Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Rain Man]

This made me curious about how common adjustable rate mortgages are. I never considered one when I bought my house a million years ago because the risk bothered me. I wondered if others feel the same.

According to the Fed, about 8 percent of households have adjustable mortgages. https://www.stlouisfed.org/on-the-ec...rate-mortgages

Surprisingly, it's more common among high-income households than low-income households according to that article. I would have assumed that lower-income households would be more willing to take the risk because they had no choice.

And if you look at fixed-rate mortgages as an approximation, rates are about 2.2 percent higher than they were five years ago according to this chart: https://fred.stlouisfed.org/series/MORTGAGE30US

It seems like there's a little window of people for the next two years who'll get screwed by higher rates, but then they'll go down for people who bought after that. You'll also get a massive wave of people who got high fixed-rate loans over the past three years, and they'll be refinancing.

I don't think it'll be a large percentage of people who got adjustable rates in that two-year window and are about to get sodomized. Maybe that's enough to cause problems for the economy with defaults or maybe not. I don't know that kind of stuff. But I do think there'll be a lot more people who'll benefit by refinancing fixed loans down.

It's an interesting thing to think about.

[Buehler445]

Originally Posted by Hog's Gone Fishin

Get ready for Mortgage defaults to start hitting. People that bought 4 years ago with variable rate loans bought what they could afford at the time. Now they are struggling if they got an adjustment. I've got 5 mortgages left on rentals that all adjusted in the last 12 months from 5% to 8.75%. I can raise rents, but people with a home mortgage just have to get a 2nd job. Meanwhile the property taxes have increased as well as fuel and groceries. Banks are going to get wrecked shortly or another bailout. Never ends.

And mother****ing insurance. That bullshit is through the ****ing roof.

But are there really fools out there with adjustable rate primary mortgages? There was absolutely no chance in any primary mortgage I've ever had would stick that bitch on an ARM. I had to fight to lock my farmland mortgage. I don't want any of that heat.

Maybe young morons that have never seen interest. Maybe.

[Buehler445]

Originally Posted by Rain Man

This made me curious about how common adjustable rate mortgages are. I never considered one when I bought my house a million years ago because the risk bothered me. I wondered if others feel the same.

According to the Fed, about 8 percent of households have adjustable mortgages. https://www.stlouisfed.org/on-the-ec...rate-mortgages

Surprisingly, it's more common among high-income households than low-income households according to that article. I would have assumed that lower-income households would be more willing to take the risk because they had no choice.

And if you look at fixed-rate mortgages as an approximation, rates are about 2.2 percent higher than they were five years ago according to this chart: https://fred.stlouisfed.org/series/MORTGAGE30US

It seems like there's a little window of people for the next two years who'll get screwed by higher rates, but then they'll go down for people who bought after that. You'll also get a massive wave of people who got high fixed-rate loans over the past three years, and they'll be refinancing.

I don't think it'll be a large percentage of people who got adjustable rates in that two-year window and are about to get sodomized. Maybe that's enough to cause problems for the economy with defaults or maybe not. I don't know that kind of stuff. But I do think there'll be a lot more people who'll benefit by refinancing fixed loans down.

It's an interesting thing to think about.

8% is a hell of a lot more than I anticipated.

I guess right now I wouldn't feel too bad about an ARM. Save fees for a refinance.

But my ass would have to buy a shoebox in a gutter if I were going to give up my mortgage today.

[GloryDayz]

Definitely some rough days...yikes...

[scho63]

Fed is ALWAYS wrong.

[KCUnited]

The **** would you go with a variable rate loan 4 years ago?

How low did they think it would get?

[Rain Man]

Originally Posted by Buehler445

8% is a hell of a lot more than I anticipated.

I guess right now I wouldn't feel too bad about an ARM. Save fees for a refinance.

But my ass would have to buy a shoebox in a gutter if I were going to give up my mortgage today.

I guess an ARM is a good strategy if you know that rates are going to go down. You usually don't know that, but right now? Rates are going to go down. The Fed is committed to that outcome. So an ARM would be a good plan, I think.

When I bought my house, I got a fixed rate that was over 7 percent. Rates kept going down and I kept refinancing. I think I was paying at or under 3 percent when I finally paid the house off. Maybe I should have done ARMs for 20 years. But I didn't know that we would have 20 years of declines.

At some point I got a HELOC at some ridiculously low rate, and that's what I used for my last big rehab project on the house (redoing the kitchen, adding a deck, finishing off the third floor, etc.) I think it might have been under 2 percent, so I paid off the main mortgage before I paid that one off. At some point the lender stopped offering it, and that was a sad day.

[Rain Man]

Originally Posted by Hog's Gone Fishin

My LOC I use on my Rental properties is at 8.75% also. It has to renew every year so I get the bullet. They were going to put it at 10.5% this last renewal and I called the President of the bank and said LOOK. I've been with you since 1998, never been late on a payment, had over 30 mortgages , would you at least drop it to my current rate on my rentals at 8.75%, and he said he'd talk to loan committee. They called back an hour later and said that would work. WooHoo , excited about an 8.75% loan victory. LOL

Holy cow. Are you banking with the mob or something?

I had no idea rates were that high.

[KCUnited]

30 years were in the 3’s 4 years ago

If you took an ARM in 2020 then you deserve it

[Buehler445]

Originally Posted by Hog's Gone Fishin

My LOC I use on my Rental properties is at 8.75% also. It has to renew every year so I get the bullet. They were going to put it at 10.5% this last renewal and I called the President of the bank and said LOOK. I've been with you since 1998, never been late on a payment, had over 30 mortgages , would you at least drop it to my current rate on my rentals at 8.75%, and he said he'd talk to loan committee. They called back an hour later and said that would work. WooHoo , excited about an 8.75% loan victory. LOL

And what's funny is that the loan officer that's been there 20 said she had no idea they were even negotiable. Dumb bitch!

LOCs you're going to have to eat the shit, but a primary? Helllllllll no.

[lewdog]

Originally Posted by KCUnited

30 years were in the 3’s 4 years ago

If you took an ARM in 2020 then you deserve it

No shit. That's just being dumb. We were at historic lows for YEARS.

[GloryDayz]

Originally Posted by scho63

Fed is ALWAYS wrong.

They have screwed the pooch this time.

[Rain Man]

Originally Posted by Hog's Gone Fishin

Taking an ARM at the time gave me the best interest rate 10 years ago. I'm almost out from under my mortgages completely so timing worked out OK. I got 15 year Mortgages with 5 year ARM's and have paid ahead on everything. 12 more months and I'm debt free. I'm selling a couple properties and will dump about 150K into high yield dividend funds and pull 50% of those divi's to finish paying off my existing debt.

Will you still sell boulders? The world needs boulders.

[Rain Man]

Originally Posted by Hog's Gone Fishin

Absolutely! Best business ever!

That's all I needed to hear to have a good weekend.

[Buehler445]

Originally Posted by Rain Man

Holy cow. Are you banking with the mob or something?

I had no idea rates were that high.

Rentals are commercial loans. No Fannie/freddie shit.

Originally Posted by Hog's Gone Fishin

Taking an ARM at the time gave me the best interest rate 10 years ago. I'm almost out from under my mortgages completely so timing worked out OK. I got 15 year Mortgages with 5 year ARM's and have paid ahead on everything. 12 more months and I'm debt free. I'm selling a couple properties and will dump about 150K into high yield dividend funds and pull 50% of those divi's to finish paying off my existing debt.

I get it on commercial loans. I had to fight like hell to get a fixed 20 on my land purchase in 2019.