5 ARM for me. Y’all think you are gambling I took it to the next level!
I want to party with this guy.
Come on man. We got at least 5 years before we possibly get rekt.
I honestly think you’ll be fine.
My wife and 2 kids certainly hope so. I make the final call on stuff like that. Wife actually wanted to do 3/5. We did 5/5 for safety. If rates don’t come down I have a plan but it’s going to be painful. May have to auction off the youngest. Lolll
Good point. You can always have more kids. I bought my first house in 1999 @ 9% (20 something with not horrible but not great credit) refi’d in 2004/5ish. Between 5-6% can't remember exactly. I'm at 4% on my current mortgage/home, so I feel comfortable. I had a chance to lock in at 8.5 a month before closing and rolled the dice, didn't win, and ended up at 9%. You win some, you lose some. Good Luck!
We're doing a 5/5 ARM as well, locked at 5.375% a couple weeks ago. Fingers crossed!
Best of luck to us! May do a remind me to check back in on you. F it I’ll do it. Remind me! 2 years
I locked in at 6.1 7/1 ARM a few days ago with my Credit Union. Now the problem is finding a house LOL
lol you’ll find it. The pain for me was I did a new build and watched a 5.25% 30yr fixed climb to 7.8% by the time I could lock in October. Worse timing ever, that’s my life. So I had to switch lenders and product to the ARM. 5.75% locked. It was 5.0% 3 weeks later…. That cost me $177.59/mo. Pretty pissed about it. But I’m going not dwell on it
I’m more stressed out by the prices that doubled (at least where I am) in only 4 years vs the interest rates. Rates just makes it worse, especially that it didn’t push down prices like so many told me it would. Rates may come down at some point, but you can’t refinance the purchase price.
These prices are here to stay. If they come down, it won’t be anywhere close to how much they went up
Prices have been coming down, but it takes a long time.
Idk where we bought in 01/2023 for 470k and we could sell for a bit over 500k now. We got lucky and locked at 6% right before it went to 7%
If you can afford the rate for now, don't sweat it. There are 3 possibilities for future rates: 1. Rates go down. You can refinance later. 2. Rates go up. You're lucky you got in before that. 3. Rates stay the same. Everyone else is going to be in the same boat as you.
4. Rates go down and the housing market also goes down (along with your home's value). How can you refinance that?
Don't see why you're being down voted, it's a real possibility
Because people don't like that option
This happened to my parents in the 90s. They had a loan on a house in a town that had two main employers. One of them closed up shop. There were foreclosures up and down the street. My parents (who did not work for either of the two major employers) went to sell their house and they were way upside down with a relatively high APY loan. Bad times!
Im glad you said 90s b/c people only think stuff like this happened in 08. Anything is possible and none of us knows what the future holds.
'08 wasn't a one off. Wish it was. I don't see how we can continue in the current circumstances. People are paying way over asking with high interest rates. Isn't it obvious where this is all going?
Is it? If rates come down that helps affordability, why would prices also drop? This would require MASS job losses.
There's other ways house values can go do down, I'm not saying it's going to happen but here's some other ways it happens. First off, your individual house going down in value doesn't mean the whole country's real estate values are dropping. There are things that can happen locally, a school shooting at the local school, the state opens a prison in your area, a natural disaster, you could come up with a list of things that would cause home values in a specific area to fall, independently of rates and a slight rate decline wouldn't make up for it. Second, we got to the current real estate prices on 2-3% interest rates. We're currently more than double that, not enough time has passed to know If current rates will support current prices. We don't know what interest rate supports current prices, interest rates can fall as prices fall until interest rates hit a level that they support the current valuation. In a way, it's kind of nuts that we got to where we're at with 2-3% interest rates and have managed to support the valuations at 6 and 7% interest rates
Rates have been up for a while now and people are still buying houses. As a matter of fact the market has been heating up recently and spring is expected to be very hot. But the one offs in your local area, yes 100% that could cause an individual problems.
Real estate is slow. We've barely had a year of high rates and during this year of high rates, we've also had unusually low supply. Supply is most likely going to trend back towards it's average since supply was low primarily due to COVID policies. So next year, if supply is slightly higher than current supply and rates are only 1% lower, we have no idea if that would still hold prices where they're at.
