1st mortage, is 4.5 a good rate on 30 yrs?

Best you're gonna get this week. Overall, still very, very good.

Closed in May of last year at 3.625% on a 30 year fixed

Since we're dickwaving here, I closed November 2012 for 30 years at 3.25%. On a condo. No points.

ETA: To the OP, yes 4.5% is probably just fine and still historically very good.

I locked 4.375% in September 2013, 30 yr fixed

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Should I feel bad about my 5% in 2011?

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Not a bit. There's a slight downside to the great deal I got, namely, I'm basically locked into owning this property for 30 years now. But that's a price I'm willing to pay.

I got lucky more ways than one - I had tried to refi my existing 5.5% note a tad early at 4% but the guy working at that morgage lender fricked up and the rate lock expired through no fault of my own. I was able to provide emails to his boss showing it was their fault and quickly got assigned someone more competent. That one was very professional but in the meantime the market rate had tanked.

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I'm basically locked into owning this property for 30 years now. But that's a price I'm willing to pay

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Ha. I'm in 30 @ 3.625 and drawing up plans as we speak! I'm also up almost 150k in value since building in 2011, so we're going to throw that equity into next one. Even at 4.5% and 1000 extra sq. ft. going into next one, the note is only couple hundred more a month. And being in the biz I can build in the low 700's and immediately will be valued in high 800's, low 900's.

Back on subject, I hand this out to all my clients, especially those just entering the market. Since 1971, when the Fed started tracking, at 4.5 your still in the top 1-2%.

LINK

I'll join in. 2.5% on a refi of a 10 year loan (was in 3rd year). No points.

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2.5% on a refi of a 10 year loan

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I maintain this is not as good as a 3.5% for 30, because you're paying a higher amount to more quickly retire a debt that is lower than the rate of inflation. 2.5% is obviously lower but the negative real ROI on the extra payment amount more than offsets that.

These mortgage rates are great, but the only real way to get a good deal on a house is to pay down the mortgage much quicker than 30 years.

I spend most of my time in New Orleans, this part varies by locale but here is my example.


I would argue anyone who tells me a house in New Orleans is a good investment is a moron. The total ownership cost of a house in New Orleans is a terrible investment. I did the math on the house that I rent part of when it sold recently. I also did similar calculations on condos I could purchase that are comparable to my rental. Here is a breakdown of my example house: When I say approx that means rounded number not a guess.

Sold for approx $1.7 million
Prop Taxes: approx $24,000/yr
Insurance: approx $28,000/yr plus windstorm risk exposure approx $100,000 (deductable)
Interest cost assuming 30yr and 20% down
$977,425.29
Taxes and Insurance assuming no tax inflation or premium inflation (obviously over conservative)
$1,560,000

So you're looking at a cost not including your principal investment ( $1.7 million) or maintenance/utilities/capital improvements of nearly $2.6 million. Add your principal and you get about $4.23 million in 30 yr costs. Remember now we simplified, taxes would go up, insurance would go up, often by a bigger number than inflation.

If home prices continue to rise by an average of 3.4% annually over the 30 years your house will be worth $4.6 million with a minimum outlay of $4.23 million. Once you add in maintenance/tax+insurance inflation/loss risk due to poor insurability it really is a terrible investment.

The 8% difference in projected value over costs won't even come close to covering upkeep costs, let alone make the downside risk tolerable.

When I looked at the numbers on 1-2 bedroom high end condos the numbers were actually even worse due to comparable rentals being so affordable.

Bottom line: Look at an amortization calculator, understand the real interest costs. Get a long loan if you need to, but manage your cashflow to pay down the debt quickly. Interest on a large loan is a cancer on your overall wealth. Ownership costs and purchase price are nowhere near the same thing.

And lastly since its tax season: The tax write off for interest argument is bullshite. Spending $100 in interest to get $25 or $30 back in taxes is never a good investment.

3.65 rate 15 year loan= $30,000 interest for every $100,000 borrowed

4.5 rate 30 year loan= $82,000 interest for every $100,000 borrowed

Closed in Dec 2012 at 3.25% on a 30 year fixed. Was building at the time and they just dropped right at the right time and then started creping back up. Couldn't have been luckier.