The Old Standby: the 30-year fixed mortgage

[flintlock]

Re: The Old Standby: the 30-year fixed mortgage

I caught my 78 year old almost blind Dad on his roof the other day!

[don]

Re: The Old Standby: the 30-year fixed mortgage - Homes Depreciate

My son lives in somewhat rural Pennsylvania - somewhat in that if you drive certain roads you don't see the freeway and the housing track sprawl - in a small development where each house, albeit of 1 of 4 models, is well placed on their large lots, each angled in a way that breaks up the commonplace straight-in-a-row suburban housing. There are no fences between neighbors and lots and lots of green grass, the mowing and trimming of which is the touchstone of conversation. They're currently in a drought. Temperatures peaked last week at 113 degrees. He told me green acres is a fire waiting to happen. Things we take as given can change . . . in time.

[don]

Re: The Old Standby: the 30-year fixed mortgage

I caught my 78 year old almost blind Dad on his roof the other day!

My hero . . .

You go, Pop!

[LorenS]

Re: The Old Standby: the 30-year fixed mortgage

I see people who grossly underestimate this every day. Many go into a RE deal with the expectation that a home built in the 1960s will have no more problems than one in the 2000s. First time buyers especially make this mistake. Energy efficiency differences alone should be a major factor in what you pay. Utilities are becoming more expensive than the mortgage note for many. Yet I still go into homes with less than 1" of matted down insulation in their attics. Single pane windows. Un-vented attic spaces. Crawl spaces with no insulation. Old inefficient furnaces. Not to mention the decrepit wiring, plumbing and HVAC. Codes were less strict in the past and time only brings to light any weaknesses in home construction. Unwary buyers then compound their error, in an attempt to minimize their mistake, by hiring the lowest bidder to do the work, which often leads to paying twice to get it done correctly.

I bought a house built in the 1950's. It was the best built house I've ever lived in.

My current house was built in the 90's by a reasonably good builder, but the quality is not up to 1950's standards.

We have expansive soils and other hazards in Colorado. Buying a new house can be risky as well.

[don]

Re: The Old Standby: the 30-year fixed mortgage

On aging houses and finding the sweet spot.

A well-built foundation and framing is always desirable. So is an established ground movement/settling track record. Systems like plumbing and electric, regardless of their original integrity, will age to the point of needing repair or upgrade, more the latter for the wiring. Seriously older homes will come with less insulation, including windows. Then there's the issue of 'improvements' over the years by prior occupants, a minefield in itself.

Getting an expert to evaluate the property along these lines is a few dollars well spent.

[BobinSFCA]

Re: The Old Standby: the 30-year fixed mortgage

Try renting in New York City or San Francisco, Vancouver, or San Jose at over $2000 per month, and then tell me that renting is cheaper in the long-run than owning.

A very true statement Starving Steve. I live in the SF Bay area, and to rent a decent 2-bedroom apartment in or close in to the City, you need to spend anywhere from $3,500 to $4,500 per month, not including parking. Rents are going through the roof here thanks to another mini-dot com boom.

After selling my condo in 2008, I rented a "cheap" place near the airport. After three years I became very frustrated living with my third-world neighbors and a rat infested apartment that was falling apart. I just bought a brand new home on the outskirts in Wine Country (I work at home), and my new mortgage is about $2k/month cheaper than the rent I was paying to live in the 900-square foot dump. I got an FHA loan, so I put down next to nothing and most of my cash remains in the bank as it did when I rented.

When it comes to real estate, everything is local. A purchase made absolute financial sense for me, but it may not work in all metro areas the same way for someone else.

