Not how that works. They are NOT an ARM and not risky at all.

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Mar 28, 2024
9:35:29am

monteburns All-American

Not how that works. They are NOT an ARM and not risky at all.

Buydowns are a regular 30 yr fixed loan where the borrower prepays the interest for the first two years to reduce the payment.

The prepayment goes in an escrow account and gets applied to the principle if the loan gets paid off prior to the end of the buydown term.

Sellers will often pay for the buydown on behalf of the buyer as an incentive.

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monteburns

Bio page: monteburns
Joined: Sep 16, 2004
Last login: Apr 26, 2024
Total posts: 10,935 (361 FO)

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Messages

Author

Time

I genuinely worry about how my kids are going to be able to afford homes.

Ungoy

Mar 28, 9:00am

My wife and I bought 30 years ago with 7.5% interest. But our home costed

Brigham

Mar 28, 9:02am

*cost

Greg Kite's 'stache

Mar 28, 9:05am

*Cost Ed...Ed bought the home

RH84025

Mar 28, 9:15am

**Accosted

WhyaskY?

Mar 28, 2:40pm

35 years ago for me with a 10% mortgage on a $100k home

Hoopster

Mar 28, 9:05am

What was the percentage of your household income then vs now?

gmj81

Mar 28, 9:31am

I literally could not afford it today.

Brigham

Mar 28, 10:20am

My prediction:

Ragnar Danneskjold

Mar 28, 9:04am

Explain. I surmise there is no bubble. Inflation has affected everything. Wages

Idacoug

Mar 28, 9:18am

RE: Explain. I surmise there is no bubble. Inflation has affected everything.

Mises

Mar 28, 9:21am

Is anyone seeing this? I am not. I have not see a housing price drop, nor have

Idacoug

Mar 28, 9:24am

RE: Is anyone seeing this? I am not. I have not see a housing price drop, nor

Mises

Mar 28, 9:30am

My home is down 10% from his peak on Zillow

Skeptical Optimist

Mar 28, 9:32am

What location?

Idacoug

Mar 28, 9:35am

Austin TX area

Skeptical Optimist

Mar 28, 9:40am

I just checked 5 houses that either my parents or I have owned

Mar 28, 4:00pm

10-15% sure. But interest rates doubled and so the monthly mortgage is up

JuicyJam

Mar 28, 9:36am

That’s a huge deal right now. Home insurance gone up very significantly

Idacoug

Mar 28, 9:40am

I am in Texas and am seeing it.

rad dawg

Mar 28, 9:43am

Interesting. What is causing this?

Idacoug

Mar 28, 9:44am

Same old story. Median incomes are not high enough to support prices.

rad dawg

Mar 28, 9:47am

Then why isn’t this happening in most other places outside Austin/san antonio?

Idacoug

Mar 28, 9:53am

Because nothing is inducing forced selling right now in most markets

rad dawg

Mar 28, 10:00am

I've talked with 2 people in the last week who bought in Austin at the peak.

Skeptical Optimist

Mar 28, 9:55am

When you say sky high, do you mean 6%?

WDaddy

Mar 28, 11:05am

Lol yeah, it's all relative I guess.

Skeptical Optimist

Mar 28, 11:09am

I wonder if that's true looking at it more micro than macro

cougarfann888

Mar 28, 9:25am

100%. We just built a 1500 sq. Ft home because that is all we could afford.

Idacoug

Mar 28, 9:27am

Not seeing it at all. Except for this one scenario that I am seeing:

monteburns

Mar 28, 9:31am

I don't understand how sales are picking up and how people are affording it.

Ungoy

Mar 28, 9:34am

Spring time is usually the hottest time to buy, and interest rates decreasing?

Idacoug

Mar 28, 9:36am

Interest rates are still up from last year, and home prices are still going up

Ungoy

Mar 28, 10:29am

Massive leverage. I am seeing it amongst my friends all the time.

rad dawg

Mar 28, 12:21pm

Makes sense. My wife and I want to move out family elsewhere,

Ungoy

Mar 28, 12:29pm

My siblings have hoped for that for the last 4 years now they’re priced out of

Magneto

Mar 28, 5:40pm

It’s brutal. Mortgage payments on townhomes are about $2,500/month & decent middle class homes are about $4,000/month.

