Im bowing out

[DouglasR]

The Colorado ski towns where the rich play and locals have to live in cars

Colorado mountain towns have seen real estate prices soar, particularly as out-of-towners panic bought during the pandemic. Workers can’t afford to live there, creating a workforce and housing crisis, writes Sheila Flynn

www.independent.co.uk

Preach.
Along with having nearly 40 credit hours in obscure courses from a prestigious community university in east central Il, I’ve been out here living in my car and working full time at an entry level position in this picturesque vacation community for nearly 3 months, yet I cannot afford a modest home in summit county.
This is blasphemy.

 

[SAJ-99]

Well I'm sad to say that today I think we bowed out too. We finally found the house that we're were looking for everything pretty much perfect about it. Problem is with the rising interest rates it put us about 10 to 15% over what we decided was our MAX. Sounds minimal but it just didn't sit right with me. In order to get it down to where we were comfortable would have cost me an additional $50,000~ down. So we would have had no safety savings and in my line of work you have to have that. So I guess this means we're bowing out too. Shitty to let that house go, but I've learned when your gut tells you don't do it you shouldn't as much as that sucks at the moment. I'm going to go drink myself to sleep now, good evening.

Sorry to hear that. There will always be other houses. Also, keep in mind everyone is in the same situation. Higher rates make houses they thought were affordable a bit more questionable. This should drive housing prices down but it will take time for sellers to realize this. Again, affordability isn’t just a matter of the price. Good luck.

 

[Nick87]

Sorry to hear that. There will always be other houses. Also, keep in mind everyone is in the same situation. Higher rates make houses they thought were affordable a bit more questionable. This should drive housing prices down but it will take time for sellers to realize this. Again, affordability isn’t just a matter of the price. Good luck.

Thanks. That's my thought as well. Rates have just started coming up so things take time imo. Not to mention the elephant in the room fuel and food prices. I understand demand is high but you can't have all time real estate prices and highest interest rates in years coming and nothing will change right? Just seems like simple math but I'm sure there's a lot more to it, another part that is hard is that your dealing with houses at your max budget and you literally have a gun to your head and have a couple hours to make a decision for best offer. Good way to get caught up in a bad decision imo.

 

[Nick87]

Sorry to hear that. There will always be other houses. Also, keep in mind everyone is in the same situation. Higher rates make houses they thought were affordable a bit more questionable. This should drive housing prices down but it will take time for sellers to realize this. Again, affordability isn’t just a matter of the price. Good luck.

Got to thinking about this a little more, remembering all the articles I was reading earlier this year from experts saying that the rate increase won't affect the red hot housing market. So I started thumbing back through some of them. Most saying that rates would stay around 3.6 rough 2022. Yesterday I was quoted 4.6~ and we have pretty damn good credit. It's only March and we are in a pretty much daily rate increase as far as I can see. Mortgage rates are tied to bond market though correct? Not so much the fed rates?

 

[SAJ-99]

Got to thinking about this a little more, remembering all the articles I was reading earlier this year from experts saying that the rate increase won't affect the red hot housing market. So I started thumbing back through some of them. Most saying that rates would stay around 3.6 rough 2022. Yesterday I was quoted 4.6~ and we have pretty damn good credit. It's only March and we are in a pretty much daily rate increase as far as I can see. Mortgage rates are tied to bond market though correct? Not so much the fed rates?

Correct. Mortgage rates tend to follow the 10year treasury yield. Shop around for rates. 4.6% seems a tad high for a good credit. Online lenders tend to give the best deals so they can capture market share from traditional banks. Credit Unions also typically have great rates. Eventually the higher rates bleed through to prices, but it takes time. It is also hard when there is such low inventory available for sale because it will skew the "average" price and the few buyers that are insulated from higher rates because they have cash will still be able to purchase.