[lektrode]

Re: The Old Standby: the 30-year fixed mortgage

It's seldom seen in that light. The small principal reduction is treated by most home buyers as, 'just the way it is, what are you gonna do?' Comparing bank lending to our personal finances is like comparing balancing our checking accounts to the national debt. Two different birds. Often a lender bundles mortgages and sells them to a third party. That was before the MBS/derivative frauds commonplace today. Obfuscation rules in home mortgage lending and for good reason.

this gets to be one of the bigger issues: the lack of financial sophistication of the typical mortgaged buyer - in my case, when i bought my dump in '03, i was trying to get a fixed15 and was initially quoted 4.75 - after choking thru all the docs nec to get a self-empl'd type like me qualified (when i thot my 20% down would've been enuf), at the last minute they tell me that 'because of yer trailing income avg, we cant do a 15fixed, but we will do a 5/1/30 at 4.5' - to this i said NO WAY jose, i want fixed or nuthin (being a believer of inflation) - WAIT! " 4.5 ?" - ok, i'll take it...
paid it down by more than 50% over the 5year-fixed period and then when the 1st adjustment came in year6, i was floored when i thot what was going to happen is that they would simply adjust the rate ? - NO, they re-amortized the whole thing and instead of paying the same payment, with larger portion of it going to principal , with a lower % of interest - its back to the same 30year rate of principal paydown, but at (now) 3% (great deal still, but was SHOCKED to see how this all worked out)

[flintlock]

Re: The Old Standby: the 30-year fixed mortgage

Buying a new house can be risky as well.

I agree with this, but generally speaking, most homes in the US have always been built to merely meet code, if that. Tract builders generally only build to minimum standards for sure. The building code has progressively gotten much better over the years. Proof of this is that in areas still without code enforcement ( rural mountains mostly) in GA, the homes I encounter are a real mess. Not all of them of course, but a lot more than typically found in areas which require local inspections. Even the expensive custom homes in areas with no inspections tend to have serious issues. Sometimes just knowing the work will be inspected keeps workers honest.

We own a 50s built home, my wife's mother's old house. No insulation in the walls, single pane windows, the plumbing and electrical leave something to be desired. I work on homes of all ages in my business. Hands down the newer ones are better built for the most part, dollar for dollar. Now the stuff most people notice, fit and finish, things like trim, paint, solid doors, etc. That stuff may be what people fondly remember as being better, but for the most part, when you dig deeply, even the bones are not that well built. Dank wet cinder block basements. Floor plans that never saw a structural engineer's glance. Mold growing on ceilings where there is no ventilation above it. This may just be typical of Atlanta of course. But I see all this sentimental longing for the quaint old homes that if they really knew what they were getting they'd run from. I'll take my reinforced concrete foundation, 2x6 walls, Engineered joist, cement siding and trim, Energy efficient home any day over most of what was built before the 2000s.

[ER59]

Re: The Old Standby: the 30-year fixed mortgage

Buying now, unless you're in a confidently rock-bottom market, you should anticipate a 20% further drop in whatever you paid, plus a 6% realtor fee to sell.

In the 10-year example, crank an additional 26% ($26,000/100k borrowed) off the top and with a $18,658 hard-paid equity, you have one unhappy pilgrim.

But if you rent for 10 years, assuming $1500/month rent, you'll pay $180K and will have nothing !

[mesyn191]

Re: The Old Standby: the 30-year fixed mortgage

But if you rent for 10 years, assuming $1500/month rent, you'll pay $180K and will have nothing !

Nonsense. You'll have the money you saved which could've been invested or saved or spent on other things than a depreciating "asset". The idea of building equity, the whole concept of it really, is almost entirely BS. Unless you get lucky and find a sucker willing to overpay or you manage to rent for more than the PITI or you sell in a booming/bubbling market you will probably never make money on a home and stand a good chance of losing lots of cash when all things are considered.

The value of owning a home for most will be found in paying it off and having a place to retire to with almost no cost of living or for various social aspects which are outside the realm of economics altogether.

[don]

Re: The Old Standby: the 30-year fixed mortgage

The value of owning a home for most will be found in paying it off and having a place to retire to with almost no cost of living

Bingo! The rest is mostly BS, as noted.

[c1ue]

Re: The Old Standby: the 30-year fixed mortgage

The value of owning a home for most will be found in paying it off and having a place to retire to with almost no cost of living

Bingo! The rest is mostly BS, as noted.

