As a buyer, it's more important to me that I...
- ...get a low interest rate on my loan. (18%, 22 Votes)
- ...get a low price on my home. (82%, 99 Votes)
Total Voters: 121
This poll was active 03.10.2013 through 03.16.2013
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if u are buying because of LOW interest rates U R A FOOL! If I have to explain why to u then U R A BIGGER FOOL!
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Price for sure as I may be a cash buyer soon for rental properties in AZ.
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RE: toad37 @ 2 – 2 things wrong with this TOAD. Why would you use CASH when its the cheapest Mtg money in history? Keep your CASH. #2 HUGE GLUT of rental homes in AZ . Money FAR BETTER invested here in the NW where jobs are plentiful and rents are bringing in HUGE DOUGH! People from all over the country are moving to the PNW for employment. They surely are NOT heading back to AZ.
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RE: ray pepper @ 3 – I need the income. From what I’m seeing cash on cash would earn more off properties purchased right now in AZ as opposed to WA, but I’m willing to listen if you can show that I’m wrong. I’m not seeing ANY deals in WA. I’m trying to get 10% yield… I’m not seeing it in AZ unless you dig HARD for deals, but in WA I’m not even seeing a chance of 10%…would love to hear and see that I’m wrong.
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4. toad37
3. ray pepper
Why don’t you two just get a room ?
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RE: 3rd Generation @ 5 – 3rd Generation your obviously someone who bought or contemplates buying bcuz of low rates. One of the 11 BONEHEADS! Its ok though. Every society must have your kind.
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RE: toad37 @ 4 –
You’d be late for Arizona. Last year maybe the numbers would work out.
This year rents are ridiculously high, so it looks attractive, but there are tons of properties in Arizona. I don’t see what would attract more people there. I’d want to know what the economic viability is for Arizona.
I don’t have any advice about your income, but I don’t think residential housing is a good bet, Commercial properties maybe better.
I agree with Ray that Seattle is much more economically viable. You just need to watch for the right deal, and open your search patterns.
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RE: David Losh @ 7 –
Thanks David,
Ray did make me think, I’ll give him that much. I will do more research into WA for perhaps a small apartment building. Instead of all cash, perhaps leveraging 1/3 to 1/2 to lower my risks through more rental income. Only problem would be financing for me because my income is extremely low right now and although my credit score is around 700, I had a foreclosure 3 years ago.
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RE: toad37 @ 8 –
An apartment financing is different from a home. Number one, many of the contracts may be written for a thirty year amortization, but the have a fifteen year balloon payment. You’ll want to get some principal paid down in those fifteen years.
You can use the rental income to qualify, but most any lender would want to see the upside potential in the rents.
The foreclosure is a problem. but as I said last week I’m surprised at the number of people with a short sale, or foreclosure, who are now approved by a lender, and are shopping for property.
What it depends on is your analysis of a property, your management skills, and ability to present that to a lender, or the property owner, if they will carry the contract.
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RE: toad37 @ 4 –
Have you looked into:
1) PIMCO Closed End Funds(CEFs)
2) Master Limited Partnerships(MLPs)
3) Mortgage Real Estate Investment Trusts(MREITs)
4) Business Development Corps (BDCs)
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RE: David Losh @ 9 –
Thanks David, I appreciate the excellent feedback/advice. If I recall anything over 4 units is considered commercial. When you said you didn’t think residential housing is a good bet, would a 4 unit building fall under that?
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RE: banjo country @ 10 –
Hi Banjo, not yet, but I plan to. Thanks for pointing these out. The idea of those sound great as they would be a lot less work than maintaining an apartment building. :)
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This is the kind of question that’s a little too vague. Here’s how I interpreted it:
1. It’s generally a bad idea to buy a home just because it’s cheap. The market’s not bad at coming up with a reasonable price for homes, and if the house you’re buying has a very low price, there’s probably something wrong with it. I’d rather spend more and get a quality house that I can move into, rather than spend the next year fixing up.
2. A low rate, however, can increase your buying power. With a high rate, maybe I can only afford a lower quality home. But with a low fixed rate, I can qualify for a higher quality home.
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RE: Matt the Engineer @ 13 –
With a low rate you likely pay a higher price for the same quality home at the same monthly cost.
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RE: patient @ 14 – Making sure I understand your claim: Rates drop, so more people can afford more house, so prices increase. Yes? But surely higher prices convince developers to build more supply – so price increases are only a short-term phenomenon.
Of course, in places like Seattle where we use inflexible zoning rules and NIMBY trench warfare to keep more supply from being built, maybe this phenomenon is less short-term here.
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So it looks like I’m in the minority in this one. But on this one the devil is really in the details. How long does one plan on owning the house? How much money is being put down? What are the prospects for rate decreases in the near to medium future? What are the expectations for value increases in the near to medium future? Since my wife and I are in the buy and hold forever camp I chose rates. We recently refied down to 3.25%; our original rate was 5%. Our purchase price in ’09 was 369k. Our appraisal for our refi 3 months ago came in at 450k.
For the heck of it I calculated out the total 30 year cost for our original loan terms (369k, 5.0%) assuming no refis; the total borrowing cost was $713,113.84. If we were to buy our house at the appraised rate/terms now (450k, 3.25%) the 30-year borrowing cost would actually be less by $8,079.60 at $705,034.24.
So pretend for a second the market did a U turn, rates went back up to 5.0% (still one of the best non-manipulated rates in the last 50 years, BTW) and prices dropped back down 18% from the peak value. Assuming you were in it for the long haul you’d still be better off buying at the higher price, lower rate. My guess on the low percentage of low interest people is because there not to many buy and hold people voting? Or maybe more cash buyers which would render this argument moot? Not sure. I do prefer to look holistically when taking on debt though and thought I’d give a contrarian argument.
PS I realize the rebuttal is that I proved the buy low now and refi later theory in our situation; however, its my belief that since rates are basically within a 1/2 to 3/4′s of a percentage point of the absolute bottom that they can go without collapsing the banking system I don’t think that’s too strong of an argument.
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RE: Tim McB @ 16 –
I couldn’t agree more, but your response has no arrogance, negativity, or hyperbole in it so I have to question it’s validity.
This is like the” tastes great | less filling debate” Personally for me I would like to buy cheap, and at a low interest rate ( which I did).
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