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Mortgage Rates (1 Viewer)

I'm starting to wonder if all these workouts people took are going to roost.  

Chad, what are the rules for people basically cash-in refinance to get the forbearances into the loan?  Is this a reasonable solution?  

 
culdeus said:
I'm starting to wonder if all these workouts people took are going to roost.  

Chad, what are the rules for people basically cash-in refinance to get the forbearances into the loan?  Is this a reasonable solution?  
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You can not do a loan until the existing loan is made current. Even non-QM (use to be referred to as sub-prime) won't touch it otherwise. 

 
Chadstroma said:
You can not do a loan until the existing loan is made current. Even non-QM (use to be referred to as sub-prime) won't touch it otherwise. 
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Maybe my question wasn't that great, I understand this to be true.  But can you see a solution being people rolling this non-curency into a new loan?

 
In general, what happens when you shop for a mortgage on a second house? Can you expect to still get the best rates? I assume income weighs heavily? Nothing imminent but wife has thrown out the idea of buying a cheaper second home back north to be able to spend more time near family as Covid has changed our work situations where we are able to work remotely on the regular. Just refied to a 15 on current home. Wondering cash flow wise if we might also need to turn that into a 30 to afford two mortgages. I know most typical FBGs have at least two homes and have experience in this area. 

 
cap'n grunge said:
In general, what happens when you shop for a mortgage on a second house? Can you expect to still get the best rates? I assume income weighs heavily? Nothing imminent but wife has thrown out the idea of buying a cheaper second home back north to be able to spend more time near family as Covid has changed our work situations where we are able to work remotely on the regular. Just refied to a 15 on current home. Wondering cash flow wise if we might also need to turn that into a 30 to afford two mortgages. I know most typical FBGs have at least two homes and have experience in this area. 
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Rates will be higher than a primary residence. 

It would really depend on what you debt to income ratio in how it looks with current loan and second home addee in. 

 
Chadstroma said:
Rates will be higher than a primary residence. 

It would really depend on what you debt to income ratio in how it looks with current loan and second home addee in. 
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And somewhat how it is approached as well, no?  If they were to approach the new loan with the intent of moving to that home and making it their primary?

 
Ron Swanson said:
And somewhat how it is approached as well, no?  If they were to approach the new loan with the intent of moving to that home and making it their primary?
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If you are buying it as your primary and keeping your existing home that is one thing. Buying a second home for a second home is another. Saying you are buying the second home as your primary and not moving is not advised as that would be mortgage fraud. The difference on rates available would be roughly about 25 bps or so. It isn't going to be a huge hit, well, at least not with a broker.

 
flapgreen said:
Tossing around the idea of renting out our home vs selling it once we move out of state in July. We live in one of the hottest suburbs of the Nashville area about 20 minutes from downtown just into one of the bordering counties with a good school district. No HOA and we have a pool and a decent sized lot for the area. Told my wife I needed to ask my message board friends before making a big decision like that. Should we get out now and store away the profits or rent it out and keep building equity and sell in a couple of years? We know nothing about renting or if it would even be too big of a headache to deal with letting some company rent it out. We're never moving back to the area because I'll be working on a military base from here on out. 
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If you decide to lease, shoot me a PM.  I over a company that handles 700+ doors.  I can help you with questions to find the right PM.

As a rule, the lowest monthly % isn't always the cheapest option.  Many of my competitors uncut me and then mark up maintenance 10% and worse yet, only pay contractors 80 cents on the dollar.  It's the wild west out there.

Tough decision for you.  Cash in hand is enticing.  One of my first clients from 2001 couldn't sell their home for $220K back then so they leased it with me for $1400 a month.  Now it leases for $2600 and worth close to $700k (ideally they should sell and by several cheaper rentals).  If you're extremely disciplined you can beat real estate in other areas.  I call it a force savings plan.  You never seem to make much money but if you stay the course you end up wealthy.

 
culdeus said:
I'm starting to wonder if all these workouts people took are going to roost.  

Chad, what are the rules for people basically cash-in refinance to get the forbearances into the loan?  Is this a reasonable solution?  
Click to expand...
culdeus said:
Maybe my question wasn't that great, I understand this to be true.  But can you see a solution being people rolling this non-curency into a new loan?
Click to expand...
I think I know what you are saying but I’m not sure. I’m assuming you are asking if they can refinance with a forbearance loan without actually paying it back.