RdF3

Mar 28, 9:04am

our middle class home is $2400/month. it helps that our interest rate is 2.75%

reagan21

Mar 28, 9:05am

I’m talking about people buying a home right now.

RdF3

Mar 28, 9:06am

For first time in my life i was on the right side of a real estate purchase.

reagan21

Mar 28, 9:13am

I'm confident buying your same home right now at its current price and interest rates would have a mortgage around $6k.

RdF3

Mar 28, 9:17am

like i said, for the first time in my life i was on the right side of a real

reagan21

Mar 28, 9:21am

"middle class"

Mar 28, 9:10am

i’m firmly in the middle class. i could make a lot more money but lifestyle

reagan21

Mar 28, 9:12am

30 year or 15?

Mar 28, 9:17am

30 but we make extra payments when we can. Usually 15-17 payments over a year’s

reagan21

Mar 28, 9:20am

So you borrowed roughly 600k for your home?

Mar 28, 9:23am

Borrowed $385k. we had saved and lived frugally for 9 years

reagan21

Mar 28, 9:27am

Your payment seems really high for that loan amount at that interest

Mar 28, 9:30am

with taxes, PMI, and HOA it’s like 2391 or something.

reagan21

Mar 28, 9:31am

ahhh okay. That makes sense now. NM I change my comment about the $6k. I was thinking $600k loan in 2020

RdF3

Mar 28, 9:36am

if i wanted to buy my house now i’d have to borrow more than $600k.

reagan21

Mar 28, 9:40am

PMI and HOA could be adding a lot to get you into that zone.

Mar 28, 10:36am

That’s exactly where I’m at.

Spindash

Mar 28, 11:31pm

The first home my wife and I had was a condo we were fortunate to purchase

Ungoy

Mar 28, 9:07am

my wife and i bought a condo in 2005 for $217k. that same condo today is about

reagan21

Mar 28, 9:17am

Rates will go down.

kimdaddy35

Mar 28, 9:13am

It always seems to work out. I agree though that cost seem out of control.

orrin7

Mar 28, 9:05am

Prices won't get better until supply is fixed.

maYbe

Mar 28, 9:06am

100% true. Supply is way too low in most places.

BlooCoug

Mar 28, 10:17am

Remember they're called "starter home" for a reason. Get the best location you can afford as soon as possible.

Soupie

Mar 28, 9:06am

My first home was 1,600 sqft and I was there 16 years. I was perfectly happy.

maYbe

Mar 28, 9:12am

Lotta younger people today are simply too arrogant for this. 😕

BleedCougarBlue2

Mar 28, 9:12am

Condo’s aren’t affordable either. They are going for 300s in Saratoga Springs.

wildlandfireguy

Mar 28, 9:28am

The only problem is that a lot of these starter homes are still $400k+

ballen

Mar 28, 11:32am

Yes. And many kids coming out of college are starting at $70k+ when some of us who bought our first home

Soupie

Mar 28, 12:17pm

I do agree that the only way to buy a house in any generation is to save, budget

ballen

Mar 28, 2:25pm

Daughter bought house last fall on one income w/ very little from husband who's in grad program.

Soupie

Mar 28, 2:28pm

That’s been generally good advice in recent history.

Spindash

Mar 28, 11:40am

Things will balance out. Mortgage rates when our parents were buying their first

Skeptical Optimist

Mar 28, 9:06am

I don't think they will. Builders aren't Building starter homes any more.

fbguru

Mar 28, 9:09am

I think there will always be a market need for starter homes

Skeptical Optimist

Mar 28, 9:14am

I hope so, but I don't see it. Big apartment complexes make more money and are

fbguru

Mar 28, 9:28am

Son is buying a home for $780k with a 2-1 interest buy down starting around 7%.

