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re: What is the board's predictions regarding mortgage rates over the next 5 years?
Posted on 6/4/23 at 9:01 pm to Weagle25
Posted on 6/4/23 at 9:01 pm to Weagle25
You overpaid for your mortgage.
Taking out a 30 yr or 15 yr fixed rate and dumping it for another loan in 5 years is the definition of being overcharged for your interest rate.
The average duration of a mortgage is 4 years. You aren't alone. Almost everyone does it.
I got out of PMI by paying "what I should have paid" in the fixed rate mortgage. I was in a 6 month LIBOR and even with the rate going down and coming back up higher than I started, I was 10s of thousands ahead.
Why buy a 20,000 square foot home if you are only going to live in 2,000 of it?
Taking out a 30 yr or 15 yr fixed rate and dumping it for another loan in 5 years is the definition of being overcharged for your interest rate.
The average duration of a mortgage is 4 years. You aren't alone. Almost everyone does it.
I got out of PMI by paying "what I should have paid" in the fixed rate mortgage. I was in a 6 month LIBOR and even with the rate going down and coming back up higher than I started, I was 10s of thousands ahead.
Why buy a 20,000 square foot home if you are only going to live in 2,000 of it?
1
Posted on 6/4/23 at 9:52 pm to meansonny
If I take an ARM initially on my mortgage and let it ride for 15-20 years
Vs
Taking a 4.5% fixed 30 and refinancing to a 2.99% 5 years later and own the property for the same amount of time.
Which do I come out ahead on?
Vs
Taking a 4.5% fixed 30 and refinancing to a 2.99% 5 years later and own the property for the same amount of time.
Which do I come out ahead on?
Posted on 6/5/23 at 5:05 am to Weagle25
quote:
Taking a 4.5% fixed 30 and refinancing to a 2.99% 5 years later and own the property for the same amount of time.
How about you give us a scenario that’s actually realistic? Plus you didn’t even give a comparable ARM rate so how is anyone supposed to argue this? I’m on the same side as getting fixed but this is not attainable right now below 5, much less assuming we go below 3 again in 5 years.
Posted on 6/5/23 at 6:41 am to MrJimBeam
quote:
How about you give us a scenario that’s actually realistic?
We’re talking about my mortgage so I don’t know how that’s not realistic.
I already said myself using his or my situation isn’t really relevant to the question we’re answering but he chose to keep talking about it.
If he uses any sort of realistic ARM rate, it’s not going to work out. Math only works out if you’re turning over mortgages left and right.
Posted on 6/5/23 at 7:10 am to Weagle25
We can only comment about the first 5 years.
You took out a fixed rate which was higher than the arm and refinanced out of it in 60 months.
Versus taking an arm rate and refinancing out of it in 60 months.
Not only was the arm lower at origination, but it dropped during the course of the 60 months.
I stand by my statement.
You ultimately screwed yourself over by taking the fixed rate and keeping it only 60 months.
You took out a fixed rate which was higher than the arm and refinanced out of it in 60 months.
Versus taking an arm rate and refinancing out of it in 60 months.
Not only was the arm lower at origination, but it dropped during the course of the 60 months.
I stand by my statement.
You ultimately screwed yourself over by taking the fixed rate and keeping it only 60 months.
Posted on 6/5/23 at 7:14 am to shutterspeed
quote:
What is the board's predictions regarding mortgage rates over the next 5 years?
Inflation is remaining sticky so we can expect at least one more rate increase this year.
At the least, I don't think we see sub 5% until sometime next year (at the earliest). It would be nearly impossible for us to see sub-4% within the next 5 years (at least in the current view, a lot of things can happen in five years).
Posted on 6/5/23 at 9:02 am to Bard
At what lower rate would it start to become worthwhile to begin to consider pulling the trigger on a re-finance from 5.5%?
This post was edited on 6/5/23 at 8:48 pm
Posted on 6/5/23 at 9:05 am to shutterspeed
It completely depends upon the loan size.
Posted on 6/5/23 at 9:09 am to shutterspeed
Whenever your break even on your cost to re-fi in X number of months that you are comfortable with, and you can afford the re-fi without any issues.
I close next Monday and I am buying down to a break even that I'm comfortable with.
At the end of the day it's a gamble based off of what you think future rates will look like.
I close next Monday and I am buying down to a break even that I'm comfortable with.
At the end of the day it's a gamble based off of what you think future rates will look like.
Posted on 6/5/23 at 9:12 am to BabyTac
quote:
If you can’t pay cash for something, you can’t afford it.
Yeah, and thanks to our government, paying cash for major purchases like a home has gotten exponentially less realistic.
Posted on 6/5/23 at 9:29 am to meansonny
quote:
stand by my statement. You ultimately screwed yourself over by taking the fixed rate and keeping it only 60 months.
You’re looking at it in hindsight. There’s almost always going to be a better way to do it when you know with 100% certainty what all the variables are because risk isn’t in your equation at all.
If I knew I’d be refinancing in 5 years, sure I could’ve done an ARM. But at the time no one saw 2.99% coming. So why would I bank my decision on that happening? It’s about the logic of the choice. Especially when you’re giving advice for someone now based on what will or will not happen in the future.
You’re just not even factoring risk into your decision making at all which is my whole point with fixed rates.
This post was edited on 6/5/23 at 9:33 am
Posted on 6/5/23 at 9:36 am to shutterspeed
Most people say when it’s 1 percent or more of a drop it’s worth considering, depending on how long you plan to stay in the home.
Posted on 6/5/23 at 9:44 am to shutterspeed
I'm praying they get back to at least low 4s in the next 5 years.
Posted on 6/5/23 at 9:54 am to Weagle25
quote:
You’re looking at it in hindsight
The average duration for a mortgage is 4 years.
That isn't hindsight.
That is foresight.
We are clogging the thread.
Agree to disagree.
Cheers
Posted on 6/5/23 at 10:23 am to BourbonDad
quote:
We’ll never see sub 4.0 again.
As someone that closed two months ago please let me dream
Posted on 6/5/23 at 5:44 pm to BabyTac
quote:
If you can’t pay cash for something, you can’t afford it.
So your solution is to keep renting for the same amount or sometimes more, and lose the opportunity to begin building equity?
Posted on 6/6/23 at 3:34 pm to shutterspeed
quote:
Out of curiosity.
4.5% to 7.5%. I refi'd out of a 30 yr 2.75% to a 1.625% ARM that was locked for 84 months, still have 62 months left at that rate, cap is 6% on the remaining 276 month term, and would likely pay it off at that point if we are still here. The super low interest rates artificially drove house prices up significantly and I don't see that as a good thing for the average buyer. There are some interesting numbers coming out of FL regarding rental properties and declining values.
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