There was someone in hear who posted about doing a forbearance and using the savings to invest. Hopefully, all went well but when is that all coming due? Something tells me that there’s more of these people who bought GME at the top hoping for $1000 than the ones who bought it at $5.

 
The Z Machine said:
Anyone that's purchasing a new home are you concerned about moving from a place with 15 years left on the note to a new 30-year note?
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In my view 15 vs 30 is really about one question right now with rates as low as they are: What do you value more, cash flow or overall savings. The 15 will get your a better rate and the larger payment together will result in significant savings. On the other side, the longer payment increases your cash flow. With being able to get rates as low as they are now, it doesn't cost much to essentially "buy money". Can I get a better return on my money than 3% elsewhere? I think so. I did a 30 yr when I refinanced my own loan a few months back. 

For a purchase, the only difference of the question may be "we can not afford this upgrade of a house unless we go to a 30 yr" and if that is the case then what do you value you more? A smaller mortgage or a bigger (assuming bigger, maybe better locale or otherwise just more expensive) home? 

 
stbugs said:
I think I know what you are saying but I’m not sure. I’m assuming you are asking if they can refinance with a forbearance loan without actually paying it back.

There was someone in hear who posted about doing a forbearance and using the savings to invest. Hopefully, all went well but when is that all coming due? Something tells me that there’s more of these people who bought GME at the top hoping for $1000 than the ones who bought it at $5.
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Let me be clear, you can not do a mortgage loan until the current loan in forbearance is made current. I checked around for any lender willing to do it and no one is willing to touch that. I also checked with my equity lender to see if they would and no, they will not. Conventional and Govies (FHA, VA and USDA) will not do it. So, it must be a portfolio loan and no lenders are willing to take that on. 

I was very clear a year ago screaming for people to NOT play the forbearance game unless they absolutely had to due to their circumstances. I am well aware of people who think they are smarter than the average bear and used it to take money and invest or whatever. If they have the cash, they can bring the loan to current and then refi or purchase. 

I think it would be nice if Fannie and Freddie took that MOUNTAIN of money from the "market fee" they did on all refinances and allow people to refi from forbearance to get lower market rates and pay up assuming they are working again, etc. But... I don't make the rules, I just live by them. 

 
I mean equity values in homes have soared.  I'm stunned nobody has suggested rolling forebearance in to re-fi as a natural next step.  

 
culdeus said:
I mean equity values in homes have soared.  I'm stunned nobody has suggested rolling forebearance in to re-fi as a natural next step.  
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It goes against basic underwriting principles. They have shown that they are unable to pay the mortgage. 

Likely the biggest issue is that it opens up the lenders to lawsuits as it would violate the qualified mortgage rules aka safe harbor. The gobermant men and women in Congress would need to stop screwing around playing politics long enough to put a law together that would address that and direct Fannie and Freddie to do it. 

If they can't pay- they can sell since most everyone should have equity in their homes and reset and then look to buy later. 

 
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The Z Machine said:
Explain that to me like I don't know crap about finance and have never used the word "forebearance" in a sentence. 
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Most people have equity in their homes (value exceeds what they owe) since the market is either hot or solid pretty much everywhere. The idea here is to use that equity to pay off the old loan with a new loan. The big benefit would be getting into a lower rate as these people have missed the chance to refinance as so many others have taken advantage of because they could not since they were in forbearance. Lower rate, lower payment means they should be better off. 

If they have been in forbearance, they owe money (all the missed payments that they had since in forbearance) and in order to refinance, would need to catch up on that. That can be a significant amount of money even if you are now working again. If they were being cute and doing it to invest, then hopefully they can liquify and then bring positive. For someone who was out of work etc that can be nearly impossible to catch up. 

So, these people are unable to take advantage of the low rates which would actually help them get back to where they were before COVID and layoffs, lost wages, etc. 

They pushed the moratorium to 2022. There will be a lot asked of lenders to give options and make it a soft landing but I wouldn't be surprised to see yet another 'stimulus package' that would be targeted to address it in some way. 

Dingbat Chairwoman of the Finance committee took time out of telling people to riot to introduce a First Time Home Buyers bill that would give up to $25K to people to buy a home. It is a HORRIBLE idea to inject MORE money in an overheated market as it is but you know.... gobernmant. 