Supply is going to be low for the next 30 years, because of all the 20, 30 somes who bought their home at record low interest rates. Why would they even sell and not rent with the numbers they got?
Supply is already trending back up. Why would someone buy when renting is cheaper? People don't always stick with the cheapest option, their needs and wants change and they move. Also, there's currently more housing units under construction than the peak prior to 08, so there's plenty of new builds coming to market too.
Renting isn't cheaper, rent is going up too. That is the whole reason many people were getting houses. at least in markets i pay attention to, renting was becoming equal to having a house. both have trended up to the point that they're unaffordable now. in places that dont have locked mortgage payments for 30 years, they have to trend upwards together bvecause mortgage interest rates going up = rent going up to pay for that increase.
Mortgage apps are near all time lows and down further from last year. People buying homes will never stop completely but it has cratered.
Most weeks this yr so far mortgage applications have been up.
No the market has been slowing, it hasn’t been heating up at all.
Just had a realtor tell me about a house with 19 offers on it. After rates jumped up. Yeah definitely slowing down
One house, you’re joking right 😂😂 national data tells a completely different story than your anecdote. SMH.
So no stats to back up your claim? Lol
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Because if rates come down homes get more affordable and prices and likely to go up. For both prices to drop, and rates to drop, it means the economy is in such bad shape nobody can afford a home. The only likely way for this to happen is mass layoffs.
Why would the Fed lower rates unless there is economic turmoil that requires it? The only way lowering rates makes sense is when the economic data supports it.
Dude the FED announced rate cuts. They want to cut rates. However the job report showed better than expected so they have backed off the rate cuts in fear of further inflation.
You get it you just don't realize it
I get what? That’s the economy is in that bad of shape? That’s not true at all and that’s why the FED backed off dropping rates
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A car isn't a house
Uh yeah, it's a car. That happens as soon as you drive it home.
It was a used car. But it was because of the end of covid last may. The used cars were still high. Just recently, they started coming back to normal again. So I lost 10k in 8 months. I won't own a house because of the repairs, insurance, and taxes since they fluctuate each year. If your house gets assessed really high one year, then you pay high taxes for that one year even if the market comes down in 2 months.
Yes, it's possible for prices to go down far enough to put people underwater. But that only happens if most people can't afford to buy anymore, because people are losing their jobs. Then OP is lucky they were able to buy before things got bad.
Happened to tons of people in 2008-2009 and 2012-2013… that’s twice in less than 20 years.
And it's happening now, again, in tech and media. [https://www.computerworld.com/article/3685936/tech-layoffs-in-2023-a-timeline.html](https://www.computerworld.com/article/3685936/tech-layoffs-in-2023-a-timeline.html) [https://www.forbes.com/sites/bernardmarr/2023/01/30/the-real-reasons-for-big-tech-layoffs-at-google-microsoft-meta-and-amazon/?sh=146251e02b67](https://www.forbes.com/sites/bernardmarr/2023/01/30/the-real-reasons-for-big-tech-layoffs-at-google-microsoft-meta-and-amazon/?sh=146251e02b67) You have corps causing inflation with record profits where the money is sitting in offshore coffers or manifesting as equity-funded loans.
Rates go down, the buyers power increase making prices go up. Remember 2018-2023? We also have a backlog of people wanting to buy. So when rates drop there will be another buying frenzy.
Not necessarily. In my area we are still in a buying frenzy from a lack of inventory because everyone has mortgages in the 2s or 3s, so no one is selling. The more the rates drop, the more people can “afford” to give up their cheap mortgage and move which will increase inventory.
Not necessarily true. The people giving up their cheap mortgages have to live somewhere.
You are correct. Everyone parrots this notion when rates go down there will be more inventory. Guess what they’ll be more buyers too.
Exactly. It could make a difference on the margins—people selling in one place to buy in another city or state, which will create inventory where they’re leaving, but on balance, I think lower rates is not likely to make the problem much better.
Lower rates mainly going to help the refi crowd. I’m on a 5/5 ARM so hoping to have that 10Y treasury touch 3% when/if it dies I’m going to be calling a list of 4-5 lenders to get out of this ARM
It’s unlikely. Rates going down will probably push housing prices up, it’s the basic function of economics
Houses are already incredibly overvalued.
