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Mortgage Rates (3 Viewers)
- Thread starter MechEng
- Start date
I'm missing something here.
FUBAR
Footballguy
yeah, I'm ignorant on this - I get that it's a line of credit against your equity, I've just never thought much about it.
Warrior
Footballguy
Thought you guys might appreciate this. When I was buying my first house a year and a half ago, I asked my RE agent to suggest a title insurance company. The house was only 7 years old and approx. $205k. They quoted me $710 for the title insurance, but I did a search and found an online-based company that would insure my title for $351.
Since my realtor had a good relationship with his title company and trusted them, I preferred to work with them. I saw some reviews of the online service where their representative didn't show up, had slow communication, etc. and held up the closing. I asked if the local company would match the $351 price and they agreed. That saved me $350...not a lot in the grand scheme of buying a house, but definitely worth a few emails back and forth!
This isn't directly related to mortgage rates, but just a reminder that certain closing costs and expenses can be negotiated (especially title insurance, which is like 90% profit to the insurer).
Since my realtor had a good relationship with his title company and trusted them, I preferred to work with them. I saw some reviews of the online service where their representative didn't show up, had slow communication, etc. and held up the closing. I asked if the local company would match the $351 price and they agreed. That saved me $350...not a lot in the grand scheme of buying a house, but definitely worth a few emails back and forth!
This isn't directly related to mortgage rates, but just a reminder that certain closing costs and expenses can be negotiated (especially title insurance, which is like 90% profit to the insurer).
Chadstroma
Footballguy
Pretty much a credit card using the equity on your house to get a low rate and tax deductibility. A good option in a lot of circumstances such as debt consolidation, paying for kids college, emergency fund, home improvement, down payment on second property, etc. Low cost* way of accessing the equity in your home while leaving your mortgage alone. Likely could be a whole new thread.
*should be able to find one at no cost.
leftcoastguy7
Footballguy
Dang I'm trying to refi with my credit union and they want over $6K in closing costs. 1700 of this is for the title company. What a ripoff.
I'm wondering if I should give Quicken Loans a call.
Wooderson
Fight The Power
I'm using a Mortgage Broker that can shop around. It's the same guy I used when I bought my house 3 years ago.
I'm sure the loan will be sold right away but that doesn't really bother me.
Just looked again the exact number is $3236 for closing.
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greedygoat
Footballguy
Thanks to this thread, I locked in at 3.625 about a month ago and I'm scheduled to close in 4 days. I will be moving from an ARM I got 10 years ago to a 30-year fixed and my payment will be going down about $400 per month. Thanks to everybody who posted in here and urged me to look into it. 
fantasycurse42
Footballguy Jr.
We'll never see 6% ever again. I'm skeptical we'll see 5% in the next decade. In fact, at 5% I'd say that housing prices would be in for a serious hit.
Chadstroma
Footballguy
I think that that is reaching a bit. Though it is funny because rates as they are for so long as they have been- it is hard to remember that a 6% mortgage rate about a ten years ago was a good rate.
greedygoat
Footballguy
fantasycurse42
Footballguy Jr.
I don't see 6%, at least for a very very very very long time and then right back down.
Maybe one day, good likelihood of ever, 6% would destroy the market, affordability is already getting out of reach for the average American, at 6% housing prices would collapse. The FFR will never be normal again, at least not for a very very long time. If they're able to get a few measly hikes in at 25 basis points a piece, by the time it hits 2-2.5% we'll prob back to another recession, they'll drop it right back to zero. Lower borrowing costs for the lender = lower borrowing costs for the consumer.
Look no further than Japan, going to zero % for a central bank is pretty hard to get out of.
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Chadstroma
Footballguy
Right now 6% would destroy the market but that is because we have had 8 years of a crappy economy buoyed by a monetary policy that on a scale of 1 to 10 is an INSANE. When the economy moves again beyond being propped up by monetary policy, then money will flow in and people will make more and inflation will erode the dollar- all of which means interest rates will (and must) go up and it wouldn't kill anything. It is all based on an economy that can stand on it's own two legs- which we have not had and who knows when we will get that. To say never is really stretching things out there but it is hard to see it on the horizon now for sure.