Hoopster

Mar 28, 9:08am

What is a “2-1” interest buy down? Never heard that term.

BleedCougarBlue2

Mar 28, 9:16am

Pay extra to lower interest rate 2% in first year and 1% in second year. Back to

Hoopster

Mar 28, 9:18am

Yeesh! Basically an ARM. That IS a gamble. How much extra for the 2% and 1%?

BleedCougarBlue2

Mar 28, 9:22am

Don’t know the financial details of buy down but he thinks it is worth gamble

Hoopster

Mar 28, 9:29am

An ARM is different.

BlooCoug

Mar 28, 9:33am

Not how that works. They are NOT an ARM and not risky at all.

monteburns

Mar 28, 9:35am

But, an ARM may be a great option in a high rate environment where rates are

monteburns

Mar 28, 9:36am

Daughter did that just last fall. They're watching rate closely.

Soupie

Mar 28, 9:49am

I have been thinking a lot about this prophecy by Isaiah:

2FarGone

Mar 28, 9:09am

Barring changes home ownership will require abandoning traditional family.

rad dawg

Mar 28, 9:10am

This scenario has already been happening for some time. Cost of living in the US

BlooCoug

Mar 28, 9:34am

I assume that we will start to see more mutli-generational families.

ballen

Mar 29, 11:47am

What is really pathetic are the people that are so selfish they want to hold

chismoso

Mar 28, 9:17am

They will worry their kids won’t be able too as well.

Mar 28, 9:21am

doubtful.

rad dawg

Mar 28, 9:32am

I tell my kids all the time they will always have a place to stay…in my barn.

DwigtA2RM

Mar 28, 9:26am

My wife and I bought a condo in Saratoga Springs for $125k in 2014. That same

wildlandfireguy

Mar 28, 9:27am

The constant worry of parents. My parents bought their Calif. home for $33,000

O Gaucho

Mar 28, 9:29am

This is a constant worry of mine as well.

gangbusters

Mar 28, 9:30am

the future generation is going to afford housing when their parents/grandparents

LeonMarek

Mar 28, 9:31am

Biggest problem is salaries aren't going up

WJCougar

Mar 28, 9:31am

They are rising a little. But not enough to track with inflation.

BlooCoug

Mar 28, 9:36am

Here is what the data says. Wages are moving much faster than

The Chief

Mar 28, 10:01am

Not true in my case. Those numbers are averages and the data set may have some

BlooCoug

Mar 28, 10:20am

I'm sure many people are not seeing it...everyone is in different places.

The Chief

Mar 28, 12:31pm

You aren't wrong, but housing appreciated so quickly since 2019.

Ungoy

Mar 28, 9:36am

It called the Cantillon Effect (or Cantillon effects).

Mises

Mar 28, 11:44am

kids just need to get out of UT and move someplace you can buy decent homes on normal salaries

byujag

Mar 28, 9:39am

This. Much of the midwest is still very affordable also.

Mar 28, 9:47am

A fear often expressed by a boomer who just purchased their 5th rental home...

seacougar

Mar 28, 10:29am

Get a job where they can work from home and move to Kansas or Nebraska or Magna

BYU Grounds

Mar 28, 10:34am

Boomers all die in the next 20 yrs and leave their houses & money to GenX & Millenials. Doesn't that pretty much fix

BlooGeek

Mar 28, 11:32am

Most people are between 50-65 when their last parent dies

STL

Mar 28, 11:52am

But the Boomers will most likely vacate their homes upon death...that was my main point. Many homes empty and on market.

BlooGeek

Mar 28, 11:54am

The missing piece to that is boomers are not that wealthy.

rad dawg

Mar 28, 12:02pm

For me (little kids still) my only thinking is I should try to acquire multiple

Brute66

Mar 28, 11:40am

High density housing will be the new normal

botticus

Mar 28, 12:18pm

Even high density housing is no longer affordable for many young couples.

Ungoy

Mar 28, 12:31pm

WWIII should even things out. If not get a useful degree and marry smart.

EDthoracotomy

Mar 28, 4:34pm

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