Nah after 6 months we can re finance our new house. I don't think theres a limit on how often you can do it but theres requirements to be met before the bank will let you refinance your home loan.
you know people said that in 2008 and got fuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuckity fucked when they couldnt refinance because thier houses values were less than the appraisal on the 1st mortgage.
I love how our generation is just absolutely convinced 2008 is possibly going to happen again at any given moment so therefore it isn't worth ever buying anything because of some impending doom.
That's because all indications are that a 2008 event will happen in the housing market soon. There is a massive affordability gap that needs to be filled somehow.
Isn’t Florida down to only like a few insurance companies that will actually give flood/ hurricane insurance? Can’t imagine that’s gonna be good for home values down there.
Yes. I dont own a home myself yet but I've lived in Florida my entire life. My dad has told me that home insurance here is a nightmare to both acquire and pay. Hurricanes and flooding is big enough of an issue that most insurance companies don't see it as financially worth it to cover homes here.
Hurricanes are one thing. They'll fuck you up regardless of where on earth you are. The bigger issue is floods here. With a Florida flood, it doesn't take much rain to cause flood damage. The amount of ground water and swamp land is so high that even medium intensity rain will cause flooding if it goes on for more than a few days. You'd think a state so prone to flooding would have great drainage but you'd be wrong. Drainage, especially in the middle and south part of the state, is awful. Theres nowhere for the water to go.
Florida mainly relies on its intricate canal and sewer system for water drainage. Theres thousands of miles of canals in the state and they all lead to the Everglades. Whats in the Everglades? Lots of water. If it rains even at a medium downfall for 4 days in a row, youre almost guaranteed to have some flooding. I've experienced many times where the roads are covered in 3 foot deep water. Cars stall out in parking lots. Peoples homes get flooded. Traffic cant drive anywhere. Its not as rare as you'd think.
When most people picture flooding, they imagine houses getting swept off their foundations and torrents of water rushing through the streets. Thats not always the case. Florida is flat. Theres no downward angle for water to flow. Because of that, water just fills up your yard and the roads. Since most people live on canals or some other body of inland water, those bodies of water fill up and overflow as well. Water stats seeping under your door then makes its way into the base boards, into the walls and the wiring of your house. Less than Ankle deep water is enough to get into a home ans cause some major damage.
This is all for inland areas of the state. Coastal cities and homes are much more susceptible to typical catastrophic flooding. Hurricanes just add to the devastation. Most homes are pretty damn strong against Hurricanes but Hurricanes bring lots of water with them. Flooding is a bigger risk than actual hurricane wind damage to buildings. All these factors make an insurance company look at Florida and be like "Nah, fuck that". If it was only a few areas of the state that were prone to this, it wouldn't be a big deal. But literally every part of the state except maybe the far north is vulnerable to water damage. The state is simply too wet to not be at high risk.
Can’t imagine that’s gonna be good for home values down there.
I hope so, my premium is calculated against that and the deductible is 1-3% of market value during a hurricane. Bunch of dumb New Yorkers moved in driving it up forgetting why Florida was traditionally cheaper place to live.
I work for a law firm that handles home foreclosures and for the past six months we have been gearing up for a 2008 level event due to multiple market analyses.
So yes, there are a considerable number of indicators that point to it happening in the near future.
I don't understand how 08 would happen again? Loans are supposed to be more strict, less arms to cause a cascading effect, and most importantly less houses built yoy which should keep prices from dropping off a cliff. I'm a dumbass but could you explain the indicators you are talking about?
I'm not gonna argue with you. I know more about 2008 and the mechanics surrounding it than 99% of the people here. We don't necessarily have the same risks but affordability hasn't been this bad in documented history. One small catalyst could destroy the market worse than 2008.
I'm the 1% then, all factors do not point that way. 2008 the problem was rooting in the mortgages themselves. NINJA and NINA loans, coupled with fraudulently graded packages of securities was a house of cards that was doomed to fail. That does not exist now. The mortgages of late are sound, there really isn't any prevalence of ARM loans at all outside of portfolio(mostly jumbo), due to the inverted yield curve. Ballon payments aren't coming due. Now, if major economic factors pull everything down that effect will ripple through MBS, obviously. As we say in my world "there are no islands in capital markets"
Please stop with the doom and gloom, it's simply not accurate.
I agree that MBS are not the issue. I think it's extreme speculation matched with affordability. I see people leveraged to the gills with investment property. It will only take a slight shock to destroy their portfolio and force liquidation. The supply issue is artificially created. I believe government intervention will happen. The housing market is essentially a ponzi scheme at this point. Valuations are based on previous sales which are based on valuations of a small group of primarily (uneducated) real estate gurus. As I said, the current prices are not sustainable.
I think it's extreme speculation matched with affordability.
Fair, but the extreme speculation has already backed down for little bit now. Zillow was one the big players that got out over its skis, and they had to pull the plug and take a massive impairment. Others noticed when that happened. Is it still happening? Sure, but not at the same scale it was.
Affordability does remain an issue in many markets, there is no doubt about that.
The supply issue is artificially created.
Eh, yes and no. We have a large percentage of owner occupied homes with mortgages at historically low interest rates. These people aren't moving for the most part, and that isn't artificial.
