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Mondavi

Interest Rates going to keep going up?

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I got a quote on a 5/1 arm today for 2.875. I think that makes sence for me. Going fha on a 300k mortgage my mortgage insurance is $350 a month. I'm going to do some improvements and refinancing in 13 months to try and get pmi off. After 5 years it would go up a max of 1% a year, so 8 years from now it would be worst under 6%. If the rate is any higher than 7% I think we as a Country would have way bigger problems.

Edited by robert217

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Unfortunately I think the bottom is gone. Today's rates are still low when compared to the earlier part of the previous decade so I think we'll see people rushing it get in before they get back to the 6s. Right now it's almost a game trying to figure out when you should lock in. The more you finance, the more important this "game" becomes.

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Since I'm a total newb when it comes to interest rates.. Would you all (the ones who know what they're talking about) avoid buying now because of the interest rates? Or would you hurry and buy as quick as possible to get a decent rate before they go up more?

I would not wait on rates to come back down - if you are eligible now and the plan is to buy

I would get started as soon as convenient/possible. We may see a few days down but we most likely are done with rates in the 3's - I am surprised that they lasted as long as they did.

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so realistically what can we expect 1 year from now. I know its impossible to say but lets assume a worst case scenerio. would FHA be 6% or could it be worse. I am not sure what is considered bad or high compared to the previous decade before they dropped so low.

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Loving this input. The plan is to buy ASAP, but gotta improve the credit quickly first for a USDA loan. If we can't do that, we may do FHA or Conventional with 5% down.

 

What do you all predict will happen by the end of the year? If we aren't able to get a USDA loan, that's likely when we would be purchasing FHA or Conventional..

 

Such a bummer we messed up our credit in the past, home prices here are constantly going up, as well as interest rates. *sigh*

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Is it even possible to time your lock with the market? Can you lock your rate the instant you are approved or is it within a certain timeframe?

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Is it even possible to time your lock with the market? Can you lock your rate the instant you are approved or is it within a certain timeframe?

My understanding is you have to have a property address to get a file number and lock the rate nowadays

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anyone else think that, int he future, property prices are going to have to come down to compensate for the higher interest rates?

 

Im pretty sure the number of potential buyers for a given property would shrink if the rates were to go up much higher

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anyone else think that, int he future, property prices are going to have to come down to compensate for the higher interest rates?

 

Im pretty sure the number of potential buyers for a given property would shrink if the rates were to go up much higher

I dont think so - based on rates and prices from the past - In many areas 10 years ago homes were twice as much and rates almost twice as high - it was a very busy time in the industry - not that it ended well - I just think there will always be a builder and there will always be a buyer - these rates are incredibly low even where they are now..........Just my 2 cents

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The new lender we had could have got us in the 3's a few weeks ago, but because of all the problems we have had, the rates have now gone into the 4's. Still better than the last mortgage we had which was in the 6's. But, it means that we can't afford what we could have a few weeks ago. :( Anyone think in the next few weeks it will just linger in the 4's? Or can we hope it might drop back into the 3's? I can always dream right?

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I doubt we will see 3s again, despite the overnight rate not changing yet, short of some catastrophic event. The only thing left to drive rates down for now is competition and somehow I don't see banks driving each other too far. If you can get into the 4s, you will probably be doing better than others that finance in the next decade or two. I'm not happy about it, but that's my take.

 

As for pricing declines, that's hard to say. I do not think they will go down on rate increases alone. That's because everyone that was sitting on the sidelines and missed out on the bottom will be jumping in now to make sure they still get in on the lower end. That means demand and possible steady increases even. Now in a year or two, its possible... but this market and QE approach is unprecedented. What we don't know is how many of these people exist and are in a position to buy and where the dollar will be when the dust settles. We also can't account for other financial events that can effect prices.

 

Keep an eye on taxes and insurance as well. Cities and counties are struggling with the drastic drop in values. We could very well see millage rates and premiums increase to help cover lost revenue.