 

[Irrelevant]

Correct. Mortgage rates tend to follow the 10year treasury yield. Shop around for rates. 4.6% seems a tad high for a good credit. Online lenders tend to give the best deals so they can capture market share from traditional banks. Credit Unions also typically have great rates. Eventually the higher rates bleed through to prices, but it takes time. It is also hard when there is such low inventory available for sale because it will skew the "average" price and the few buyers that are insulated from higher rates because they have cash will still be able to purchase.

@nick87 I would highly recommend zillow for finding a mortgage. The rates are way more competitive, and while your loan will be sold the day after you close, does it really matter who you send the check to?

I just checked and found rates down to 4.1%. I will say that those rates went up as I changed to setting to put more money down. Seems like they just WANT to sell crappy loans.

 

[SAJ-99]

@nick87 I would highly recommend zillow for finding a mortgage. The rates are way more competitive, and while your loan will be sold the day after you close, does it really matter who you send the check to?

I just checked and found rates down to 4.1%. I will say that those rates went up as I changed to setting to put more money down. Seems like they just WANT to sell crappy loans.

And you can always pay points to bring the rate down.

 

[Deleted member 28227]

@nick87 and @SAJ-99

Question and or thought. Why should I care about interest rates at all?

Seems like my monthly payment, down payment, and avoiding PMI are all I really need to worry about.

Why... well and this is me not Nick, I am 100% going to buy and sell my next 2 homes within the next 10 years. Further you can always refinance, and rates go up and down. Even if rates went to 8.5% I'm not sure how much it would change my math.

I've never heard of anyone, ANYONE, who locked in on a 30 year and then paid off their house with that rate.

 

[SAJ-99]

@nick87 and @SAJ-99

Question and or thought. Why should I care about interest rates at all?

Seems like my monthly payment, down payment, and avoiding PMI are all I really need to worry about.

Why... well and this is me not Nick, I am 100% going to buy and sell my next 2 homes within the next 10 years. Further you can always refinance, and rates go up and down. Even if rates went to 8.5% I'm not sure how much it would change my math.

I've never heard of anyone, ANYONE, who locked in on a 30 year and then paid off their house with that rate.

The rate affects the monthly payment and the monthly payment determines whether or not you can afford the house.

I suspect you have lived your entire life in a period of declining interest rates, so refinancing at a lower rate has always been an option. What if the next 20yrs the opposite is true?

I have. My last house I paid off the loan on the same rate. I suspect I will with the new house as well. A refi has costs too and they make the whole exercise fairly unattractive most of the time.

 

[Nick87]

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@nick87 and @SAJ-99

Question and or thought. Why should I care about interest rates at all?

Seems like my monthly payment, down payment, and avoiding PMI are all I really need to worry about.

Why... well and this is me not Nick, I am 100% going to buy and sell my next 2 homes within the next 10 years. Further you can always refinance, and rates go up and down. Even if rates went to 8.5% I'm not sure how much it would change my math.

I've never heard of anyone, ANYONE, who locked in on a 30 year and then paid off their house with that rate.

@wllm1313 planning on being in this house for at least 20 years. Also I'm not so sure about refinancing in the future with rates in the 4% range not so sure were gonna have lower rates to do the refinance at that point. With these low (lower now) rates I don't foresee many people refinance down the road. Then again I'm no banker so...

Also @neffa3 I just used your zillow search credit score of 760 and above with 25% down shows lowest rate of 4.495% so maybe those rates are different in different areas?

 

[Nick87]

I suspect you have lived your entire life in a period of declining interest rates, so refinancing at a lower rate has always been an option. What if the next 20yrs the opposite is true?

That what was in the back of my head the entire time I was trying to make a decision yesterday. I kept thinking I'm buying at an all time high with the possibility of never being able to drop this rate.

 

[Irrelevant]

Also @neffa3 I just used your zillow search credit score of 760 and above with 25% down shows lowest rate of 4.495% so maybe those rates are different in different areas?

I'm sure it's based on all kinds of things, I just kept messing with the downpayment to see what the lowest rate I could find is. You can always game the system, put a smaller amount down, then make a large lump sum payment afterward and request the PMI be removed.