Johnny Rock
Footballguy
fantasycurse42
Footballguy Jr.
Fair enough, but to get there, we would have to endure some serious pain... The Fed refuses to allow that to happen.
A decade of crazy monetary policy and we still have anemic growth. Worrying about rates for the next few years is not an issue IMO.
Chadstroma
Footballguy
Historically the more normal range is around the 6-8% range. Late 70's and early 80's being a huge outlier and now we are in another huge outlier. It will eventually move back into happy medium territory eventually.
Chadstroma
Footballguy
Perhaps not pain but it is all driven by a healthy economy. I haven't see that in a long time and I don't see one in the near future. :(
fantasycurse42
Footballguy Jr.
It is, maybe one day it will get back there, but I don't think that will be for a very very very long time. 7% is unheard to a large portion of the buyers in market over the last few years. A good portion of buyers who have dealt with higher rates will never be in market again and younger buyers who have a foreign concept of these higher rates simply wouldn't buy if faced with them.
Zegras11
Footballguy
Chadstroma
Footballguy
You can check a couple of other sites.... Chase and Citi mortgage have AVM's on them that you can use for free. They tend to all come in about the same range with some variance because they are all using the same data- public information and comps in the area. To be honest, it might work against you in that it will lead you to believe that the Zillow is actually fairly close in value if they all come in that same which could be wrong.
Best advice that I can give is either two things: 1) If you know of any real estate agents, hit them up and ask what they think. A decent one is pretty in tune with valuations in the area and should be much more accurate guess than Zillow. 2) Keep an eye out for houses near by for sale. Note how close they are (no further than 5 mile radius usually) how closely they resemble or don't resemble your house and how much they sold for. That will give you a good idea- specially if a similar house like yours sells.
fantasycurse42
Footballguy Jr.
http://www.businessinsider.com/moodys-report-normal-interest-rates-may-never-come-back-2016-5
Moody's agrees with me... If the 10 year never returns to "normal", these current interest rates are nothing special, probably the new "normal".
It is possible we are having this conversation in 5 years when people are talking about a 2.7% 30 year jumbo loan.
Moody's agrees with me... If the 10 year never returns to "normal", these current interest rates are nothing special, probably the new "normal".
It is possible we are having this conversation in 5 years when people are talking about a 2.7% 30 year jumbo loan.
Chadstroma
Footballguy
The keys are still the same: economy and inflation.
What we have had is basically 8 years of either downright horrible economy and at the best tepid just above not growing economy. Coupled with that a lack of inflation which has had various deflationary pressures- mainly a piss poor economy but other factors as well such as globalization of trade (the Wal-Mart effect) and currently the oil glut to name a couple. The economy has been supported for 8 years by one thing: Monetary policy and that monetary policy has helped keep interest rates ridiculously low. There does not seem to be any change of direction in the future in fiscal and economic policy, so yes, there likely will not be huge changes in the near future. The Fed seems set on slowly trying to push up the Fed Rate but I am not sure how much they can really do when there really is not much to hang your hat on in terms of independent economic strength.
These things change and even the best minds miss it. Remember, Moody's is also the same company that gave investment grade ratings on a bunch of crap MBS that was a huge factor in leading towards the Great Recession.
brun
Footballguy
I've been watching 5 & 7 year ARMs at PenFed for a little while now thinking they might go just a little lower. Recently the 5/1 & 7/1 have moved up from their lows (for the period I've been watching). So, I decided to apply and lock the 5/5 at 2.75 & 0 points which didn't move at the same time as the other two.
l realize that this might be a blip and not a trend, but wanted to share for those watching for movement.
l realize that this might be a blip and not a trend, but wanted to share for those watching for movement.
Chadstroma
Footballguy
Ministry of Pain
Footballguy
brun
Footballguy
I turn 61 this year. Looking to sell in 5 +/- 1 year.