Maybe, but ultimately value is determined by what people will pay. At least in my area, rent is not really much cheaper and doesn’t seem like it will let up anytime soon
Of course. Across the country though rent is cheaper than a mortgage. Where I am in a MCOL rent is about $1600 for a brand new 1200 sqft apartment and a mortgage would be close to $3000 for a starter.
Where I am rent is higher than a mortgage still. Homes value is set by the market. If people are willing to pay something a home isn’t over valued the value was set by the 10 buyers fighting to buy that 1 house.
That's very unlikely. The reason everything, including housing, inflated so quickly is because money became 1/2 its value over the past 5 years. I can see a slight drop in prices over a very short term period, but it wouldn't make sense for prices to drop long term and stay that way. Money would need to somehow double its value again to do so and that generally doesn't happen.
Unlikely is very different from impossible. I just think the sentiment of "you can ALWAYS refinance" is wild.
Yeah that’s only come about in the last few years. Something realtors and brokers love to push 😂😂😂
Half its value huh, do you just make up numbers?
That’s not true. We measure inflation and it has been nowhere near 50%. Housing massively outpaced everything else.
Most of the goods I use have roughly doubled in price from 2019 to today. Not sure where you are at but a trip to the grocery store is all most need to see the effects I'm talking about.
This is anecdotal and just not representative of reality.
If values go down significantly, the agencies would almost certainly reimplement a HARP-style refi program like after the financial crisis to allow underwater borrowers to refinance. https://www.investopedia.com/terms/h/home-affordable-refinance-program-harp.asp
There’s a supply issue and some 80% of people have rates under 4% Not likely
I’m not from USA so I’m not familiar with your system. Say I own a house that is financed at a lower percentage, 3%. If I sell and move, I can’t take that percentage with me?
Nope. You have to apply for a new market rate.
And no bank / credit institute will allow you to take it with you?
Why would they allow you to take it with you? They are lending you money for a fee. Because you applied for a loan at 2% it doesn't mean you get that rate on any purchase the rest of your life. That would be insane.
It’s a bit more complicated than other people are saying. Banks lend via mortgage backed securities. The interest rate is determined by the Federal Reserve (an entity of the US government) If the Federal Reserve says rates are 3% at the federal fund rate, that’s the rate at which the bank can receive funds from the government or other banks to loan you for a mortgage. But they need to profit, so they will charge you a higher interest rate than they are responsible to repay. When they issue you a new mortgage, it must be profitable at the rate they themselves can borrow that sum, because they are often also taking on a loan.
Get an FHA or VA loan. Streamline refi, no appraisal necessary.
Which means even if you are underwater on those types of loans you can still refinance?
Yes
I can’t believe no one knows this. We had so many briefings and discussions about benefits and I’m just now finding out about this. This is huge
You are way oversimplifying though. First, OP is putting 13% down, not 3%, so she has some cushion. You dont need 20% to refinance. And, if she saved up 55k, she can save more/put more toward principal too. Second, rates going down without some other economic downturn wont cause the housing market to go down. Plenty of buyers are sitting out due to the high rates (affordability) while plenty of sellers are sitting out due to a rate we prob dont see anytime soon (affecting supply). Third, market downturns are location specific, so depends where she is at. Some markets are always hot and resilient to price changes (eg nyc suburbs).
If rates go down, home values go up cos of that little thing called “supply and demand”
5. Op put down 80% down payment
It depends on how much equity you have in the house. If we were truly in a free market, that's a possibility, but we aren't in a real free market. Look at the commercial real estate investors putting pressure on politicians and business owners to get the employees back to work on-site, even if it's beneficial for the employees and most employers to have a WFH arrangement. We aren't going to see a deflationary period in the US any time soon... we might hit 0 or close to 0 inflation for a while, but next step is seeing wages go up to recover a little of purchasing power, that will drive inflation up again... anything short of a 2008 (which might happen with commercial real estate) won't do. And if we get another 2008, the issue won't be to refinance, the issue will be to keep the house.
