Too good to be true offer!

[jp1]

The title of this post is snark. Today we received a letter from our mortgage broker that we can refinance and take out $113,000 if we want. Doing that would increase our monthly payment from $2216 to $3335 and reset our 1 1/2 year old 30 year fixed mortgage to a new 30 year fixed mortgage with the interest rate increasing from 2.2216% to 4.25%.

We still owe $560,000 on the mortgage so basically we'd be increasing our monthly payment by 50%, extending the loan a year and a half, and getting $113,000 cash in the process. One would need to be quite desperate for the cash to take up this offer. I've already put it through the shredder.

[bae]

That's just evil and predatory.

I suspect the next few years of inflation/recession/... will produce all sorts of scammy fun for us all.

[pinkytoe]

Realtor told us today that refi loan officers are getting desperate and some are being laid off

[catherine]

Yeah, my mortgage website has a nice chart where you can see how much equity you've accumulated over the past couple of years and you can click on "I want to use my equity"--making it sound like free money.

[jp1]

Realtor told us today that refi loan officers are getting desperate and some are being laid off

Anyone that didn’t refi 1 1/2 to 2 years ago missed out. Back when we bought basically everyone we knew that already owned was doing a refi. Interest rates won’t be coming down for a while so, yeah, there’s not much demand for refi loan officers today.

[bae]

To help with cash-flow management, and/or tax planning, for years now I've been making use of a Home Equity Line of Credit from my local small bank. It's fixed-rate, at a pretty decent rate, and they don't seem to mind when I go for years without bothering to use it.

I suspect it may be helpful in the upcoming recession/stock market unpleasantness.

[iris lilies]

As an old person I have to comment on the days where I was first considering buying a house and interest rates where as high as 16%. Yes that’s mortgage interest rates.

You young’uns don’t know ‘bout interest REAL interest rates.

[Alan]

As an old person I have to comment on the days where I was first considering buying a house and interest rates where as high as 16%. Yes that’s mortgage interest rates.

You young’uns don’t know ‘bout interest REAL interest rates.
We bought our first house in 1979 and were able to lock in a VA loan at 10%, which I thought was outrageous at the time but soon became thankful to get in before the high teens kicked in.

[sweetana3]

Yes, I remember 13% mortgage interest. My husband did not invest in Certificates of Deposit at that time but I was more cautious and felt they were very safe. Got a nice return. Learned to pay off all debt too. Those interest payments were irritating.

[catherine]

I bought my first house in 1980 @13% interest. I had a friend in my neighborhood who actually put his down payment on credit cards, which sounded horrific to me at the time, but the interest rates on his credit cards might have been better than the mortgage rates.

[LDAHL]

Credit card companies were all moving to places like South Dakota and Delaware to get around usury laws.

There was a lot of gold buggery and schemes to invest in “tangible assets”.

[ApatheticNoMore]

So interest rates were higher but housing prices much lower, and all that matters is the monthly payment really.

[JaneV2.0]

Can you still claim mortgage interest on your taxes?

[iris lilies]

Can you still claim mortgage interest on your taxes?

Yes, but with the tax simplification carried out during the Trump administration, That amount has to be pretty high because the standard deduction was raised to be very high. But I suppose in place like .california, it is not hard to reach that level paid out in mortgage interest.

The idea of that gives me the creeps. But to each his own.

[catherine]

So interest rates were higher but housing prices much lower, and all that matters is the monthly payment really.

Yes, but adjusted for today's dollars, until the recent housing market boom, the houses tracked pretty much on par with everything else, including income. But it's true that the market over the past two years has changed things.

I purchased my house in Dutchess County NY for $85k. If I google "what's 1980 $85000 worth today" it comes out to $301,000, which is about right for that area and that house before COVID. Zillow says that same house now is worth $394k-463k.

[iris lilies]

So interest rates were higher but housing prices much lower, and all that matters is the monthly payment really.
I did a comparison of my salary back in the year 1982 when I was househunting, and I think I made a case for houses being as affordable now as then, if not more so.


