I've been on the fence. I think I'm just a mark above 4... And I'm curious if I could get better and if in the end it would be worth it.... Bought about 1.5 years ago and my credit recovered well, so I might call my lender and see what she says...
Buyer's market or potential risk? (4 Viewers)
- Thread starter SixSpeedFury
- Start date
DrStrange
4 of a Kind
This has much more to do with the original Poster's personal life than it does with the price of the home.
Is this going to be a new obligation? In other words, are you moving from one mortgage to another or is new to you?
How secure is your income source(s)? The problem we are facing includes a huge amount of uncertainty. It would be a bad thing to jump into a $500,000 loan and lose one or both of your jobs.
Keep in mind the lender is going to be FAR more difficult than they might have been ninety days ago. Both in how they perceive your credit worthiness and how the appraise the property. You may find a solid gold credit score isn't worth nearly as much as might be expected, though at least it will get your foot in the door.
Why do you think moving is a good idea at the moment? Is this a local move or not?
Big life changes cause stress. Taking on a big, new mortgage is significant. How do you and your wife feel about things considering the economic and health situations?
As for the seller and the price drop. I am in almost the same situation as the seller. I have a home that appraised $930,000 in march 2019 and a contract for $695,000. Why did we take that? Because we had the same problem in 2008 and took four years to sell off the properties and we owner financed it because an 800+ credit score wasn't enough to get a 25% down mortgage.
It is quite logical for the seller to realize this might be the only opportunity to sell for the next several years. The seller might value liquidity, might need liquidity in the case of holding an old home while having moved into a new home. Also, the appraisal process might become an issue. My buyer is having issues with their appraisals, even after putting 20% down. We have already agreed to a two week extension, but I worry the lender is acting strangely. Hard to imagine local property values dropped 25% in the last few weeks - - - but maybe they have.
That is essentially the same 25% drop as your seller is offering. It could be evidence of problems with the property, but it could represent a clear-eyed decision to sell now and avoid waiting years for another chance.
DrStrange
Is this going to be a new obligation? In other words, are you moving from one mortgage to another or is new to you?
How secure is your income source(s)? The problem we are facing includes a huge amount of uncertainty. It would be a bad thing to jump into a $500,000 loan and lose one or both of your jobs.
Keep in mind the lender is going to be FAR more difficult than they might have been ninety days ago. Both in how they perceive your credit worthiness and how the appraise the property. You may find a solid gold credit score isn't worth nearly as much as might be expected, though at least it will get your foot in the door.
Why do you think moving is a good idea at the moment? Is this a local move or not?
Big life changes cause stress. Taking on a big, new mortgage is significant. How do you and your wife feel about things considering the economic and health situations?
As for the seller and the price drop. I am in almost the same situation as the seller. I have a home that appraised $930,000 in march 2019 and a contract for $695,000. Why did we take that? Because we had the same problem in 2008 and took four years to sell off the properties and we owner financed it because an 800+ credit score wasn't enough to get a 25% down mortgage.
It is quite logical for the seller to realize this might be the only opportunity to sell for the next several years. The seller might value liquidity, might need liquidity in the case of holding an old home while having moved into a new home. Also, the appraisal process might become an issue. My buyer is having issues with their appraisals, even after putting 20% down. We have already agreed to a two week extension, but I worry the lender is acting strangely. Hard to imagine local property values dropped 25% in the last few weeks - - - but maybe they have.
That is essentially the same 25% drop as your seller is offering. It could be evidence of problems with the property, but it could represent a clear-eyed decision to sell now and avoid waiting years for another chance.
DrStrange
Klobberer
Full House
If you did your due diligence and were comfortable at 800k, seems like a no brainer.
Over here we can refinance at the home bank without closing cost (except 2 months of intrest) and a fee (500-ish) that they will wave if you have a good standing / credit rate. They will never offer the lowest % but it's still a (potential big) money saver...
Congrats on the new house btw
As the market settles down and absorbs all of this, and the Fed continues to purchase assets (MBS), there will continue to be downward pressure on rates.
15 year money available today close to 2.5% and 30 year available close to 3.125% - this is likely to be a point where the planet refinances again.
We're at all time lows.
More than a few Non-QM Lenders have closed their doors in the last 2 weeks due to liquidity issues.
