The FED, THE FED! THE FED!! Short term rates aren’t mortgages – we’ve talked about this, so why aren’t mortgage rates coming down yet?? Well because the money market is a bit volatile at the moment. So did you miss the best rate? Well, you missed 2.8. Hell you missed 1.0. So did I, frankly. But you’re not getting 12 and that’s what’s important homie. Let me dig a little deeper to create some context and see what that does for your OCD… and your wallet.
Ok so, the rates have been moving around a lot. Like lasagna on a wet plate. Right now, and every day, if you’re watching yes, rates have gone up. But they’ve also gone down. And then back up. But, the thing is that until markets settle after the FED stops messing with the interest bottom line this is the trend we can expect. So banks have actually started working on various types of investor loans to help qualify more folks that specifically want to invest. They’re also requiring that some points get bought down in order to make sure the rates don’t disqualify buyers if they are just too high. I’m seeing a lot of different tactics along this type of trend to encourage and support the housing market. Yet we’re still seeing less mortgage applications day by day.
But let’s take a beat from my last video…
(insert “By comparison, a 6% mortgage rate really isn’t that bad. In the year 2000 you would pay 8-9%, 2010 maybe 5-5.5%, 2011 is when 4% showed up. And we’ve had pretty great rates since then, but in 2018 you could easily have had a 6% rate for a 30 year mortgage. That was before the pandemic.”)
So what does that mean? If you didn’t buy something in the last 10 years, you may have missed some great rates. That’s different that comparing right now with the last 3 years. I sold a lot of real estate in the last 3 years, but people bought at 6 and 7% before 3 and 4% came on the block so, what’s different right now?
Context is key here. Historically speaking, these rates really aren’t that bad. What’s scary is what’s going to happen with our economy as these rates change, right? But that doesn’t change the need for housing and work space, places to sell retail. More people, more housing. More housing, more sales. More sales, more value. More value, more things purchased. If you want to play the game you have to get off the sidelines.
You will have less competition right now when you go to purchase. That means you can ask for more form the seller, and the best thing to do is to have them buy a couple points off your mortgage rate, bring it from a 7 to a 6 or even a 5.5 if you can get it. In time, pay down your principal – throw $1,000 at a time at the lender…. This goes directly toward your equity which gives you options. We all know we can refinance to maybe get a better rate. But the better thing to do might be to recast the note. I haven’t talked about this much, but it’ll allow the lender to drop your monthly payments quite a bit.