Interest Rates Are Awesome
Not sure if anyone is currently in contract or looking to refinance but interest rates are amazing today. They will probably go back up a little in the next few days as this may be a knee jerk reaction to Fannie and Freddie getting bailed out by the gov. If you are paying 1pt you…
Not sure if anyone is currently in contract or looking to refinance but interest rates are amazing today. They will probably go back up a little in the next few days as this may be a knee jerk reaction to Fannie and Freddie getting bailed out by the gov.
If you are paying 1pt you are at 5.625% on a 30yr fixed.
No points you are under 6% at 5.875% today on the 30yr fixed.
Call you broker or banker if you are currently floating to lock in.
Those are indeed great rates, short-term and historically. It may convince some buyers on the sidelines to jump in now. I know similar rates in 2003 got us to buy. We just couldn’t see rates going much lower than 6% for a 30-year fixed on a co-op, which is what we got with buying a point.
As for the various “products,” I don’t consider myself financially sophisticated, but in hindsight, we’d have been much better off with a 5-year ARM, considering that we sold that apt. at the height of the boom. And I can see the point of a 10-year I/O, but I’m too conservative to assume that either I’ll sell before the piper must be paid, I’ll have the discipline to pay down the principal, or that I’ll see a significant rise in income to handle a 20-year fixed.
I have no problems with mortgage gimmicks per se, but I also know enough to know what I don’t know, if that makes any sense. A lot of folks don’t.
Toxic mortgage products sound like great ideas in bull markets and end up being terrible ideas in a downturn. They decrease monthly payments in the short-term, which in the long-term pushes people into prices they can’t really afford. New York real estate is in the early stages of a downturn. At least you aren’t pushing interest option products, which are the most toxic.
A 10-year interest-only mortgage becomes toxic at year 10 *unless* it can be refinanced. Many will not.
Many, many, many buyers in other markets have learned the hard way that they shouldn’t have taken out an IO mortgage (either because it would have kept them out of trouble to stick with a fully amortizing mortgage they can actually afford or because they got kicked in the teeth when the mortgage started to fully amortize and they couldn’t refi). Many, many buyers in NYC (where these products are particularly popular because of affordability issues) will learn some pretty hard lessons in the next 10 years.
IO products are actually appropriate for a very small number of financially sophisticated buyers. In my experience, the great majority of people who consider themselves financially sophisticated are not, and should stay far away from these products.
1998-2008 performance is a completely irrelevant red herring.
How is a 10yr IO toxic? That means if you bought a property in 1998 you would be upsidedown today? Are you crazy? Think before you type.
Even today banks like Astoria Federal Savings do not even offer a 30yr fixed. They don’t have it. Give them a call. They prvide Arms, a 10 and 15yr fixed but no 30yr. A 10yr Arm or a 30yr IO are perfectly safe products.
These are toxic mortgage products. This is exactly the sort of thing that got people completely over their heads in other markets and caused them to lose their homes.
The rate is fixed for 30yrs and it they allow you pay the IO for the first 10yr and then it converts to a 20yr fixed rate. I think it’s a fantastic product. What’s there to learn? You barely pay any pricipal the first years of the mortgage as it is. I personally have a 30yr IO and I make pricipal payments every year with my tax refund and then my monthly payment goes down as the loan re-amortizes.
10 years is a long time when the average mortgage has a life span of 5-6 years.
“That said I am actually pricing the 30yr fixed better than the 10yr ARMS today. I’m doing 6% for a 30yr with the 1st 10yrs Interest Only.”
10 years interest only. You’d think people would have learned by now, or at least the banks would have. Must be more money floating around than people are letting on.
I totally agree with Just Wondering. I literally just discovered ACRIS a couple of weeks ago and of course had to look up a few people just out of curiosity. I was astonished at what I was able to find and how easily and quickly I could find it.
One of my personal favorites is a power of attorney signed (and you can see the signature online) by Mr. Gordon Sumner to his lawyer. Mr. Sumner just bought a pretty sweet apartment at 15 Central Park West. I bet it’s pretty damn difficult to find something that is actually signed in that name. I also found some sort of transfer between Ethan Hawke and Uma Thurman.
kdabrowski- Some banks will allow you to “float down” to current market rates but they will either pad it with a pricing adjustment or charge you to lower the rate. You can try playing hard ball and tell them that you are going elsewhere but if they are giving you good service and willing to negotiate I wouldn’t hold them over the coals for an .125%
That said I am actually pricing the 30yr fixed better than the 10yr ARMS today. I’m doing 6% for a 30yr with the 1st 10yrs Interest Only.
Although lechacal peruses ACRIS just to be nosy, I wonder how safe it is to have so much information, so easily accessible. ACRIS has posted actual copies of the original deeds complete with signatures. This opens every homeowner in the city to fraud.
I know that this is public information, as it should be, but before the advent computer-based searches, you had to actually go to Borough Hall and pull the microfiche in order to view an actual deed. You also had to show identification before being given the microfiche which was recorded in a log. At least that way there was some sort of a record as to who viewed the microfiche, if there were later a need to investigate a criminal act.