I Bought my House at 4.5%! Too Bad I Lost My Job The Next Day.
With all this chatter about the 4.5% interest rate range, you’d think we were in for some major life-altering, world-saving changes. Well, that’s just NOT going to happen.
Because the lowest rates in the world won’t do a thing to curb the underlying reason our housing market collapsed.- The unsustainable and over-inflated housing PRICES.
Because you can’t buy a house if you have NO JOB. http://money.cnn.com/2008/12/05/news/economy/jobs_november/index.htm
Because you can’t sell a house when you owe more than it’s worth without ruining your credit. That’s right- lenders will not consider a short sale unless the owner can prove hardship- and that means they have to stop paying their mortgage! With late mortgage payments on a credit report, kiss owning a NEW home goodbye.
Because when 10% of homes are IN (or nearing) foreclosure, that means that housing inventory will soon GROW. http://www.foxbusiness.com/story/markets/economy/home-loan-problems-break-records/
Rates are already fantastic- 5% on a 30 year fixed, with a point or two, of course. But still, very attractive. What will happen if they fall to 4.5%, on OUR dime??? In reality, very little, to nothing. People WILL clamor to refi to 4.5%, but they won’t be able to because the new government subsidized rates will be for PURCHASES only.
Will the people who CAN buy now benefit? Sure. They’ll save some money in INTEREST. But will their purchase price still be over-inflated? Probably. Will they have a job next year???? I hope so, but the way things are going, I wouldn’t exactly count on it.
Lock when you are comfortable, and don’t bet on some miracle plan that might not ever happen.