Kinda makes you wonder if the next bail-out will be government backed refinance to get banks to work with home owners that don't have necessary equity to qualify on their own.
Housing market
- Thread starter simply1
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Kinda makes you wonder if the next bail-out will be government backed refinance to get banks to work with home owners that don't have necessary equity to qualify on their own.
Sorry just saw this. The amount that can be spent in a house has been increased drastically. Im trying to remember the discussions and not read a bunch of pages. The joys of usually being on your phone and condensing your statements.
I'm not sure if it will get as bad as when HARP was needed to let people refi who were underwater but certainly possible, especially in metro areas with higher price volatility.
Realtors should have to register as financial advisors if they are giving advise like that... That makes me sick to hear that is happening..
Could RUIN someone's life if that is their plan
The problem with that comp is that there is basically no unemployment right now. People were getting foreclosed on and losing homes because jobs were being lost (amongst other factors like ARM’s, etc). Underwater doesn’t matter if:
1) you’re not selling
2) you aren’t trying to refi (which I don’t know why anyone would be doing that at this time
3) you still have money to pay the mortgage (ie working)
If you expected to use your home as a financial instrument, being underwater sucks.
But if you just bought it to live in it, it doesn't really pose a problem. I don't think I'm likely to go underwater, but even if it did, so what. Just keep making the payments and enjoy living here.
Assuming that you're locked into the low rates from last year and before, the high rates now shouldn't affect you. I feel like a king/that I'm robbing from the bank right now with my October 2021 rate.
I might've overpaid a bit but not too bad and locked in a low rate. Plan on living in this house for the next 15-20 years so doesn't really matter for me.
Realtors are generally an arrogant group of bad with finances sales people from my experience.
If they give that advice and don't qualify it as some people have done this in the past, they can open themselves up for issues. I know when I was in the bank, we could not give advice on what we thought would happen with markets in case it was way off and the borrower complained that it was our advice that buried them. A couple lenders got sued and lost.
The bank most likely doesn't own your loan, nearly all loans are sold off to Freddie or someone similar.
Sure, definitely some financial witchcraft that goes on there.
But whoever bought it, vaguely called "the bank" here, is losing big on that interest rate in real terms.
From the internets .
After Freddie Mac buys mortgages from banks and other lenders, it combines similar types of mortgages into bundles called “mortgage-backed securities” and then sells shares of the bundles on the secondary market to insurance companies, pension funds, and other investors.
Freddie guarantees that the investors will receive an agreed-upon monthly payment. So, how does this work? Each month, the bank receives your mortgage payment and forwards it to Freddie Mac, which then pays its investors
Guessing that its a combo. I knew they had sold them off to things like insurance companies, why they promise something like a 3% return no matter what happens.
I'm guessing that the insurance companies don't want an amortized type of payment. When they put in 5MM they don't want to get interest on it and a tiny portion of the initial amount right away. They would continually have to reinvest these small portions monthly. I would assume it's more of an interest payment and so much principle paid back annually or so.
If I understand it right, your bank acts as a processing service. They collect your monthly payment, calculate escrow, update insurance, etc., and charge Freddie a service fee for that. Freddie, as you say, bundles all of the mortgages as an ETF/mutual fund and sells the shares in an IPO like setting at some price that makes Freddie money. The investors who buy the shares probably get a dividend that is smaller than the actual cashflow from the mortgage to cover other expenses (similar to how companies retain earnings for operations, while giving the rest off as dividends if they want).
They get paid a set processing fee, they don't get to charge what they want. Just clarifying that. They also get the origination fees that are charged. That is similar to student loans except student loans are reduced by the origination fee, mortgages are charged on top.
it’s a good time to buy, just ask a realtor. It’s always a good time to buy.
Banks/lenders are generally looking for revenue from service release premiums (SRP), not the interest rate. SRP is essentially the fee Fannie Mae (for example) would pay the lender to take on the servicing rights of that loan. That said - if a bank originates a mortgage with a rate below market conditions, they may either simply not purchase that loan or the reduce the amount of SRP they would pay for it. Now obviously some financial institutions keep mortgage on their own books as portfolio loans where indeed the interest rate would be the source.
Your mortgage lender is the financial institution that loaned you the money. Your mortgage servicer is the company that sends you your mortgage statements. Your servicer also handles the day-to-day tasks for managing your loan
What's the difference between a mortgage lender and a mortgage servicer? | Consumer Financial Protection Bureau
Your mortgage lender is the financial institution that originally loaned you the money. Your mortgage servicer is the company that sends you your mortgage statements and handles the day-to-day tasks for managing your loan.
Depends on the bank. Banks that deal with businesses are looking at interest income, and they are loving it right now. Some friends of mine are getting charged close to 9% on lines of credit while the bank is paying out about 2% on CDs and 0.5-1.0% on savings. Most look for a 4% spread, but they are blowing that out of the water right now. Mine is locked at 4.25% so I'm not complaining.
In the long run, it's you and me, brother. Either your insurance rates will shoot up, or your I(name your state)PERS return will come up short so the state will throw in money to cover the shortfall from poor investments and hit the general pop on taxes.