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More pre-action and speculation. I love how mortgage rates are still up half a point an the fed hasn't budged. The jobs numbers today are garbage imo, but we'll let the day traders play their games and cost people hundreds per month until they are proven wrong...

As one of said traders (though not in financials) just want to add a couple of things. Day traders have no impact on mortgage rates. Rates have been artificially depressed, by the Fed AND the rest of the market. With the market spooked about tapering we are seeing some rotation into risk assets, so rates are trending up towards a less depressed level. The Fed is not the end all be all on the downside of rates (they are on the upside however). Speculation is always painted in poor context...people forget that speculators are NECESSARY so that hedgers can lock in prices (which makes goods cheaper for everyone). Mortgage rates today are NOT being driven by the Fed. So yes, while I understand that people have a tendency to blame traders when things go against them, they also never thank them when they go the other way (and to be honest neither angst nor gratitude are justified). A traders job is to know the minimum and maximum prices buyers and sellers will transact at. They then move the market there to allow said transactions, otherwise they wouldn't take place.

 

Traders are wrong all the time. So if you strongly feel rates will dip again, I guess you could wait. But I would advise against it.

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More pre-action and speculation. I love how mortgage rates are still up half a point an the fed hasn't budged. The jobs numbers today are garbage imo, but we'll let the day traders play their games and cost people hundreds per month until they are proven wrong...

As one of said traders (though not in financials) just want to add a couple of things. Day traders have no impact on mortgage rates. Rates have been artificially depressed, by the Fed AND the rest of the market. With the market spooked about tapering we are seeing some rotation into risk assets, so rates are trending up towards a less depressed level. The Fed is not the end all be all on the downside of rates (they are on the upside however). Speculation is always painted in poor context...people forget that speculators are NECESSARY so that hedgers can lock in prices (which makes goods cheaper for everyone). Mortgage rates today are NOT being driven by the Fed. So yes, while I understand that people have a tendency to blame traders when things go against them, they also never thank them when they go the other way (and to be honest neither angst nor gratitude are justified). A traders job is to know the minimum and maximum prices buyers and sellers will transact at. They then move the market there to allow said transactions, otherwise they wouldn't take place.

 

Traders are wrong all the time. So if you strongly feel rates will dip again, I guess you could wait. But I would advise against it.

 

I would be more fond of speculators if they actually prevented the same spikes and price hikes they are thought to prevent. But the data supporting their purpose is often unrealized. I'm not saying they are solely to blame but to think they have no effect, especially those involved in MBS, seems a little crazy.

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Nothing can prevent them in totality. That is a flaw of human emotion, dating all the way back to the Dutch tulip bubble. But they (professional traders) usually keep them more contained (though history has many examples of the opposite). However most people seek to become the very traders they despise. Short term volatility should be meaningless for most people. But even people in this thread are speculating in the market by trying to act quick to lock in a rate, or waiting for rates to fall. This is no different. And people usually blame traders when they themselves get beat at the game they have written off. Otherwise they would just take the prevailing rate if they can still afford it, and not think twice about it.

 

Take the housing bust for instance. No amount of financial engineering could have created that. It was the long-only average Joe who was levered through the teeth because "property keeps going up" combined with politically driven from GSEs that created the sub-prime industry. Banks and traders made it easier to justify and in many cases misjudge the risk, but it was already there. Everyone played a role (banks/traders included).

 

I know that opinion puts me in the minority here, but I think it's a pretty unbiased take. I blame lots of people. And I am also very critical of current markets, particularly the lack of regulation in HFT (it's criminal what goes on).

 

For every buyer there must be a seller, and vice-versa. This is a fundamental law. Traders step in when others don't.

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Please don't cry.. I bought a house in May 2009 and got 5% and that was great at the time.

Unfortunately the way PMI is rigged now, I cannot refinance without either pulling several thousand dollars out of thin air - or paying much higher PMI.

What I am saying - is that always seems to be "something" :-\

 

Lots of people can take educated guesses, but honestly, no one can know for certain where interest rates are headed. Just my 2 cents.

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