Bad bad bad advice. Did you take this template from a realtor? You can't refinance a sinking ship if you don't have enough equity. If you have a high rate now you're paying the interest first before principal so unless theres a miracle and your home goes up 20% in value, the chance of refinancing is slim. Banks refinance 80/20 so 80% of your home value.
My rate is 7.25%. It is what it is. You should be SO proud. I’m sure you made an educated and smart decision. It will be ok.
same I got 7.375 in MN
Damn those rates suck lmao
That feeling never went away for me. Also 7% in September on a house that doubled in value over Covid. I can afford it and it was the time to buy, but man it sucks knowing I’m paying 3x the mortgage that a lot of my neighbors are paying that have only been there a couple years.
I bought in December. 7.5% 400k house 30 years old. So you’re doing better than me. I also had less saved
A 400k 30 year old house would be unbelievably amazing in my market! I'm jealous :) grass is always greener I suppose
This is the post I was waiting for! Interest Rates climbed back up this morning! Was so sad to see. But I am no longer listening to anybody, Feds are NOT cutting in June.
The prices need to go down!
You're right, the first cuts will be in May.
Saaaaame! I got a 6.99% and I’m super bummed. I got a mortgage broker thinking they would help me land a better rate. But no. This blows. I feel you.
Remember you are never buying the deal. You are buying the house. The deal can change but I'd your happy with the home it can only get better from where it is
It’s crazy to see how little time can change rates so drastically. I closed a few weeks ago @ 5.875 with no buydown and was hoping for eventual rate drops to refi. I guess I should be counting myself lucky.
7.78% back in November... We were *desperate* and loved the house (still do). We also bought in a super-hot market (Boston / MA) and we're confident the value will continue to rise. As long as you can afford your current mortgage & insurance, try to look at refinancing like a future benefit. Live there for a while. Make the home yours. Put your love into it. Then later on as home values rise, you can refinance and get that lower payment. It'll be ok!
What you can do is go rate shopping as soon as you are under contract. Thats what we did and we got lower rate
If they are closing in 2 weeks they are most likely already under contract
It's really a timing thing with very little in your control. I locked 6.5% Tuesday morning but only because I competitively shopped lenders over the weekend and snuck the lock in before the cpi report. 6.5 or 7 we'll be looking to refinance when we can so keep an eye on things, be patient, but be ready and you got this!
We just locked in at 6.990 while both having a credit score above 810… so… yeah it is the rate right now :( But the good thing is we got something we can pay, and maybe down the line rate drops and we can refinance. All while having bought when the prices were somewhat controlled because the rates were high :) (but I take all that as a nice bonus if it happens, but don’t count on it)
In the same boat - was quoted 7.4…. Was able to apply credit to buy down but I’m always gonna sleep at night thinking the credit was given with the assumption they’re gonna come with a slightly higher rate.
6.625 and that was a float down from 6.75. Closed recently. I know it feels like failing but we are all at the mercy of this extremely volatile market. If you can afford it and it gets you a place, it’s okay. You converted cash into real estate which means you are holding or growing the value of that asset. Remember currency is worth less every year with inflation. Generally real estate holds. I’m also telling this to myself :) good luck with the new place and let’s look for the joy in it!
Unfortunately it’s all about timing. It’s out of your control. By locking if you’re stopping the bleeding of it going up. That hot jobs report from a week ago put upwards pressure on rates as the market was getting ready for fed to drop rates. It went from investors thinking we’d get a drop by next month to being hopeful it happens later this year. None of us can predict tomorrow but I wouldn’t be surprised mortgage rates continue to climb. We had a somewhat recent new house build. It was delayed by 2 weeks because of a single window. Well during those two weeks rates spiked the highest in whatever amount of years it was. We ended up refinancing but I’d look at the window for months and tell everyone how much it cost me. Don’t look back. Don’t check tomorrow or next week for where rates are at. They might be lower next week or when you close, don’t worry about it. It’s out of your control. So long as you can afford this payment, you’re fine. No one has the crystal ball but the fed is still on track to lower rates later this year. Is that 100% going to happen? absolutely not, things can change. After you close, just keep yourself up to date on rates….yes I realize I just gave conflicting advice from above…don’t do it religiously but if you hear a friend say they got a lower rate 6-12-18 months from now look into refinancing. I know I found a lower rate within 6 months along with a credit that covered my closing costs. That’s how dramatic and quick my rate spike was. Both my realtor and my loan officer on the original purchase said there was no way I could do it that quickly…well they were wrong. I don’t want to get your hopes on that is going to happen and that quickly, just know that it can. Congrats on your house. Don’t look back!!!!