 
Chadstroma said:
Dingbat Chairwoman of the Finance committee took time out of telling people to riot to introduce a First Time Home Buyers bill that would give up to $25K to people to buy a home. It is a HORRIBLE idea to inject MORE money in an overheated market as it is but you know.... gobernmant. 
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Maybe it’s just me, but this free money #### has got to stop. I was all for assisting with unemployment for people who’s jobs were lost directly due to the pandemic and continuing that, but I hate seeing this free money for people who haven’t been affected at all outside of a roaring stock market and a hot housing market. Pretty soon, this administration is just going to be forgiving loans and just buying people houses while ratcheting up taxes. It’s getting really frustrating because I don’t think that is far off from reality.

 
stbugs said:
I hate seeing this free money for people who haven’t been affected at all outside of a roaring stock market and a hot housing market
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I'm definitely getting to this position too.  The wide open spigot is heating up things a lot right now.  Feels not wise.

 
The Z Machine said:
I'm definitely getting to this position too.  The wide open spigot is heating up things a lot right now.  Feels not wise.
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It’s a terrible precedent. I understand the people who through no fault of their own lost their jobs because things literally shut down and in some cases are now gone. That said, another 60-70% of people just got tax free bonus checks. It sucks to not get any free money on a philosophical level but seeing people making not much less getting windfalls they don’t need pisses me off. Some of the proposals are for monthly payments and now down payments on a house? We are going down a road that won’t be able to be turned off (makes it easier to be re-elected) and it won’t be pretty. Inflation out the wazoo and taxes out the same wazoo.

 
Chadstroma said:
Most people have equity in their homes (value exceeds what they owe) since the market is either hot or solid pretty much everywhere. The idea here is to use that equity to pay off the old loan with a new loan. The big benefit would be getting into a lower rate as these people have missed the chance to refinance as so many others have taken advantage of because they could not since they were in forbearance. Lower rate, lower payment means they should be better off. 

If they have been in forbearance, they owe money (all the missed payments that they had since in forbearance) and in order to refinance, would need to catch up on that. That can be a significant amount of money even if you are now working again. If they were being cute and doing it to invest, then hopefully they can liquify and then bring positive. For someone who was out of work etc that can be nearly impossible to catch up. 

So, these people are unable to take advantage of the low rates which would actually help them get back to where they were before COVID and layoffs, lost wages, etc. 

They pushed the moratorium to 2022. There will be a lot asked of lenders to give options and make it a soft landing but I wouldn't be surprised to see yet another 'stimulus package' that would be targeted to address it in some way. 

Dingbat Chairwoman of the Finance committee took time out of telling people to riot to introduce a First Time Home Buyers bill that would give up to $25K to people to buy a home. It is a HORRIBLE idea to inject MORE money in an overheated market as it is but you know.... gobernmant. 
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Did you read the proposal lol. $25,000 for first time home buyer, has to also be a first generation home buyer so either of their parents can’t have owned a house in the prior three years, income can only be 120% of the median income for the area except for a few high cost areas and it’s only $20,000 unless you are a minority of some sort, in which you get an additional $5000. Personally, don’t know how they are going to police this.....ie what percentage of ethnicity you need, how they know if your parents have a house and what if you haven’t had any interaction with your parents in a long time. All in all I can’t see it affecting things much given the small percentage of the population who would probably qualify for the program and for a mortgage loan. 

 
stbugs said:
It’s a terrible precedent. I understand the people who through no fault of their own lost their jobs because things literally shut down and in some cases are now gone. That said, another 60-70% of people just got tax free bonus checks. It sucks to not get any free money on a philosophical level but seeing people making not much less getting windfalls they don’t need pisses me off. Some of the proposals are for monthly payments and now down payments on a house? We are going down a road that won’t be able to be turned off (makes it easier to be re-elected) and it won’t be pretty. Inflation out the wazoo and taxes out the same wazoo.
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That’s what I’m worried about. You give people free money long enough and it becomes an expectation. Businesses are having a hard time as it is right now finding employees even though unemployment is still historically high. 

 
stbugs said:
Maybe it’s just me, but this free money #### has got to stop. I was all for assisting with unemployment for people who’s jobs were lost directly due to the pandemic and continuing that, but I hate seeing this free money for people who haven’t been affected at all outside of a roaring stock market and a hot housing market. Pretty soon, this administration is just going to be forgiving loans and just buying people houses while ratcheting up taxes. It’s getting really frustrating because I don’t think that is far off from reality.
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Trying very hard not to get political here... but...

