I knew mortgage rates made a huge difference in payments.....but.....

[DCLMP]

The low rates aren't why it crashed last tim. Being able to get a mortgage without proving income did. People getting loans with a variable rate did. People buying houses with low fixed interest rates that have proved their income aren't going to cause a housing crash. It's like the total opposite of what a lot of the issue was back then.

I'm well aware of why it crashed last time. Thanks. Housing prices skyrocketing in a bad economy gives me some pause. Low-interest rates lead to inflation. We're seeing that everywhere. I personally wouldn't buy a house right now. Just because I can always afford the mortgage doesn't mean I won't be upside down on the loan in a few years.

 

[barkley]

I'm well aware of why it crashed last time. Thanks. Housing prices skyrocketing in a bad economy gives me some pause. Low-interest rates lead to inflation. We're seeing that everywhere. I personally wouldn't buy a house right now. Just because I can always afford the mortgage doesn't mean I won't be upside down on the loan in a few years.

absolutely. the house we sold in 2006 in california is still not sellable for what those buyers paid us then despite being in a hot housing market once again. there have been a number of owners of that property since the buyers we sold to lost it (all buying at hundreds of thousands lower in price) long after the lending requirements tightened but the economy tanked/inflation rose. people could afford the home on their incomes at the time they bought it but job losses or drastic paycuts put an end to that. ones that managed to keep their jobs/incomes saw skyrocketing cost of living increases in other areas of need (gas prices/massive toll increases/healthcare costs anyone????) and when it came to making ends meet.........the ends didn't.

i think it's a spectacular time to re-fi but even if i had to pay significantly more in interest i would prefer buying a house when it's a buyers market. i paid allot less on my current home with much higher interest rates than someone would pay now with it's inflated value (and i could/did drop my payment with refi's when rates dropped, someone buying high can't renegotiate their signed and closed deal purchase price when values drop down the road).

 

[tvguy]

absolutely. the house we sold in 2006 in california is still not sellable for what those buyers paid us then despite being in a hot housing market once again. there have been a number of owners of that property since the buyers we sold to lost it (all buying at hundreds of thousands lower in price) long after the lending requirements tightened but the economy tanked/inflation rose. people could afford the home on their incomes at the time they bought it but job losses or drastic paycuts put an end to that. ones that managed to keep their jobs/incomes saw skyrocketing cost of living increases in other areas of need (gas prices/massive toll increases/healthcare costs anyone????) and when it came to making ends meet.........the ends didn't.

i think it's a spectacular time to re-fi but even if i had to pay significantly more in interest i would prefer buying a house when it's a buyers market. i paid allot less on my current home with much higher interest rates than someone would pay now with it's inflated value (and i could/did drop my payment with refi's when rates dropped, someone buying high can't renegotiate their signed and closed deal purchase price when values drop down the road).

My neighbors across the street bought in 2006 at the peak. They were upside down for a long time. Paid $400,000 in 2006, worth about $525,000 now so the the market has more than recovered it. Houses often sell within hours of listing here. Lots of Bay Area transplants snapping up bargains.

 

[LeslieLou]

What I had to go through to prove income and be eligible for the rates I have was significant. At least the banks I have worked with recently don’t seem to be giving away mortgages. FWIW they would have given me more than I am comfortable with so maybe that’s a red flag or I’m just conservative with money.

For our main house that we refi’d, we were lucky enough to buy the land before the latest boom- bought in 2016. We built our home with a lot of sweat equity and a custom builder. We are in good shape from an equity perspective. We live in the fastest growing county in our state so demand is fast outpacing supply.
For our vacation home, we rent it out and while we can cover all the costs if need be, the rentals so far will cover all costs associated and provide some returns. The market was tight but this home in 2006-7 would have ran 150k more than we paid in 2020. We plan on keeping it for the long haul so aren’t worried about the market.

 

[DCLMP]

absolutely. the house we sold in 2006 in california is still not sellable for what those buyers paid us then despite being in a hot housing market once again. there have been a number of owners of that property since the buyers we sold to lost it (all buying at hundreds of thousands lower in price) long after the lending requirements tightened but the economy tanked/inflation rose. people could afford the home on their incomes at the time they bought it but job losses or drastic paycuts put an end to that. ones that managed to keep their jobs/incomes saw skyrocketing cost of living increases in other areas of need (gas prices/massive toll increases/healthcare costs anyone????) and when it came to making ends meet.........the ends didn't.

i think it's a spectacular time to re-fi but even if i had to pay significantly more in interest i would prefer buying a house when it's a buyers market. i paid allot less on my current home with much higher interest rates than someone would pay now with it's inflated value (and i could/did drop my payment with refi's when rates dropped, someone buying high can't renegotiate their signed and closed deal purchase price when values drop down the road).

