Curious- what’s the ballpark household income for that hypothetical buyer in your example qualifying for a mortgage to purchase a $1.5MM home with 25% down assuming 781 FICO with no debt besides a $500/month car payment? Thank you!!
How high will mortgage rates climb in the next 36 months?
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NEW -> Contingent Buyer Assistance Program
now I can cry with less doubt.
This is a repeat of 1981. Rates rose alot. Lots of people had mortgages way under market which ended up being lots of houses not coming up for resale. And what happened? I know cuz I went thru that time........ people decided they had to buy smaller or farther away from work and no huge downdraft came.......... just a sideways market after a small drop off of "the peak" which was not THE peak as anyone who bought them clearly can tell u.
Keep wishing for that huge drop in prices. And don't try to game your statistics. Very few around here bought the top from any builder because we pick our lots and wait for them to be built. Anyone closing at the peak got prices way under "the peak" you like to quote.
That is exactly what I think is happening, people that have mortgages in the 2% to 3% don't want to give up that rate so they just stay put or end up renting the home if they can financially pull it off. Problem today is a lack of inventory coming to market as there are less homes on the market in Irvine now than there was around year end (this does not normally happen).
However, I can say that it was supply chain constraints even in 2022. I ordered my Sub-Zero fridge in Jan 2022 and was supposed to get it in June 2022, thanks to supply constraints. But guess what? I didn't get it until December 2022.
So the question to you: What do YOU think?
C'monnnnn man!
The Motor Court Company
Well-known member
Up to 49% DTI, of gross income
sgip
Well-known member
Using your figures, the loan will be a Non-Agency Jumbo ($1.125m). Most lenders will want debt to income ratios to be below 43%, however some will OK 45% DTI, and even fewer up to 49.9. Please be aware that programs that allow higher DTI's often will have higher rates compared to those products with tighter ratios. Also, $500 per month auto debt is important to consider. If it's a lease, no matter if you pay it off, you've got to count that debt. If it's a loan, consider paying it off if DTI is above 43% and your mortgage rate suffers. Also, ARM loans may have a lower rate, but they are qualifying at index, plus margin - often in the low 7% range - so for this example, assume a 30 fixed.
Assuming 5.75% 30 fixed the PITIHOA will be around $8,400, plus your car means a grand total of $8,900. Mello Roos is the wild card here and omitted for simplicities sake.
43% DTI income is 20,700 per month
45% DTI income is $19,700 per month
49.9% DTI income is $17,835 per month.
These are gross income levels, not net, nor do they take in to account any rental property losses being shown if you have an investment home, or if you are converting a departure residence into a rental. Please use the above data as a theoretical example of qualifying income for your scenario, not as hard facts. An underwriter, not a loan officer, will need to review an application in its entirety to know what is possible and what might not work. It's a general, 10,000 ft overview of possible figures and not much else. PM me if you want to discuss specifics.
Assuming 5.75% 30 fixed the PITIHOA will be around $8,400, plus your car means a grand total of $8,900. Mello Roos is the wild card here and omitted for simplicities sake.
43% DTI income is 20,700 per month
45% DTI income is $19,700 per month
49.9% DTI income is $17,835 per month.
These are gross income levels, not net, nor do they take in to account any rental property losses being shown if you have an investment home, or if you are converting a departure residence into a rental. Please use the above data as a theoretical example of qualifying income for your scenario, not as hard facts. An underwriter, not a loan officer, will need to review an application in its entirety to know what is possible and what might not work. It's a general, 10,000 ft overview of possible figures and not much else. PM me if you want to discuss specifics.
Mawesome Sauce
Member
Thank you...
now I can cry with less doubt.
Liar Loan
Well-known member
Simple. Older people with paid off homes don't follow the real estate market closely. They take notice when their neighbors sell for an all-time high, making them feel richer, but that's it. Virtually nobody believed a downturn was in the cards, so there was no urgency to try and time the market. Many in this demographic are just now getting the memo that RE prices are falling.
irvinehomeowner
Well-known member
Well... there is also the "Where do I live if I cash out?" question... especially if you want to stay in the same area.
There is also the tax implications... maybe we should have sold once the difference was $500k and then split it into 2 properties when rates were still reasonable. Oh well... maybe when prices come down and the difference is $500k.
There is also the tax implications... maybe we should have sold once the difference was $500k and then split it into 2 properties when rates were still reasonable. Oh well... maybe when prices come down and the difference is $500k.
sgip
Well-known member
If the Feds want to bring some life back into the Real Estate Market, perhaps increasing the Capital Gain Exemption to something appropriate for the price levels we have in 2020 rather than pushing rates down again could work. Low rates are great, but if no one needs/wants to sell because of a tax gouge, what progress have we made, other than "none".