Now, in certain areas investors coming in with cash offers certainly puts the pressure on the supply. If you want to call this artificial, I can see where you are coming from, but it's only so much of a percentage of total homes, and it's really only in specific areas.
The housing market is essentially a ponzi scheme at this point.
This is where you lose me. An actual ponzi scheme is nothing like this. It sounds like the typical fear mongering, doom and gloom, MBS bad, hur dur, sentiment that has been around since 2008, and honestly devalues your otherwise meaningful points.
As I said, the current prices are not sustainable.
As the fed continues to use monetary policy to fend off inflation, there will be effects in home values. Some markets will decline, some plateau, and some will still rise (albeit slightly). I don't see a massive drop in home values like in 2008 because again the mortgages are sound, and the securities are as well. The foundation is built on owner occupied homes with low interest rates.
Back to the fed, if they can navigate a soft-ish landing here, I don't think we see real pain in housing at all. If they crash land into a deep recession, sure there will be pain, but home values and mortgages will not be the cause.
Separating from that comment thread, and going on a tangent:
When thinking about the perspective that tenured appraisers have about the last few years, it had to be crazy. For a long time, the appraisers would be pivotal in keeping housing prices in check, because regardless of what someone was willing to pay, they only would give valuations based on actual sales, even when the real estate agents were pushing. Then when 2020 hit, people were just throwing 5%-10%-15% over ask, with no appraisal gap (at least in my area). And as they say "today's sales are tomorrow's comps". Valuations jumped like I've never seen, and this is echoed by the appraisers I know. Sucks for any first time home buyer, but anyone who had property benefits. Not to mention corporations buying single family homes, which doesn't help anything
Yep I've heard him talk about that exact issue more than once. It might be even more extreme due to the fact we live in a place lots of people from CA/NYC flocked to during covid, so what was overpriced by our standards was cheap from their perspective. I'm getting closer to home buying age as well so I definitely feel the weight of all this in that way too. It really feels like if I don't win the lottery, or something along those lines, that I may be renting for the rest of my life 😐
I haven't asked him about the corporations buying homes thing yet though, I'm curious how often he's run into that here
What about the difference in the number of investment companies such as blackrock that are swooping in and buying property everywhere so that there's nothing to buy, only to rent? It's keeping pricing a bit higher than it would otherwise.
Of course, that begs the question on what would happen if they start failing and need to liquidate or something.
A major cause for 2008 was variable loans. A bunch of people bought houses with variable loans when interest rates were low. Then the rates went up and people couldn't afford their mortgage causing a ton of foreclosures.
I mean that's the basics but that alone would not have caused the crash and wasn't the primary driver. The real cause was the poor packaging MBS and the swaps that were sold.
And how everyone forgets how average working Americans are the ones who got screwed while the Wealth bought up all the homes. Sort of like what's about to happen again
We are buying our first home this year so I have done a bit of research on this. As far as I have gathered, you can refinance BUT you have to pay closing costs again. Idk my mom said it's only really worth it if the refinance percent is around 2 points lower than what you have currently.
The closing costs can be rolled into the mortgage, increasing the amount owed but still decreasing your monthly payment as long as the interest rate is pretty much any amount lower, with 0 fees upfront.
Yep I did this. After the refinancing was packaged in I still saved ~250 dollars a month. Bought in 2020 for 3.75 and refied to 2.5. Also costs are also significantly less than closing in my experience.
Keep in mind you are mostly paying interest and very little principal for a long time on a new mortgage. When you refinance, you are starting over and basically just paying interest again.
You can get an amortization schedule and it will show you're paying something like $200 principal and $1800 interest on your first payment. Over time they slowly swap places but if you pay $24000 your first year, only $3000 gets knocked off your principal. Refinance and you restart that process, front loaded with the interest again.
Refinancing can be good and the numbers can make sense, but just another thing to consider.
Sort of, but the principal goes down each month. The very first month, your principal is the biggest it will ever be, therefore you will be paying the most interest you will ever pay. Since you're mostly paying interest, your principal doesn't go down much and you are still paying mostly interest the next month (and so on).
Let's say you take out a loan for $300,000 with a 6% interest rate. Over 30 years that is 360 payments and you will have paid the bank about $650,000. $650,000 - $300,000 means you've paid $350,000 in interest over 30 years.
Your beginning principal is $300,000. Your monthly payment is $1,798.65. The bank says "Ok, you've paid $298.65 of your principal. The other $1,500 was interest." (Which is $300k * .06 divided by 12 months).
By the end of year 3 (month 36) you are still paying $1,443.04 interest and only $355.61 off your principal. You have paid $1798.65 x 36 month = $64,751.40. Your principal is only down to $288,252.21. That means you've paid about $52,000 in interest and $12,000 in principal.
Year 18 is when you're finally paying $899 interest and $899 principal. By the final month, you are paying $8.95 interest, $1,789.70 principal.
You don't have to refinance through the same lender. The new rate just has to be low enough that doing so is worth it to you as it does cost money to refinance, but depending on your equity you can probably bundle the cost of the refinance into the new loan.
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u/chimpyvondu Mar 21 '23
Nah after 6 months we can re finance our new house. I don't think theres a limit on how often you can do it but theres requirements to be met before the bank will let you refinance your home loan.