I agree with you on the good time to refi. You know they’ll be a lot of people that will bite off more than can can chew. Just because you can afford the payment on a house 6 times your income doesn’t mean you should. Our current mortgage payment is about 7% of our imonthly income . It makes life a lot less stressful living below your means. There’s also so many upkeep costs on a home you always have to take that into consideration.

 

[Lilsia]

I agree with you on the good time to refi. You know they’ll be a lot of people that will bite off more than can can chew. Just because you can afford the payment on a house 6 times your income doesn’t mean you should. Our current mortgage payment is about 7% of our imonthly income . It makes life a lot less stressful living below your means. There’s also so many upkeep costs on a home you always have to take that into consideration.

The banks are still qualifying people for more then they can afford. I was talking to a co-worker recently about him buying his first house. He told me his income and what they qualified him for. I was shocked because they said that he could afford a house in the same price range as ours and we make over double what he does. We had a long conversation about how it is not wise to spend that percentage of your income on just a house payment. He was looking to get married and start a family hopefully soon. Kids are expensive. I just think that banks and real estate agents really over estimate what people can realistically afford and still have any kind of life.

 

[afan]

The banks are still qualifying people for more then they can afford. I was talking to a co-worker recently about him buying his first house. He told me his income and what they qualified him for. I was shocked because they said that he could afford a house in the same price range as ours and we make over double what he does. We had a long conversation about how it is not wise to spend that percentage of your income on just a house payment. He was looking to get married and start a family hopefully soon. Kids are expensive. I just think that banks and real estate agents really over estimate what people can realistically afford and still have any kind of life.

If you are buying a house it's on you to figure out how much you can afford. Just because a bank decides to give me a credit card limit of 25k doesn't mean I go out and spend it all. I realize there are a lot of people that don't underatand this, but if you are buying a house you should be educating yourself and figuring out your budget and by within your means.

 

[DisneyLover83]

The banks are still qualifying people for more then they can afford. I was talking to a co-worker recently about him buying his first house. He told me his income and what they qualified him for. I was shocked because they said that he could afford a house in the same price range as ours and we make over double what he does. We had a long conversation about how it is not wise to spend that percentage of your income on just a house payment. He was looking to get married and start a family hopefully soon. Kids are expensive. I just think that banks and real estate agents really over estimate what people can realistically afford and still have any kind of life.

Yes! A co-worker of mine was approved for $350k on a 53k income..... she's young and doesn't really understand what us older folks are telling her about being house poor.

 

[QueenIsabella]

If you are buying a house it's on you to figure out how much you can afford. Just because a bank decides to give me a credit card limit of 25k doesn't mean I go out and spend it all. I realize there are a lot of people that don't underatand this, but if you are buying a house you should be educating yourself and figuring out your budget and by within your means.

This. When we bought our first house in 1987, we were approved for twice what we wanted (and ended up getting a mortgage for). We were both engineers, so decent salaries, but we were 23 and 24, both had student loans (I had a LOT of them!), a car loan, credit card debt, and had been married less than 6 months.

I also don't think a lot of people think through the associated costs of buying a house. Even though we furnished ours in "early college student", it seemed like every weekend, we had to buy more stuff for the house. From appliances to yard tools to paint, there was always stuff we needed.

 

[DCLMP]

This. When we bought our first house in 1987, we were approved for twice what we wanted (and ended up getting a mortgage for). We were both engineers, so decent salaries, but we were 23 and 24, both had student loans (I had a LOT of them!), a car loan, credit card debt, and had been married less than 6 months.

I also don't think a lot of people think through the associated costs of buying a house. Even though we furnished ours in "early college student", it seemed like every weekend, we had to buy more stuff for the house. From appliances to yard tools to paint, there was always stuff we needed.

Yep, houses are money pits. If you buy a new build like we did you may get a ten year grace period, but after that its constant repairs and replacements.

 

[tvguy]

absolutely. the house we sold in 2006 in california is still not sellable for what those buyers paid us then despite being in a hot housing market once again.