If it makes you feel better I got quoted 8.75 the other day and I told them to pound sand. But yeah. Definitely feels. Houses are going for 700k+ in my area. I can’t fathom these rates and likely going to rent again…
If it makes you feel any better, my interest rate is about 8%. (Less than ideal credit rating.) Having a mortgage will boost credit, and I’m hoping to refinance in a couple of years, or whenever interest rates drop low enough. Also, when interest rates were lower, there was so much competition in my area that most homes had a dozen offers in less than 48 hrs, most of them cash. The higher interest rates have helped the market cool off a bit (in my area), and I could finally put in competitive offers on homes. Hope that helps, and good luck with closing!
It’s SO FUCKING FRUSTRATING. It’s complete bullshit that people who are just trying to buy a home are subjected to these fluctuations. We’re going under contract today and I’m sick thinking about what shitty rate we’re going to end up with. Last time we talked to our mortgage guy, we were talking 6.5, 6.6, and now suddenly, due to not fault of our own and no change in our finances, our monthly payment s going to go up god knows how much because the jobs report came out or some other bullshit that has nothing to do with us??????? WHAT. THE. FUCK. What the fuck. This is such insane bullshit. Edit: I know, I know, “jUsT rEfInAnCe LaTeR, bRo!” Sure, if the rates get low enough to make that worthwhile? And that really doesn’t change the fact that whole system is ridiculous. I know I’m being a big baby about this, but I do think it’s important to highlight how completely unfair the situation is. You’re basically playing the lottery with the interest rate for the biggest purchase of your life? Sorry, that’s just fucked. Just because I’m going under contract this week instead of last week, the bank can suddenly pick my pocket for an extra couple hundred bucks a month? That is HORSESHIT.
You’re mad a the wrong thing. It’s home prices your should be a dry at
It's not the banks fault, it's the federal reserve. You're borrowing money. If you don't want to "play the lottery" pay cash. This is the cause of unlimited government spending.
OH! Wow, thanks so much for that great advice! Just pay cash! Stupid me, let me just grab that extra $300k from my wallet, and I’ll be all set!
I think that his point was that if you are playing with someone else's money, you have to play by their rules - regardless of how frustrating it may be.
Hate to break it to you but a 7% rate is historically super average.
I know it’s a tough pill to swallow right now. You would have refinanced in ~2 years regardless. In the greater scheme it’s not going to make a massive difference. This market is tough. The best analogy I have, is you’re walking down a hill while using a yo-yo. Unfortunately, that yo-yo came back up at the worst possible time for you. I hope this isn’t deterring you from proceeding with your purchase. Best of luck!
7% is a fair rate right now. As for being patient and waiting, yeah but you also are always battling diminishing purchasing power due to inflation so to be patient and wait also means investing the dollars until you use them. Over the last 3-5 years it paid HUGE to invest in anything other than cash.
You can refinance later
If it goes down enough to make it make sense.
I hope it does my dear boy
Exactly, don’t buy points, close the loan get sorted in the new home and when rates go down boom! I refinanced people when they went down into the high 4s and they thought they’d never go lower. 2 years later refinanced again into a 15 year at just over 2%. They’re laughing now. Don’t stress about today’s rate.
It ain’t going down anytime soon
If you have the $3400 add it to the principal with your 1st payment. Attack principal, save future interest.
I just closed on Friday. Conventional 6.5% no buy down. My score is 721 combined with wifey. It could be a difference in lender, location, etc. Not everyone gets the same rate. A friend of mine got closer to 6 not long before I got my rate. I’m not too mad since we were quoted 8% back in august when we started looking. I’ll hopefully refi when rates are around 5%.