The trick that the RE sales industry uses is to compare rental spending vs. mortgage costs.

The reality, however, at least in the 20+ years that I have been living on my own, is that what you must pay for a rental is 2/3rds to 1/2 of what you pay in a mortgage.

Thus the point about saving the difference.

The other trick is that mortgage payments on principal - even if the mortgage is paid off over the full term - are roughly 1/2 interest. Throw in property taxes and maintenance and well over 60% of the actual monthly nut is 'thrown away'.

[don]

Re: The Old Standby: the 30-year fixed mortgage

more than a few 'laughs' in this news . . .

As housing prices drop, closing costs are rising

Nationwide, the average origination and title fees on a $200,000 purchase mortgage totaled $4,070, according to Bankrate's annual survey of closing costs. That's an 8.8 percent jump compared to 2010 when the average closing costs totaled $3,741.

For the second year in a row, the states with the highest closing costs are New York, where costs average $6,183; Texas at $4,944; followed by Utah with $4,906. Next was California, where average closing costs in San Francisco totaled $4,832. New York and Texas have dominated the top spots for five years.

The cheapest places to get a mortgage are Arkansas, North Carolina and Indiana. In each of these states, the average closing costs are close to $3,400.

What exactly has gone up?

Most of the jump in closing costs is tied to fees charged directly by lenders.

On average, lenders charged about $1,614 in origination fees this year, up 10.3 percent from last year. Origination fees include lender charges for services such as underwriting and processing.

Fees imposed by third parties, including title, appraisal, postage/courier and survey charges, averaged $2,456, up 7.9 percent from 2010.

While some third-party fees rose, title insurance premiums changed little compared to last year. The survey excludes property taxes, homeowners insurance and recording fees.

Why are fees rising?

Many lenders and mortgage professionals claim that origination fees have increased because of stricter mortgage regulations that the government has implemented in the last two years.

"New regulations require more staffing and cost more money," says Jason Auerbach, division manager of First Choice Loan Services in New York City.

Auerbach says some of the "new" regulations — which vary from having to take extra steps to verify a borrower's income and employment to disclosure forms and licensing-related matters — have been in place for a couple of years already, but the mortgage industry takes them more seriously now. New forms and regulations that are still in discussion are influencing lenders already.

Paying more for fair loans?

The argument that increased regulation makes loans more expensive has long been used by the lending industry against new, more stringent rules.

While new rules may cost the lenders more money, it's difficult to determine how much of the added costs are really a result of regulatory changes, says Barry Zigas, director of housing policy for the Consumer Federation of America.

"It's ironic to hear that the consumer has to pay more to get a fair product," Zigas says.

"But if it means the mortgage they are getting is more likely to be tailored to their needs, they should be happy to pay."

http://www.msnbc.msn.com/id/43798478...trick.net#lead

[BK]

Re: The Old Standby: the 30-year fixed mortgage

My father-in-law has a paid off home and a $12,000 property bill. The home is a 4 bedroom colonial built in late 1940s and hasn't had a lot of upgrades.

My in-laws purchased the home for $45,0000 a long time ago. To had insult to injury Garbage pickup is NOT included in the $12,000+ Tax Bill.

Property Taxes for many people I know have doubled in the last 7 years. Its really hard to believe with interest rates at lifetime lows that buying Real Estate is the best way to play rising inflation and rising interest rates (eventually).

When I was a Home owner my Insurance bill was $1,800 per year - my Renter Policy is $400-$500. No gas money for a lawn mower, no saturdays consumed by yard work, no snow removal unless I'm interested in exercise, no plumber bills, no electrician bills, no contractors required when you are the Renter.

But, I'm wrong several times a day and would love for some one to convince me I'm wrong.

[don]

Re: The Old Standby: the 30-year fixed mortgage

My father-in-law has a paid off home and a $12,000 property bill. The home is a 4 bedroom colonial built in late 1940s and hasn't had a lot of upgrades.

Back to the Future?

With an never-ending supply of housing to sell, will prices fall to the above while fees explode? FIRE can dance, that we know.