This is how crazy the housing market is here. 122 offers in one weekend, including one for $101,000 over asking, in cash.

https://citrusheightssentinel.com/2...-receiving-over-100-offers-the-first-weekend/

 

[QueenIsabella]

Yep, houses are money pits. If you buy a new build like we did you may get a ten year grace period, but after that its constant repairs and replacements.

I think with a new build, we would have felt the pull of nicer furniture much more. Our first house was a 150yo farm house, so our crappy furniture fit right in. Plus, you would still need stuff like rakes and a wheelbarrow and lawn mower and so forth, unless you had them from a previous house.

I was thinking you might want decor, as well, but we re-did our kitchen and master bath a couple years back, and I still don't have any decor. I look at the blank walls and think, "That space could use something." Then I go on with my day. I probably do this about once a week--I guess decor isn't my big thing!

 

[Lilsia]

If you are buying a house it's on you to figure out how much you can afford. Just because a bank decides to give me a credit card limit of 25k doesn't mean I go out and spend it all. I realize there are a lot of people that don't underatand this, but if you are buying a house you should be educating yourself and figuring out your budget and by within your means.

Oh, I agree. But many young buyers are inexperienced and many do not really understand all of the costs associated with houses. When a bank tells you that you can afford "this" amount, you believe them. Plus I blame the real estate agents too. They are not looking out for you, they are going to try to sell you the most expensive house that they can. They constantly show houses that the person can not afford and say, "that extra $20,000 will only be an extra $30 a month. You can afford that". They are sales people and many fall for these tactics. That is why real estate agents should not be paid commission, they should get a flat fee. I am not taking the blame off of the buyers, but there is truth to what I say.

 

[DisneyHardin]

i think it's a spectacular time to re-fi but even if i had to pay significantly more in interest i would prefer buying a house when it's a buyers market. i paid allot less on my current home with much higher interest rates than someone would pay now with it's inflated value (and i could/did drop my payment with refi's when rates dropped, someone buying high can't renegotiate their signed and closed deal purchase price when values drop down the road).

This is what we did. We bought our house in 2009 and we barely broke even selling our old house, but that was okay because we had only been there about 3 years. But, we got a spectacular deal on this house that totally made it worth selling our other house for less than we were hoping to get for it due to the market. We initially had a 4.6% interest rate on this one, which was really good for the time, but we have since refinanced for 2.75%.

 

[HeatherC]

We would sell (MA) and could almost double the price we paid but there is no inventory where we want to go (South County RI) and what is out there is smaller and older and needs lots of work or bigger and MUCH more expensive. So we are staying put.

 

[dvcgirl67]

$2000 for a home. That sounds great!! For $2000 you get a studio in my area.

I thought the same....here, an hour from NYC by train....a 2 bed/1 bath house in NJ would go for $2,500...minimum. 3/2 house like mine....$3,500.

 

[dvcgirl67]

double post

 

[tvguy]

I thought the same....here, an hour from NYC by train....a 2 bed/1 bath house in NJ would go for $2,500...minimum. 3/2 house like mine....$3,500.

$3,000 a month rents you a 4 bedroom, 2 .5 ath, 3,650 square foot house on a lake in Laurel, Mississippi. https://www.zillow.com/homedetails/11-Twin-Oaks-Pl-Laurel-MS-39440/78025540_zpid/?

 

[dvcgirl67]

$3,000 a month rents you a 4 bedroom, 2 .5 ath, 3,650 square foot house on a lake in Laurel, Mississippi. https://www.zillow.com/homedetails/11-Twin-Oaks-Pl-Laurel-MS-39440/78025540_zpid/?

Nice...the only thing I know about Laurel, Mississippi is that's where they film the HGTV show Home Town. Another HGTV show with magical math where a kitchen can be gutted and replaced with a beautiful new kitchen with top of line appliances for 30K.

 

[tvguy]

Nice...the only thing I know about Laurel, Mississippi is that's where they film the HGTV show Home Town. Another HGTV show with magical math where a kitchen can be gutted and replaced with a beautiful new kitchen with top of line appliances for 30K.

LOL. My wife's nephew manages a home improvement business in southeast Texas. Our kitchen remodel cost nearly $60,000 and I showed him some of the material and appliance prices and he was shocked at how high the prices were for the same items. As he put it, those materials would just sit in the store in his area because people wouldn't pay that much. And labor rates, don't go there. A $30,000 kitchen remodel would be high end in his part of the country too