It is BEYOND moronic when inventory is ranges from low to insanely low in almost every market to think "You know what we need to do right now? Give people money to give them an incentive to buy". I can't express enough how dumb it is. Anyone that would think this is a good idea in terms of economic sense in any fashion has no clue what they are talking about. It may make political sense but beyond that, absolutely no sense at all. And this is the Chairwoman of the House Finance committee proposing this poo. It makes me mad. You want to create a housing bubble? Congrats- you found a way you dingbat embarrassment of a scum sucking pandering moron. 

The good news is that there is no much expectation of it going through unless it gets attached to the "infrastructure" bill (infrastructure since like a small percentage of it is actually being spent on infrastructure) and the White House to date does not seem inclined on adding it to their "infrastructure" bill. 

It seems that there is a mad dash to throw as much money out to the masses as possible while one party has the power. It reminds me of Rome giving away free bread and hosting Gladiator games to appease the plebeians. That great scene from Gladiator "I think he knows what Rome is. Rome is the mob. Conjure magic for them and they'll be distracted. Take away their freedom and still they'll roar. The beating heart of Rome is not the marble of the senate, it's the sand of the coliseum. He'll bring them death - and they will love him for it." It doesn't feel much different to me. In the end, there will be an impact. It will have a cost. I just hope that that cost isn't the eventual dissolution of our Republic. 

 
The Z Machine said:
I'm definitely getting to this position too.  The wide open spigot is heating up things a lot right now.  Feels not wise.
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It is already heated which is why it is unconscionable. I can see it making sense in the aftermath of 2008 when there are tons of inventory and not many buyers. Now? It doesn't make a lick of sense. Not only will it not help anything, it will cause damage. 

 
stbugs said:
It’s a terrible precedent. I understand the people who through no fault of their own lost their jobs because things literally shut down and in some cases are now gone. That said, another 60-70% of people just got tax free bonus checks. It sucks to not get any free money on a philosophical level but seeing people making not much less getting windfalls they don’t need pisses me off. Some of the proposals are for monthly payments and now down payments on a house? We are going down a road that won’t be able to be turned off (makes it easier to be re-elected) and it won’t be pretty. Inflation out the wazoo and taxes out the same wazoo.
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The down payment money doesn't help the people that have been hit hard by rona. They are not the ones looking to buy a house right now. It just doesn't make sense. 

 
fruity pebbles said:
Did you read the proposal lol. $25,000 for first time home buyer, has to also be a first generation home buyer so either of their parents can’t have owned a house in the prior three years, income can only be 120% of the median income for the area except for a few high cost areas and it’s only $20,000 unless you are a minority of some sort, in which you get an additional $5000. Personally, don’t know how they are going to police this.....ie what percentage of ethnicity you need, how they know if your parents have a house and what if you haven’t had any interaction with your parents in a long time. All in all I can’t see it affecting things much given the small percentage of the population who would probably qualify for the program and for a mortgage loan. 
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Yes, I did. "First time Homebuyer" is someone who hasn't owned in the last 3 years. The requirement for parents owning can be waived if you spent time in foster care. It also reads something along the lines of "historically disadvantaged" rather than minority, so not sure what people groups have been historically disadvantaged enough to qualify or not. 

To say that the bill is silly would make an Englishman marvel at the understatement. 

 
So I told our neighbor a couple weeks ago we were moving. They're from New York. We live in a suburb of Nashville. They texted us today saying they have a friend moving from there who's been trying to get something here and can't find anything and asking if we'd sell it before listing it. Said he let us stay rent free until we left in July. Will see what he has to say about an offer. 

 
flapgreen said:
So I told our neighbor a couple weeks ago we were moving. They're from New York. We live in a suburb of Nashville. They texted us today saying they have a friend moving from there who's been trying to get something here and can't find anything and asking if we'd sell it before listing it. Said he let us stay rent free until we left in July. Will see what he has to say about an offer. 
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current zestimate plus around +10% seems to be the going rate?

 
flapgreen said:
So I told our neighbor a couple weeks ago we were moving. They're from New York. We live in a suburb of Nashville. They texted us today saying they have a friend moving from there who's been trying to get something here and can't find anything and asking if we'd sell it before listing it. Said he let us stay rent free until we left in July. Will see what he has to say about an offer. 
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It will be worth 10% more in July.