15 year money available today close to 2.5% and 30 year available close to 3.125% - this is likely to be a point where the planet refinances again.
We're at all time lows.
More than a few Non-QM Lenders have closed their doors in the last 2 weeks due to liquidity issues.
Wow, what a brain fart! I just realized I had said under 4 and I am actually under 3%!!! No wonder you were like I could do better!
Unless you're borrowing millions, the payments between 2.5% and 4% isn't very much. Lock in at the lowest rate, but pay at the higher (or highest) rate that you can, as long as the extra goes straight toward the principle. Best to be mortgage-free as soon as possible.
Agree on the last point, BUT - 1.5% on $350,000 = $5,250 in first year.
Isn't very much? Heck of a down payment on a grail set... lol
OP
OP
SixSpeedFury
Full House
Thanks all for the tips! We are comfortable financially to purchase up to $900,000. But we would rather not spend up to the peak to leave leeway in case renovations are needed or any hidden fees pop up. We are in our mid 30's, with a 12 yr. old and a 2 yr. old toddler. We'd put down 20-25%, so we're good there as well.
Oh you know that is definitely on the agenda!
This is what we're worried about. Anything under 4 would suffice, but if we get something better, great!
Oh you know that is definitely on the agenda!
MC Poker
Straight
There are so many variables in this question. I sell Real Estate in Wisconsin and even in lockdown it is a sellers market. Feel free to message me and Id gladly offer you any advice I can. To me the most important questions are what are his motivations for lowering the price so greatly. Second would be your short term vs long term goals. If you plan on selling this home with in 10 years I might be inclined to say wait to see what happens. If your job/income is secure and this is a forever home, I wouldn't worry to greatly about it, the markets will and always do rebound.
OP
OP
SixSpeedFury
Full House
To catch everyone up to speed, we postponed the house searching in April. Market was drying up and then the good Doctor called it:
The wife got furloughed in mid April. Despite her boss saying her job was secured and to not worry, nothing is certain. We held off on looking, made sure we recollected ourselves and just hunkered down. Last month she was brought back on as well as given a promotion, so her nerves finally settled. We started the process all over again, locked in a 2.14% 30-YR. APR with the same 900k ceiling. We've put a bid on two houses in the 650-750 range and that's where we intend on staying. To answer @DrStrange and those who have mentioned it, this is indeed a personal decision. A lot of factors were taken into consideration: closer to grandma to watch the kids, dedicated office/work space now that work from home is the future, moving away from the city but close enough for a short commute into work, bigger space for our little one to grow and potentially another one in case they come along, etc. We were sick of paying rent and had saved enough to decide that it was time. Hopefully one of the agents come through with good news this week. Wish us luck.
The wife got furloughed in mid April. Despite her boss saying her job was secured and to not worry, nothing is certain. We held off on looking, made sure we recollected ourselves and just hunkered down. Last month she was brought back on as well as given a promotion, so her nerves finally settled. We started the process all over again, locked in a 2.14% 30-YR. APR with the same 900k ceiling. We've put a bid on two houses in the 650-750 range and that's where we intend on staying. To answer @DrStrange and those who have mentioned it, this is indeed a personal decision. A lot of factors were taken into consideration: closer to grandma to watch the kids, dedicated office/work space now that work from home is the future, moving away from the city but close enough for a short commute into work, bigger space for our little one to grow and potentially another one in case they come along, etc. We were sick of paying rent and had saved enough to decide that it was time. Hopefully one of the agents come through with good news this week. Wish us luck.
How exciting for you and your wife!!! Congrats!!!
slisk250
Straight Flush
I’m curious just how much property values will drop once the millions of unemployed default on their mortgages? In my situation I’m hoping that the housing market collapses. I may be a buyer in 6-12 months. My current home in the woods is paid off and I have no intention of selling (wife said she won’t live there though). Economics may force her hand. No way I’d even come close to signing another mortgage with no income so she can be next to her parents. The Exit Only visa will be activated next week so it’s all coming to a head sooner than I thought.
I Have a feeling The housing market will crash. Buy low sell high
DrStrange
4 of a Kind
This isn't 2009. The housing market is not at the epicenter of the recession. There doesn't seem to be wide scale frauds throughout the mortgage industry.
