Mortgage EDU

[saabguy]

We bought a 2nd home, closed late July, and it was interesting to hear that we "had to" pay 2 points the LO said that's fannie / freddie these days it's part of how they price it.

we did get 6.125 30 year fixed so while at the time my wife didn't quite get it that it was "good" for that market, now she's starting to understand

These are all your adjustments related to 2nd homes. There are other adjustments as well based on credit scores, property type, etc. So you add up all the adjustments to see what the total "hit" is, and usually it's between 0.25-1.00 points. And most of the time you have room in the rates to say "you can get 6.00% and pay the 1 point in adjustments, or you can have 6.25% without any points." The higher rate absorbs the points/fees. But with 2nd homes, there simply isn't enough room to absorb that high of adjustments/points. It's substantial. And as rates go up, the yields that investors offer starts to diminish. The higher the rate is, the more chance is later on that the loan gets refinanced and paid off early, which screws the investor who initially bought the loan with the expectation of collecting interest on it for usually 5+ years.

 

[silver60]

These are all your adjustments related to 2nd homes. There are other adjustments as well based on credit scores, property type, etc. So you add up all the adjustments to see what the total "hit" is, and usually it's between 0.25-1.00 points. And most of the time you have room in the rates to say "you can get 6.00% and pay the 1 point in adjustments, or you can have 6.25% without any points." The higher rate absorbs the points/fees. But with 2nd homes, there simply isn't enough room to absorb that high of adjustments/points. It's substantial. And as rates go up, the yields that investors offer starts to diminish. The higher the rate is, the more chance is later on that the loan gets refinanced and paid off early, which screws the investor who initially bought the loan with the expectation of collecting interest on it for usually 5+ years.

View attachment 262542

Yes, she said there's no way to get rid of the 2 points, can't raise the rate even if we wanted to (just theoretical as of course we didn't want this option) and buying down wasn't beneficial we'll be paying off the loan under 10 years most likely but if we decide not to that's why we chose the 30 year fixed.

What she did not tell us is we'd get a much better deal at 30% down which was something we could have afforded to do, but, we chose the 20% option to free up 10% to buy the furniture and tv's and decorate the house.

 

[saabguy]

Yes, she said there's no way to get rid of the 2 points, can't raise the rate even if we wanted to (just theoretical as of course we didn't want this option) and buying down wasn't beneficial we'll be paying off the loan under 10 years most likely but if we decide not to that's why we chose the 30 year fixed.

What she did not tell us is we'd get a much better deal at 30% down which was something we could have afforded to do, but, we chose the 20% option to free up 10% to buy the furniture and tv's and decorate the house.

Well that sucks. 25% down is where most of my investors end up at. for an extra 5% down, it saves 1.25% in fees. So it works out to only putting an extra 3.75% down. 30% down is less in fee too, but compared to 25% down, it's only saving 0.50% in points. So coming up with an extra 5% to save 0.50 points...a lot of investors would prefer to keep that extra money in the bank.

 

[saabguy]

For context, rate sheets come out every morning around 10am. If the market moves around 20 points (up or down), investors will often “re-price” which is basically saying “due to the substantial change, we’re pulling our morning rate sheets and here are new rates.” So keeping in mind that 20 points is a pretty significant move, here’s what happened today:

View attachment 261618
that’s not 1.13 points. That’s a 113 point swing today. Crushed.

Hey remember back when I said 113 points was a huge loss for the day in mortgage rates?

We're currently down another 141 points. The market is imploding

 

[stevezissou]

Hey remember back when I said 113 points was a huge loss for the day in mortgage rates?

We're currently down another 141 points. The market is imploding

Translation?

 

[Jon91SE]

Translation?

 

[Joseph Scumsworth]

There’s no easy way to say this. The last 6 weeks, rates have been getting shit-pumped. In the almost-16 years I’ve been doing this racket, we’re close to the highest I’ve ever seen now. If people ask “what’s the rate today then?” I pretty much say “what’s the fuckin’ difference? Whatever it is today, it’s going to be higher tomorrow. Maybe even by this afternoon it’ll be higher.” I don’t even look at rates to price them now, too ugly. I’d guess for a good credit conventional borrower you’re somewhere between 6.5%, and I wouldn’t be surprised if some places are at or near 7%. I have maintained all along that the housing shortage would help support the housing market and values, but if we’re approaching 7%, some people simply won’t qualify, and others will just say fuck it and find alternatives to buying near ATH prices and decade+ highs for rates. I’m sorry for anyone trying/needing to buy now. It’s not pretty. My local area is even worse, considering expensive home insurance premiums have gone up probably 300%, flood insurance in some areas have gone up significantly. Hell, even utility bills have gone up significantly for no discernible reason. Shit is cray

I've been stuck trying to get a home myself. Since the chances of me coming into a windfall are next to nil, I don't think I have any other choice but to lay low, save, and wait.

 

[stevezissou]

I've been stuck trying to get a home myself. Since the chances of me coming into a windfall are next to nil, I don't think I have any other choice but to lay low, save, and wait.

Disregard females

Acquire currency.meme

 

[saabguy]

Translation?