Liar Loan
Well-known member
Not everybody agrees that the market has bottomed...
www.foxbusiness.com
Home prices forecasted to plunge, but US expected to avoid a repeat of 2008 financial crisis: Fannie Mae
The mortgage giant's Economic and Strategic Research (ESR) Group expected a home price growth decline of 4.2% in 2023, followed by an additional drop of 2.3% in 2024. The anticipated price drops are more than the mortgage giant had previously forecasted, 1.5% and 1.4%, respectively.
Home prices forecasted to plunge, but US expected to avoid a repeat of 2008 financial crisis: Fannie Mae
Fannie Mae's latest economic forecast predicted home prices will drop by over 6% in the next two years but said the U.S. market is in good shape to weather the decline.
www.foxbusiness.com
The Motor Court Company
Well-known member
Lol home price ‘growth’ decline of 4.2%Not everybody agrees that the market has bottomed...
Home prices forecasted to plunge, but US expected to avoid a repeat of 2008 financial crisis: Fannie Mae
The mortgage giant's Economic and Strategic Research (ESR) Group expected a home price growth decline of 4.2% in 2023, followed by an additional drop of 2.3% in 2024. The anticipated price drops are more than the mortgage giant had previously forecasted, 1.5% and 1.4%, respectively.
Home prices forecasted to plunge, but US expected to avoid a repeat of 2008 financial crisis: Fannie Mae
Fannie Mae's latest economic forecast predicted home prices will drop by over 6% in the next two years but said the U.S. market is in good shape to weather the decline.
irvinehomeowner
Well-known member
Liar Loan Dictionary:
Single Digit Decline = Pain
Double Digit Increase = Destroyed
I would meme this but it's getting pathetic.
Single Digit Decline = Pain
Double Digit Increase = Destroyed
I would meme this but it's getting pathetic.
Ready2Downsize
Well-known member
Tay Mo raising prices AGAIN tomorrow. This is the second increase in a month. And still the massive downturn never got to where I bought my houses, so I guess that is happening.......................... after they have to lower again. LOL!Not everybody agrees that the market has bottomed...
Home prices forecasted to plunge, but US expected to avoid a repeat of 2008 financial crisis: Fannie Mae
The mortgage giant's Economic and Strategic Research (ESR) Group expected a home price growth decline of 4.2% in 2023, followed by an additional drop of 2.3% in 2024. The anticipated price drops are more than the mortgage giant had previously forecasted, 1.5% and 1.4%, respectively.
Home prices forecasted to plunge, but US expected to avoid a repeat of 2008 financial crisis: Fannie Mae
Fannie Mae's latest economic forecast predicted home prices will drop by over 6% in the next two years but said the U.S. market is in good shape to weather the decline.
This is a repeat of 1981. Rates rose alot. Lots of people had mortgages way under market which ended up being lots of houses not coming up for resale. And what happened? I know cuz I went thru that time........ people decided they had to buy smaller or farther away from work and no huge downdraft came.......... just a sideways market after a small drop off of "the peak" which was not THE peak as anyone who bought them clearly can tell u.
Keep wishing for that huge drop in prices. And don't try to game your statistics. Very few around here bought the top from any builder because we pick our lots and wait for them to be built. Anyone closing at the peak got prices way under "the peak" you like to quote.
usctrojancpa
Well-known member
That is exactly what I think is happening, people that have mortgages in the 2% to 3% don't want to give up that rate so they just stay put or end up renting the home if they can financially pull it off. Problem today is a lack of inventory coming to market as there are less homes on the market in Irvine now than there was around year end (this does not normally happen).
Not the article any of us wanted to see on Bloomberg today
https://www.bloomberg.com/opinion/a...ge-rates-is-what-the-housing-market-needs-now
https://www.bloomberg.com/opinion/a...ge-rates-is-what-the-housing-market-needs-now
sleepy5136
Well-known member
mortgages are not the root cause of inflation though. It's more about price gouging on day to day items and utility companies.
CalBears96
Well-known member
Yeah, that was obvious, considering the most well-known indicator of inflation is CPI. And CPI increased a lot due to price gouging thanks to supply constraints caused by COVID-19 restrictions.
irvinehomeowner
Well-known member
And some greed too... but I get it... everyone wants to get their piece.
sleepy5136
Well-known member
do you think that after 3 years it's still due to supply chain constraints?
CalBears96
Well-known member
CPI is coming down, although not as fast as expected. That is due to, somewhat, like IHO said, greed. Remember that shit the gas stations/refineries pulled back in October? And just in case you didn't hear, oil companies reported RECORD profits for 2022. 100% greed.
However, I can say that it was supply chain constraints even in 2022. I ordered my Sub-Zero fridge in Jan 2022 and was supposed to get it in June 2022, thanks to supply constraints. But guess what? I didn't get it until December 2022.
So the question to you: What do YOU think?
MTalltheway
New member
Yeah, but you're purposefully obfuscating the fact that oil companies also took a huge loss during the lockdowns when people weren't driving. They were paying others to take the oil...
C'monnnnn man!