But I deleted it because I was unsure of one number, assumption about sale price of the house in question 45 years ago.

When I have time to dig into the newspaper archives back then, I really would like to revisit that little cost study. I was using a house in Las Cruces New Mexico as the test case, a house that was my dream house at the time, and nearly 45 years later would be my dream house now. It serves as a good test case because it really hadn’t been renovated in these 45 years. It looked exactly on the inside like a place I rented in that same town at that time.

[ApatheticNoMore]

I've looked at the numbers many times for housing prices in California. Housing prices have gone up significantly more than inflation.

[jp1]

It still makes sense for me to itemize and deduct our mortgage interest. But probably only because we also pay $9000ish/year property taxes and significant state income tax.

Just read today that the average mortgage interest rate last week was over 6%. If we were paying that much our monthly payment would be $1250 more than it is. In order to get our monthly payment at a hypothetical 6% down to what it is at our current rate the purchase price would be $462,000 instead of the $727,000 that we paid.

[iris lilies]

I've looked at the numbers many times for housing prices in California. Housing prices have gone up significantly more than inflation.
California is another country. And now that disease has spread to Portland, Seattle, and various points around that away in the PNW.

When I was a young professional I specifically did not want to work in a high cost of living area because I wanted to buy a house. That was what I valued, does not mean that’s what everyone values

[bae]

California is another country. And now that disease has spread to Portland, Seattle, and various points around that away in the PNW.


My Dad bought a condo here in WA, on the island, about 2 months ago, $179k. Hugely below the average cost of anyplace liveable here - he was previously renting an under-the-radar "studio apartment" for $1100/month, and it had no kitchen/cooking facilities, and was essentially 1/2 of a two-car garage converted to the "apartment". His payments on the hellhole condo he bought are less. We had to gut the place and remodel, but that cost <$6000 with labor/materials.

An identical unit there, needing some remodeling/repair, sold for $225k just a month later.

Last Friday, another identical unit, also needing work, sold for $279k!!!

I suspect Dad kicked off a wave of gentrification in what was the island's worst apartment/condo complex. (It used to be the second-worst, with the worst being completely full of drug dealers and drug users, but some locals bought that complex in its entirety a couple years back, threw out the tenants, renovated it, then "flipped" it to our community land trust to be used as affordable apartments.)

[Teacher Terry]

Our first mortgage in 1979 was 12%. When I was evaluating job offers 25 years ago I knew I was going to divorce husband number 2 so COL was very important to me. I didn’t apply for jobs in California. Reno was the most expensive but very affordable then. Because of the tech companies moving here, being able to work from home and all the Californians retiring here our COL has skyrocketed. I couldn’t afford to rent here.

[LDAHL]

Yes, but with the tax simplification carried out during the Trump administration, That amount has to be pretty high because the standard deduction was raised to be very high. But I suppose in place like .california, it is not hard to reach that level paid out in mortgage interest.

The idea of that gives me the creeps. But to each his own.

I think the SALT deduction is limited to $12,950 for this year. That must sting a little in the high tax areas.

The standard deduction is around $25,900 for a couple this year, but we are paying some massive medical bills so I plan on itemizing for the first time since they changed the rules.

[jp1]

I think the SALT deduction is limited to $12,950 for this year. That must sting a little in the high tax areas.

The standard deduction is around $25,900 for a couple this year, but we are paying some massive medical bills so I plan on itemizing for the first time since they changed the rules.

SO and I file separately. I figured out this year that it makes more sense for one of us to take all the house deductions rather than splitting them and both taking half. (we both make about the same income) I took them all this year and SO will take them all next year. Itemizing saved me about $2,000 this year. Next year it will save him roughly the same amount.

[LDAHL]

You need to be a little careful with your records when you allocate deductions like that. I’ve heard of auditors asking to see if payments came from accounts wholly owned by one spouse.

[Tybee]

Wow, that is surprising and not in a good way.