 

[Nick87]

I'm sure it's based on all kinds of things, I just kept messing with the downpayment to see what the lowest rate I could find is. You can always game the system, put a smaller amount down, then make a large lump sum payment afterward and request the PMI be removed.
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Hmm yah this was a 375,000 house we were putting 20% down so 75,000 I even raised it up to 90,000 down I was still seeing right around 4.5 at the lowest in order to get the payment where we were comfortable (I use that loosely) it would have taken 120k down. I'm not comfortable with putting my family in a position where are nest egg is gone and were still going to have to struggle to save with more Than 30% of our net income going to a mortgage payment. That's including tax and ins obviously. You guys gotta remember taxes here in Illinois. They were $10,000 on this house with a senior discount appraised at 20% less than what we were looking at paying. So that would bring them right up around $12k a year. I was guessing insurance at $1800 annually to be safe.

 

[Nick87]

@nick87 and @SAJ-99

Question and or thought. Why should I care about interest rates at all?

Seems like my monthly payment, down payment, and avoiding PMI are all I really need to worry about.

Why... well and this is me not Nick, I am 100% going to buy and sell my next 2 homes within the next 10 years. Further you can always refinance, and rates go up and down. Even if rates went to 8.5% I'm not sure how much it would change my math.

I've never heard of anyone, ANYONE, who locked in on a 30 year and then paid off their house with that rate.

I care about interest a lot. Takes less of my money to chop down that monthly payment. Personally I'd much rather have a lower purchase price and a higher rate. I can always pay down that principal and tell the bank to shove there interest. Low rates mean I owe that principal regardless. That's just me I'm sure I'm missing something there too.

 

[BigHornRam]

Hmm yah this was a 375,000 house we were putting 20% down so 75,000 I even raised it up to 90,000 down I was still seeing right around 4.5 at the lowest in order to get the payment where we were comfortable (I use that loosely) it would have taken 120k down. I'm not comfortable with putting my family in a position where are nest egg is gone and were still going to have to struggle to save with more Than 30% of our net income going to a mortgage payment. That's including tax and ins obviously. You guys gotta remember taxes here in Illinois. They were $10,000 on this house with a senior discount appraised at 20% less than what we were looking at paying. So that would bring them right up around $12k a year. I was guessing insurance at $1800 annually to be safe.

I've heard real estate taxes in Illinois were bad. That's insane!

 

[Nick87]

I've heard real estate taxes in Illinois were bad. That's insane!

1800 sq ft ranch on 2 acres built in 1980. No outbuildings

 

[Nick87]

Maybe I'll start a gofundme.

 

[BigHornRam]

1800 sq ft ranch on 2 acres built in 1980. No outbuildings

My 1500 sqft house built in 2018 on 1.6 acres with a shop is 3k. 12k/year is a deal breaker IMO. Best of luck in your search Nick.

 

[Nick87]

My 1500 sqft house built in 2018 on 1.6 acres with a shop is 3k. 12k/year is a deal breaker IMO. Best of luck in your search Nick.

It sucks for sure but the pay here is also offset compared to other places. My line of work anyway other fields not nearly as much.

 

[Deleted member 28227]

I care about interest a lot. Takes less of my money to chop down that monthly payment. Personally I'd much rather have a lower purchase price and a higher rate. I can always pay down that principal and tell the bank to shove there interest. Low rates mean I owe that principal regardless. That's just me I'm sure I'm missing something there too.

Exactly. My payment schedule typically gets thrown out the window after the first month, so I really don’t care what the hypothetical final cost of the house is… I’m never paying that price due to making extra payments.

I care about the actual interest I pay and the average rate I ultimately pay, but not necessarily my initial rate.

@SAJ-99 did you pay that house on a 15 or 30 and did you make all the payments per the schedule or did you pay if off early.

I guess also my bias, I have lived in 17 different domiciles since I was born so the idea I would own a home long enough to pay off a 30 year seems ridiculous.

If you go on Zillow on our street every single house has changed hands 3-5 times in the last 10 years, the house next door has had 4 owners in 4 years… so who cares about interest rates lol