 
Chadstroma said:
Dingbat Chairwoman of the Finance committee took time out of telling people to riot to introduce a First Time Home Buyers bill that would give up to $25K to people to buy a home. It is a HORRIBLE idea to inject MORE money in an overheated market as it is but you know.... gobernmant. 
Click to expand...
If they want to make housing more affordable they need to focus on the supply issues we have. Unfortunately, most of those restrictions are at the very local level. Biden's infrastructure proposal does include language about giving grant money to jurisdictions that move away from exclusionary/single family zoning.

 
Our market is so heated I can’t help but wonder about selling and just renting a place for a few years to see if this cools off (my wife would murder me and never allow this). Our place is is worth 150-175k more than what we paid for it 2 years ago. A house went on the market Friday and was gone Saturday by noon. 

 
Capella said:
Our market is so heated I can’t help but wonder about selling and just renting a place for a few years to see if this cools off (my wife would murder me and never allow this). Our place is is worth 150-175k more than what we paid for it 2 years ago. A house went on the market Friday and was gone Saturday by noon. 
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I just don’t get it. I don’t think there is a house in my neighborhood for sale but I’ve heard about other closer neighborhoods going crazy.

I know the stock market and crypto markets have created a lot of wealth but why the sudden gotta move and pay a load of cash? I know people were moving from cities during the pandemic but why all of a sudden some sort of gold rush now?

Reminds me of 2000-2005 when house prices exploded and then crashed. I don’t see how this ends well once the lumber shortage goes away and builders start actually making new houses.

 
stbugs said:
I just don’t get it. I don’t think there is a house in my neighborhood for sale but I’ve heard about other closer neighborhoods going crazy.

I know the stock market and crypto markets have created a lot of wealth but why the sudden gotta move and pay a load of cash? I know people were moving from cities during the pandemic but why all of a sudden some sort of gold rush now?

Reminds me of 2000-2005 when house prices exploded and then crashed. I don’t see how this ends well once the lumber shortage goes away and builders start actually making new houses.
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Yea my wife and I were talking today and neither of us get where all these buyers were when we bought this house 2 years ago (for instance). I don’t get the demand at all, but I don’t think these are BS loans at all like they were right before the crash. The problem then was people couldn’t afford the houses they were buying. 

 
Capella said:
Our market is so heated I can’t help but wonder about selling and just renting a place for a few years to see if this cools off (my wife would murder me and never allow this). Our place is is worth 150-175k more than what we paid for it 2 years ago. A house went on the market Friday and was gone Saturday by noon. 
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Same in Riverview. Seeing ridiculous prices in my neighborhood and houses on the market 3 days at most. 

 
I heard that a lot of it is the supply of homes.  Inventory levels are suuuuper low, partly as a result of COVID, but also as a results of local policies that don't want growth (either up or sideways).  

 
The Z Machine said:
I heard that a lot of it is the supply of homes.  Inventory levels are suuuuper low, partly as a result of COVID, but also as a results of local policies that don't want growth (either up or sideways).  
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I guess I don’t get the correlation to covid. 

 
stbugs said:
I just don’t get it. I don’t think there is a house in my neighborhood for sale but I’ve heard about other closer neighborhoods going crazy.

I know the stock market and crypto markets have created a lot of wealth but why the sudden gotta move and pay a load of cash? I know people were moving from cities during the pandemic but why all of a sudden some sort of gold rush now?

Reminds me of 2000-2005 when house prices exploded and then crashed. I don’t see how this ends well once the lumber shortage goes away and builders start actually making new houses.
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Population has been increasing faster than housing for almost a decade.  The building industry can expand enough to recover because the lenders won't give them the capital.

 
BassNBrew said:
With work from home people aren't moving.  

With restrictions preventing lease termination it's hard to ask a tenant to move in order to sell.

With Covid impacting foreign countries, building materials are lagging.
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Check out the big brain on Brad. 

 
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stbugs said:
I just don’t get it. I don’t think there is a house in my neighborhood for sale but I’ve heard about other closer neighborhoods going crazy.

I know the stock market and crypto markets have created a lot of wealth but why the sudden gotta move and pay a load of cash? I know people were moving from cities during the pandemic but why all of a sudden some sort of gold rush now?

Reminds me of 2000-2005 when house prices exploded and then crashed. I don’t see how this ends well once the lumber shortage goes away and builders start actually making new houses.
Click to expand...
Inventory. Everything is tied to Inventory. Very little new construction and very few people are selling.

 
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