The 2009 housing crash drove millions of people from their homes, wiped out their savings and left many other no choice but to rent. The remaining homeowners, the ones that retained their homes after the crash, are wealthier, have more equity and are more resilient. For sure there will be issues, prices may weaken but I would not anticipate a nation-wide collapse.
That being said, Covid19 has specific places where disaster could unfold. Las Vegas would be my first guess for a systematic devastation of the housing market. No doubt there are other candidates. The question is - - - why would you want to live in Vegas? The casino business might be very slow to recover from Covid19. As the casinos go, so goes Las Vegas. Sure your house might have been "cheap" but then what?
I encourage folks to be making thoughtful decisions. Buying a house is typically one of the biggest financial decisions a person makes in their lifetime. This is not a time to "buy low and sell high". Depressed real estate can stay depressed for generations. Buy a home because you need to. In a place that suits you. There is no bargain quite as bitter as being locked in a home that you can't sell in a place you no longer want to be.
DrStrange
The 2009 housing crash drove millions of people from their homes, wiped out their savings and left many other no choice but to rent. The remaining homeowners, the ones that retained their homes after the crash, are wealthier, have more equity and are more resilient. For sure there will be issues, prices may weaken but I would not anticipate a nation-wide collapse.
That being said, Covid19 has specific places where disaster could unfold. Las Vegas would be my first guess for a systematic devastation of the housing market. No doubt there are other candidates. The question is - - - why would you want to live in Vegas? The casino business might be very slow to recover from Covid19. As the casinos go, so goes Las Vegas. Sure your house might have been "cheap" but then what?
I encourage folks to be making thoughtful decisions. Buying a house is typically one of the biggest financial decisions a person makes in their lifetime. This is not a time to "buy low and sell high". Depressed real estate can stay depressed for generations. Buy a home because you need to. In a place that suits you. There is no bargain quite as bitter as being locked in a home that you can't sell in a place you no longer want to be.
DrStrange
Being "close to work" is a big driver for many when selecting where to life. This whole work from home thing has the huge potential to change the real estate market. If you've been working from home effectively for the last 4-5 months, companies may decide that they don't need everyone to be in the office post COVID and as a result, many may move to be further from work since there will no longer be a daily commute.
This could be huge for big cities - a buddy of mine who lives in central London says that it's deserted and the building he's in is at less than half occupancy.
My company is already discussing downsizing the office and having hot-desks rather than fixed places for people to sit.
And I'm thinking about investing some money in my house to build out a study now that working from home may not be just temporary.
This could be huge for big cities - a buddy of mine who lives in central London says that it's deserted and the building he's in is at less than half occupancy.
My company is already discussing downsizing the office and having hot-desks rather than fixed places for people to sit.
And I'm thinking about investing some money in my house to build out a study now that working from home may not be just temporary.
I echo DrStrange's sentiments about the market in general, though I look at the Vegas market with a little more optimism. I just refinanced a month or so ago from a 4.125% 30-yr to a 3% 15-yr, and I'm looking to possibly buy an investment property in the vegas area toward the end of the year if/when the vegas market crumbles. Will Vegas suffer with the casinos taking a hit? yes... however it's proven through the decades to be a resilient place, reinventing itself as needed to keep up with the changing times...
You think Vegas is bad, you should see Hawai’i. Hawai’i feeds off tourist and our gov just extended the 14 day mandatory quarantine on visitors till September. We are over 40% unemployed as most work for hotels or rest which is all shut down. I’m glad I’m a essential worker but I can Gaurantee u the housing market will crash in Hawaii. ESP all Airbnb and short term rentals are banned at this moment. Can you imagine the people who have 2-6 of these and can’t rent em out as a short term rental, these will fold up
slisk250
Straight Flush
I can see where you are coming from still think prices will drop. I was able to benefit from my last real estate sale in 2005 when I left the states. That summer was a sellers market with low supply and many buyers as some tech companies were opening locations in PHX Metro. While I do not know about a crash in PHX again, I can't imagine that prices will hold at all with the unemployment. I'm hoping for a 20% base drop in housing prices. There certainly will be foreclosures and people forced to sell at a lower point than they would under normal circumstances.
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