If you were doing a new loan for $300,000, to get the same rate available today compared to the end of the day Friday, it would cost you an extra $4200. Or, without paying any extra, your rate is approximately 0.375% higher. In one day that’s nearly unheard of. And this has been going on for the last 6 weeks (not as severe as today, but multiple 100 point daily swings, and most other days “only” losing 30-60 points).

 

[aloe]

Hey remember back when I said 113 points was a huge loss for the day in mortgage rates?

We're currently down another 141 points. The market is imploding

One of the greatest cinema lines of all time

 

[stevezissou]

If you were doing a new loan for $300,000, to get the same rate available today compared to the end of the day Friday, it would cost you an extra $4200. Or, without paying any extra, your rate is approximately 0.375% higher. In one day that’s nearly unheard of. And this has been going on for the last 6 weeks (not as severe as today, but multiple 100 point daily swings, and most other days “only” losing 30-60 points).

TRANSITORY

 

[Jon91SE]

TRANSITORY

You dumb bitch

 

[stevezissou]

You dumb bitch

 

[saabguy]

 

[calisteph6]

These are all your adjustments related to 2nd homes. There are other adjustments as well based on credit scores, property type, etc. So you add up all the adjustments to see what the total "hit" is, and usually it's between 0.25-1.00 points. And most of the time you have room in the rates to say "you can get 6.00% and pay the 1 point in adjustments, or you can have 6.25% without any points." The higher rate absorbs the points/fees. But with 2nd homes, there simply isn't enough room to absorb that high of adjustments/points. It's substantial. And as rates go up, the yields that investors offer starts to diminish. The higher the rate is, the more chance is later on that the loan gets refinanced and paid off early, which screws the investor who initially bought the loan with the expectation of collecting interest on it for usually 5+ years.

View attachment 262542

Is that the same for vacation homes or only for investment properties? I want to buy a vacation property but these rates are crazy. We’re almost priced out of the market but I guess we can just wait.

 

[saabguy]

Is that the same for vacation homes or only for investment properties? I want to buy a vacation property but these rates are crazy. We’re almost priced out of the market but I guess we can just wait.

Vacation homes are now priced the same as investment properties.

Because all you motherfuckers told us “oh we want a nice little beach getaway property” but had your Airbnb listing all ready to go live before it even closed.

Now…..YOU PAY.

 

[saabguy]

One of the greatest cinema lines of all time

I’ve been puckered since July.

 

[Mike00]

We bought a 2nd home, closed late July, and it was interesting to hear that we "had to" pay 2 points the LO said that's fannie / freddie these days it's part of how they price it.

we did get 6.125 30 year fixed so while at the time my wife didn't quite get it that it was "good" for that market, now she's starting to understand

100%. locked in second home today had a half point and did get 6.125 but it was on a 7 year ARM. I talked to broker today she had 3 rate cards issues and likely to be more of that over the next 45 days. SHould be fun.

Ahh well if it hits 7.5% plus - which looks likely. Even losing 10% on a $735k home you end up back to almost even on the monthly. Not holding off multiple years with cash in bank while stagflation occurs.

HUge difference on 25% down vs 20% also. Not much for going beyond. And 30 year fixed made no sense with all the points.

Saabguy:

Well that sucks. 25% down is where most of my investors end up at. for an extra 5% down, it saves 1.25% in fees. So it works out to only putting an extra 3.75% down. 30% down is less in fee too, but compared to 25% down, it's only saving 0.50% in points. So coming up with an extra 5% to save 0.50 points...a lot of investors would prefer to keep that extra money in the bank.

Saw this after but I was shocked by points difference going up 5%. I always expect a shift but not this much.

 

[Joseph Scumsworth]

Disregard females

Acquire currency.meme

Started seeing one and following the acquire currency bit. If the relationship Hindenburgs then I’ll just acquire more currency faster.

 

[stevezissou]

Started seeing one and following the acquire currency bit. If the relationship Hindenburgs then I’ll just acquire more currency faster.

You literally just confirmed the meme

 

[Joseph Scumsworth]

You literally just confirmed the meme

🤦‍♂️

 

[SkiMax]

Soooo what are we looking at for rates these days? Heard they are falling

 

[mysteryman]

Soooo what are we looking at for rates these days? Heard they are falling

do you know how to google?

 

[saabguy]

Soooo what are we looking at for rates these days? Heard they are falling

They have certainly came down from their highs of 7+% not too long ago. They got down to around 6% in mid December, but they increased the 2nd half of December. Not because of any reason in particular. Trading volume is light during the end of year holiday time, so minor reports and events can have a disproportionate impact on markets, and can cause volatility. That’s mainly what we saw. Expecting 2023 for rates to continue improving.

And when they do, more people will be on the hunt to buy, which will probably cause house prices to go up again.

 

[SkiMax]

They have certainly came down from their highs of 7+% not too long ago. They got down to around 6% in mid December, but they increased the 2nd half of December. Not because of any reason in particular. Trading volume is light during the end of year holiday time, so minor reports and events can have a disproportionate impact on markets, and can cause volatility. That’s mainly what we saw. Expecting 2023 for rates to continue improving.

And when they do, more people will be on the hunt to buy, which will probably cause house prices to go up again.

Thanks for the update!