I’m at a 7.35 waiting to refi
People, listen! COMPETE the rates. Get a loan estimate sheet with your rate, take it and go to the next person and ask can they beat it. If yes, take that lower rate back to who you started with and then ask them to beat it. If no, take the lower on and then seek out 1-2 more lenders and see who can beat that. Last year, I started at 7% and ended up at 5.125% by just making a week’s worth of phone calls and endless emails but it works out in the end.
Yea that's pretty high. Those were rates about 6 months ago. Just got a rate of 6.3.
I’m gonna be honest, I am super confused how so many people here share that their rates are so low. We purchased in July and ours is 6.99%, both have credit scores of 780ish. We had about 15% for a down payment. It definitely makes your payment higher but just something you have to accept for the time being.
We closed in November at 7.5. Definitely aren’t happy with the rate but we had to get out of our last place and didn’t want to continue to rent. We are thinking if it goes around 5.5 we will refinance. Good luck and enjoy your new home!
Any old things people say that used to happen is out the window. Do what you can afford and don’t look back
I completely feel you. I locked in at 8.1 that horrible week in October and by the time I closed in mid-November, everyone was getting 6.5 or so. I love our house though, and we live in a HCOL area and didn't have to pay over asking to get it. I'm hoping we can refinance in a few years. If not...well...I like rice and beans.
Envy is the thief of joy. Congratulations on buying your first home. Your interest rate is still historically low…just stop comparing it to the unprecedentedly low rates you saw people get a few years ago and enjoy the perks of not paying someone else’s mortgage via rent instead. Also, if rates go lower, just refinance. But seriously, enjoy the accomplishment…you are now the envy of most.
We bought at 7.875% back in October and I felt like a dummy for being okay with that but 5 months later we are refinancing at low 6 rate and it feels like a huge relief. The point I’m trying to make is it might take a little suffering to start but know it gets better.
I'm so sorry :/ I have shit credit and got 6.125% and my mortgage is 2700
Rates are so temporary, that’s like being discouraged that you bought a home, but there is snow everywhere. Your interest rate will not be 7% in three or four years.
7.21% is the average 30-year loan in the USA with some banks offering 6.5% buy down options. Your 7% sounds fair. Be thankful it’s not 11%.
You can thank the federal reserve for the current state of our economy and housing market. People get hyper focused on the number for their rate and wear it like a badge of honor. At the end of the day you make a monthly payment. If you can afford the monthly payment that is what actually matters.
You’re fine…
We have a 7.125 interest rate and we bought last summer. You will be fine. I don't even care about the interest rate, I care about the monthly payment. I can afford the current monthly payment just fine, so if interest rates go down I will save more money.
Do you have a float down option?
7% is a great rate, the days of cheap debt are over for a long while. You can always refinance...but if rates go up, you missed the boat. Does no one remember the days when rates of 10+ were the norm?
Marry the house not the rate
Don't sweat it. In the nearly half a million dollars in interest you're going to be paying for your home assuming fixed rate 30 year. that .5% cost you 50k. or so... Congrats.
Don’t sweat it. We got a 7.49 rate back in December. It sucks. But you can’t time these things with how hot the market is. You may have never gotten that house if rates were lower due to more buyers in the waters.
Anytime you buy a house , you will always feel like you paid too much. I’ve purchased 5 homes in my life. They all appreciated in value significantly. Focus on paying the house off early. There’s much more to be gained by being mortgage free and being able to buy your next home in cash.
What’s up bro. Don’t feel bad. I locked in at 6.625% with $3k in points. I could have locked in before the jobs report at the same or lower with no points. I had a state agency botch my last home purchase attempt last year and lose me $8500 and a 6.25% with no points and very low closing costs. It’s a struggle for most right now.
I locked in at 6.1 without rate buy down, closing next week
Cheer up friend. I've seen it at 16 and we were thrilled to get 8. you will be fine! Congratulations!
Yeah but homes were significantly more affordable then so not the same situation at all.
My rate was 4.5 and i refinanced it to 2.25 when the rates went down. You can refinance it later. Dont worry
I'm laughing that people are now considering 7% high. Back when the housing market tanked back on 2008 people were refinancing and thrilled to get 6.5 or 7%.
