Posted on 12/11/2023 10:23:25 AM PST by ChicagoConservative27
Banks get scr#wed on mortgages. If the rate goes up, customer keep their cheap mortgages. If the rates go down, customer refinace.
They do peel off a lot of the lousy mortgages, and package them as “fixed income investments” to the clowns that run pension funds. Believe me, the good fixed income vehicles are snapped up by the billionares, and the drek goes out to the retail market.
Equity. I stopped renting when the rents in my area went up. I bought a little house instead, and after 7 years sold it and even through I lost money on it, I still walked away with a cool 50K.
Good for you! I was afraid you may be one of the young casualties who simply couldn’t keep up and lost it all. There have to be many such people out there with their hearts broken.
They also typically have a coherent family structure (like Americans used to have) and have multi generations living under one roof. This helps spread the mortgage cost around. Smart if you ask me.
Actually, if rates go up, fixed rate people are protected.
But if they go down, you can refinance a fixed rate.
So a fixed rate mortgage is essentially an adjustable rate mortgage that can only go down.
I never bought more than I could afford, and I kept making payments. Halfway through my adult life a divorce set me back to zero, but I kept plugging away.
Yes, I’m familiar with that tale as a parabel. But here on earth, I liked youth better than post-youth. Since it is just a daydream, I can daydream that my friends and family all got to turn the clock back, too. A daydream isn’t logical.
I would choose my 40’s....................
You must not have much experience living next to Mexicans.
Fair enough, but if you move around so frequently that fluctuations in the market value of your home have serious implications for you, there's a good chance you shouldn't even own a home at all.
I look at it this way ...
Would you ever even consider an investment that had all of these negative qualities to it?
1. You have to borrow money to buy it.
2. You have to pay recurring maintenance and insurance costs while you own it.
3. It generates no income, so it will carry a negative cash flow for the entire time you own it.
4. It is highly illiquid (i.e., you can't sell it off easily).
5. It has the worst possible diversification of any real estate investment (i.e., it's one asset in one asset class in one location).
Would you ever buy $400,000 worth of Exxon/Mobil stock or U.S. Treasury bills under these conditions?
You're 100% correct. Go to the head of the class. You have it all figured out!
Mine also. Early 2023.
What is the NASDAQ going to do over the next NINE years? And what will the short-term savings rate be over the next NINE years?
Do the math and compare the rental vs. the purchase. In almost any scenario, it makes more sense to own the home over the course of those ten years than to rent.
Suppose you put 20% down on a $400,000 home and financed the rest with a 30-year fixed-rate mortgage at 6.5%.
If the home loses 10% of its value over ten years then it is still worth $360,000 while the balance on your mortgage is less than $272,000. At that point you can continue to pay off the mortgage or even refinance it and end up with a lower mortgage payment for the next 10-30 years.
Yep. This is our ‘forever farm.’ We’re both leaving feet first! ;)
I have a friend that is building an $800K home right now. They’re in their 70’s. Yes, they can afford it, but I’m still baffled as to why you would do this to yourselves at this time of life.
That’s not a mortgage payment! That’s a cell phone bill!
Congratulations!
I went to school in Newark 37 years ago and it was crazy then!
A mortgage payment in DC was a 1 room apartment in Irvington.
Why not sell and move?
How much of that is due to people’s variable mortgage rates varying?
How many people on this forum complained for years that interest rates generally were artificially low and needed to be raised?
No. The problem is structural now. Home values have gone up 35% in the last 3 years. People who have a home and a locked in low mortgage (or entirely paid off home) have almost no incentive to sell their homes. If they sell and re-buy a new home, they have to reset their interest rate AND their property tax assessment will reset as well. Better to keep the home and rent it out if you HAVE to move. This will take a decade or longer to resolve and a lot of political change which is unlikely to happen especially in my home state of CA which is facing a $65 billion deficit this year. There's just hardly anybody in a position to sell a home, and few in a position to buy the ones there are.
Neighbors... and politicians.
The graffiti written on the walls tells the residents that it's only getting worse in many of these areas.
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