Even with taking a few bucks out, I will save about $150 a month. If I stay an extra year and the loan goes up the max allowable I'll still be better off than keeping my current loan or taking the 7/1@3% with about $2600 more in closing costs.
Chadstroma
Footballguy
Assuming the adjustment has a decent annual cap on it- you are certainly better off in the 5/1 than 7/1 in that scenario.
fantasycurse42
Footballguy Jr.
Market there has been flat for 6 months. Actually declined Q4 2015 to Q1 2016.
You want a good investment for the next 10-20 years, check out San Diego. Biotechs and startups are moving in.
brun
Footballguy
Thanks for the feedback. Both the 5/1 & 7/1 had higher rates and higher closing costs than the 5/5. Even if I stayed in the house for 7 years I still come out ahead with the 5/5. Not much at that point (don't have my spreadsheet in front of me, but the max the monthly payment could go up is <170), but IIRC at least enough to buy dinner.
Of course, if keerock ever buys a winning ticket it won't matter. ?
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Chadstroma
Footballguy
Missed it was a 5/5. Haven't seen that in like a decade. Rate was significantly lower than a 5/1? Does not really matter on your plan though. Is there a cap on the adjustment? 5/1 usually do.
brun
Footballguy
So, my appraisal was not what I expected. I refi'd just over 2 years ago and the valuation was $310k. Less than a year ago I got new siding and new windows (about $50k worth). My new appraisal comes in at $305k. If I had known how the value would not hold, I could have done other things with that money.
matttyl
Footballguy
Same thing with me, and it really doesn't have anything to do with value not holding. I did a HELOC a year or so ago, and they did a "drive by" appraisal and used used comps from a neighborhood a few miles away with much nicer homes. They also included the bedroom and full bathroom in my basement from the online listing that was still available. This time, they came in the home and took pictures and measurements and such, but also went off of the county records (which doesn't include the finished basement) and used more recent sale comps, which weren't as nice for me. I doubt the sale price of my house (if I were to sell, which I'm not) dropped by $50k, which they claimed.
James Daulton
Footballguy
Newsflash, most appraisers are lazy and suck.
Chadstroma
Footballguy
The value of your home does not increase by the value of what you put into home improvement projects. ROI can vary widely depending on what it is you are doing but generally things that sell houses have higher ROI (money put in kitchens and baths for example) where as things that are more of upkeep type things such as siding and windows have a very low ROI. Also, your ROI will vary depending on if you are paying for labor or doing it yourself.
Comps are the biggest factor to your home value. If someone nearby sells low, does a short sale or foreclosure- it will hurt your value. Same holds true in the other way. If your neighbors happen to get some great prices when they sell, your value will jump up.
Also, it is important to know that appraisals are as much of an art as they are a science. You can have two full appraisals using the same comps done at the same time and come back with different numbers.
brun
Footballguy
My son was home when the appraiser came through. He said the guy was done in about 15 minutes (probably an under-estimate. He took pics inside and out. It's a 4 be garrison with a 1 br in-law apartment. Doesn't sound like he wasted any time.
A house the next street over sold 2 months ago for $380k. A similar structure, but the in-law looks bigger. Can't vouch for the condition of the interior. This was not one of the comps in his report. The comps he used were all, per the report, a mile + away.
I know I still need to update a kitchen and 2 bathrooms. Then some finishing touches. I just didn't think it would lose value in what has been characterized (in the report) as a stable market.
A house the next street over sold 2 months ago for $380k. A similar structure, but the in-law looks bigger. Can't vouch for the condition of the interior. This was not one of the comps in his report. The comps he used were all, per the report, a mile + away.
I know I still need to update a kitchen and 2 bathrooms. Then some finishing touches. I just didn't think it would lose value in what has been characterized (in the report) as a stable market.
James Daulton
Footballguy
Don't knock your head against the wall trying to understand the appraisal. Someone said it was "art", I'd say it's actually a lot more bs than, but the banks are so terrified of writing a bad loan that you essentially have no recourse against a stupid appraiser.