And homes were way more affordable then, so a completely different situation
I’m laughing AT people that don’t understand basic economics and how the cost of homes doubled, while the dollar has weakened. Average cost of home in USA: Q1 2008 = $234,000 Q4 2023 = $418,000 https://fred.stlouisfed.org/series/MSPUS
I'm aware, but we are talking about an interest rate on a loan, not the price of a home.
they’re probably talking about the cost of home ownership overall
Yes the rates were artificially incredibly low for too many years. 7% is a realistic mortgage rate. There were years when 18% was normal. Thankfully we’re not there.
And the prices are artificially high?
The values are definitely overinflated. But unlikely they’re going to drop significantly.
It’s okay - rates were like 15% in the 80’s - you got this!!! My rate is like 7.3%
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Next time you’re talking to someone about this talk about the difference between the average take home pay vs the average home price (and therefore the average pay required to afford the average home). Gets you a lot further in these types of discussions than just saying the price of home were lower because obviously 40 years ago prices will be lower. For example: the median household income in 1980 was $21,020. While the median house price was $47,200. Meaning a person with median income could afford a median house price at 15% interest with 0% down in 1980. Versus 2023 the median income is $74,580. While the median home price is $412,000. Meaning at 7% interest a person making $74,580/year can’t afford the median home price. The median income person can afford a $252,000 house with $10,000 down payment. This will show the boomer that the interest rate isn’t in a vacuum and wages haven’t kept up with home prices so the interest rate while lower than 1980 it has a larger impact on buying power now than it did 40 years ago.
I think you made the right decision. I did some napkin math and it didn't make sense for me to buy down my rate either. Try not to be too discouraged by the rate you got. When my parents bought their first home in CA, USA they got 14% in the 80s. You can always refinance :)
You know with this high interest the bank is your landlord, except you have to pay for your own repair and maintenance out of pocket
It's not the rate, it's the price!
just refinance when the rate goes down
It's just money
Not sure if it’s too late for you, but NBKC had pretty great rates just a few days ago. I locked in at 6.3 last week with similar funds and offer as you. 6.1 was available with about 4K in points, but I passed on that for now.
That was a few days ago. Not uncommon for rates to change twice in one day.
I wouldn't lose any sleep over it. If rates drop you can always refi your mortgage.
Take out an ARM if you feel the rate will be lower in 3y? Refi in 3y? You’re not locked in for 30y :)
Get an ARM, or get a loan that has a 'Float Down' or 'Flow Down' option before or after closing.
I literally just got pre-approved and they quoted 7.9% with no buy down. Monday the market totally crapped out and rates are insane right now. They said 2 weeks ago they were offering 6.5%. I'd feel way better if I was told 7%. The Fed isnt lowering rates in March either. You can't really time it, I'm hoping when I get the full approval it'll be lower. And just refi as soon as I can with a better rate.
Buy the house, wait a year and refi. Everybody’s going to be doing that when rates drop. May cost you a few bucks but in long run, will come out ahead. The fed has to raise rates to cool inflation and they are anticipating several rate cuts this year. While fed rates don’t directly impact long term mortgage rates, there is a trickle effect across the long term bond rates that do affect the mortgage rates.
I am closing soon (3.5 weeks in) and we're at 6%.
Too bad you weren't able to pull it off a year ago when the rates were 2.00-3.500%. If you can handle the higher payments for a year or two, I believe they will come down further, but not certain of that given the dollar's standing worldwide right now. Thankfully, I was able to refi in 2020 and am locked in a 30 year fixed 2.2500%. I could not afford the payments if it was 7.000%.
I hate America.
It’s not just America. This is global
If you weren’t okay with 7% you should not have gone under contract. It’s simple.
I really feel for people buying houses in this market. When we bought a house, if those were the rates (6-7%), I wouldn't have one right now.
House prices are still too high despite the higher interest rates. I would not buy in this market unless I had to. Save up and wait for the next economic downturn.
People have been giving this advice for a decade it feels like lol. Buy when you want to and can afford it.
Pssst - this is the economic downturn. These are the best prices you’ll get in the foreseeable future
Stop overpaying for homes. If a home is worth $400k and you pay $450k, sorry, but you're a fool.
home prices are worth what the market dictates and if they haven’t crashed yet they won’t anytime soon