The real problem: People buy a monthly payment - not a price. Rising mortgage rates kill prices. Frankly, if I had any “investment” property or lived in a home that is way beyond my means, I’d sell IMMEDIATELY. Let the high rates kill prices, get back in, and then refinance when rates come down.
As they do with cars.
, if I had any “investment” property or lived in a home that is way beyond my means, I’d sell IMMEDIATELY.
Roger that.
Which is why car loans are routinely calculated over 6 years vs. the traditional 3 or 4.
Currently selling our home and in the midst of a bidding war. It will sell for thousands more than asking price. Which is ridiculous! Not only are interest rates low but FHA is still doing low down payment options. Hmmm isnt that what got us into trouble the last time.
That's not the right way to think. First of all, if you are not renting a property out, it is NOT an investment - it is a speculation.
Is the asset cash-flowing, or not? If the asset is rented and delivering a positive cash flow, then who cares what the market price is? You are not selling and your tenant is paying the mortgage for you.
Does anyone seriously expect a massive crash in rental rates? Did we see one after 2008? No - rents went up, because mortgage lending ground to a halt.
Market crashes do give you the opportunity to acquire more assets if you have the liquidity, but selling even a highly appreciated asset in anticipation of a crash just triggers a big taxable event. And taxes always eat sellers alive.
Better to use the appreciated market value to put more debt on the property at these super low interest rates. Money from a cash-out refinance can be used to acquire more assets - and since the proceeds are borrowed, they are tax free. Our tax code richly rewards intelligent use of debt - and brutally punishes Depression-era savings-focused thinking.
Dave Ramsey give great advice for the kind of people who take out payday loans to buy cigarettes. But people who want to be successful need to learn how to use debt intelligently - not run in terror from it.