FUBAR
Footballguy
I'm convinced ours was intentionally low to protect the VA if we defaulted. The comps used were ridiculous - similar in size but one was literally sandwiched between three trailers to one side and a horse farm on the other, on a busy road. The other was on the corner of the busiest road within the square mile, the others weren't much better. Ours was easily the best location and seems to be in the best condition outside anyway.
Chadstroma
Footballguy
A better comp than those used is on thing that the bank can push back with on the appraisal. However, if the appraisal meets the needs of the loan then they won't bother but then you can have the peace of mind knowing that it is a low appraisal based on better comps.brun said:
brun
Footballguy
Yeah the change in LTV isn't enough to affect the loan. I'm not trying to sell it so in the end I guess I got my panties in a bunch for nothing.
Johnny Rock
Footballguy
@Chadstroma or anyone else?
We built new and closed in 8/2009 at 5% 30Y Conv + HELOC and were ineligible for HARP. I GC'd it myself. I believe equity is at least 28% now but RE friends think lower. Concern about appraisals coming in stopped me from hitting the bottom on a refi.
Now we'd finally like to finish the basement, add a deck and possibly a 64' x 40' pole barn.
Local bank did my one-time close construction-to-permanent loan and immediately sold it to a big bank who still holds it.
We built new and closed in 8/2009 at 5% 30Y Conv + HELOC and were ineligible for HARP. I GC'd it myself. I believe equity is at least 28% now but RE friends think lower. Concern about appraisals coming in stopped me from hitting the bottom on a refi.
Now we'd finally like to finish the basement, add a deck and possibly a 64' x 40' pole barn.
Local bank did my one-time close construction-to-permanent loan and immediately sold it to a big bank who still holds it.
- What do you think are my best options for a cash-out refi for a larger amount where the proceeds would cover improvements and possibly other debt if possible? With Jumbo rates so good I'm looking to do one big loan rather than a max conv. + HELOC.
- What type of process would this be?
- Appraisal up front based on the plans, then construction draws?
- What type of financing institution should I be targeting for this type of product for best rate, lowest fees and ability to close as smoothly as possible? TIA
leftcoastguy7
Footballguy
If the appraisal sucks, can you order a new one? A second opinion?
Under the new regulations I wonder if you have to go through a different lender to do this.
Under the new regulations I wonder if you have to go through a different lender to do this.
Zegras11
Footballguy
A FHA appraisal sticks with the home for six months. Yiu can always contest an appraisal and give new info he didn't use.
Wooderson
Fight The Power
Middle of a refi on my house I've had for 3 years. Got the news today that an appraisal is not needed and that I will not longer have to pay PMI. Great news as no more PMI was the biggest reason I wanted to refi. I think it will also drop my interest rate from 4.125% to about 3.75% closing cost under $2,000.
Should finish next week pretty stoked.
Should finish next week pretty stoked.
Chadstroma
Footballguy
Are you still at 5% on the conversion to perm from construction? Everything is really going to depend on the appraisal for you as much as what options you have. The appraisal would be an appraisal like all other appraisals. My thinking on this is that you might want to go with a broker or a large bank that does a lot of mortgage loans. I would prob contact a few people and give them an idea of where you are at and walk through what options that they may have. My guess is that most will tell you it depends on the appraisal that they get. I would seek to push on them for specific options in different scenarios and then go with the one that has the most options. There are a lot of different loan types, programs, etc that could help you but not all lenders do everything.
Chadstroma
Footballguy
If you have a full appraisal then pretty much unless there is an error or better information not used there is not much a lender can do. If the appraisal is a desktop or drive by (used in equities mostly) then they can upgrade if there is reason to believe that there could be better value. If you are paying for it then that ought be an easy thing for them to upgrade. If they are paying for it then they need more reason to believe it will come in higher than you think it ought to or want it to.
fantasycurse42
Footballguy Jr.
Anyone looking to refi a 30 year? You'll be able to do it at under 3% soon enough.
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