San Diego Housing Bubble News and Analysis

Re: Nightmare situation #1. Isn't high inflation great for those that have debt (like a mortgage)?

I don't much about lender comparisons...

...Provided it's a fixed mortgage. If you have a 10/1, that doesn't seem fixed, and I would surmise your rate would rise with inflation.

... I think getting an adjustable loan poses a risk particular since more than likely rates are going to go up in the future. I don't think most people are savy enough investors to be able to consistently obtain investment returns that would beat that rising ARM rate....

...I seriously doubt we'll see deflation in the long term.

...In a depression everyone is screwed, but even then being screwed is relative. So hopefully you would have enough cash to at least buy food and shelter.

...Regarding a 30year IO...You probably need to assess how good you really are at saving versus spending cash on hand. I think most people probably spend more when they *feel* they have more cash on hand. Also, it's not just that you would be screwed if you didn't pay down your principle by the time the loan was down...I'm sure someway the taxpayer would be on the hook for that.

They still offer 10/1's? Wow.

Call or email HLS. homeloansheldon [at] aol [dot] com.

I am not agreeing or disagreeing with your decision.

The premium on I/O loans is much higher now than during the boom so the cash flow benefit is greatly reduced.

I'm with SDR... Call Sheldon. I just did a refi with him and he's honest, and easy to work with. That seems pretty unusual in mortgage brokers.

As far as your decision... It's so far out of my comfort zone - I wouldn't do it. I'm pretty conservative when it comes to money decisions, though. I can't give advise on something I would never consider myself.

Keep an eye on San Diego County Credit Union's 7/1 amortized over 40yrs. It was 4.875 on Jumbo for quite a while but just went up to 5.25 on Wed. I've used them in past and they are easy to work with.

Thanks everyone for your suggestions and feedback. I'm starting to doubt my own sanity, but the current real estate market seems to be dominated by lunacy.

AK, I give you an A+ for originality.....

First of all, it just isn't realistic to think that there is ONE lender who always has "the best"
rates or programs.

Loans fall apart all the time for reasons other than the rate; people don't qualify, even though they think that they do.
Getting the loan done is what counts and knowing how to get it done when something goes wrong is what counts.

You can shop for quotes on the internet and have your lead sold 50 times and get 50 emails/phonecalls from mtg people all promising you the lowest rate. The most foolish way to "shop" for a mortgage, yet the way many people do.

The premium that you will pay for an interest only 30 YR fixed is expensive money. It's about a .50 difference in rate. The I/O option is only for 10 years. In years 11-30 your payment jumps as it becomes amortized over 20 years.

On a $400,000 loan your payment difference is about $300. By paying $300 more, you will lower your principal balance by at least $450 a month, in excess of a 50% return guaranteed. Nobody is going to be able to beat that return consistently.

With a 10YR ARM you have a choice of I/O or fully amortized. The I/O option is expensive money.

With 10% down you are going to pay mortgage insurance, which is also expensive money.

If you would like to discuss what your options are, I'll be happy to help.My contact info was posted above. HLS Sheldon

Thank you so much HLS. I'm still considering all my options but you present a strong case for the 30 year fixed.

AK the one thing I can confirm for you is that it is SHEER LUNACY in the market right now. It is so far from where it was just 6 months ago that it is laughable. I am seeing no look offers, multiple offers, offers above bid. It makes no sense.

Thanks for confirming my diagnosis SD R :)

I've actually been beat out when trying to submit no-look bids. I also saw a short sale with a possible foundation crack get six bids in three days, even though it wasn't listed in Sandicor.

Whether or not the CIA really was behind crack cocaine ... there's no doubt that the government created this madness with the $8,000 tax credit. I'm hoping the sheer lunacy will subside to mere insanity in a month or so. If not I'll just have to choose the best of the many crazy options at my disposal.

Wonder if I can still get an option ARM ... just kidding :)

I think its the foreclosure moratoriums constricting supply coinciding with sub-5% rates. Then with the rate spike of the last 2 weeks a lot of people are panicking that they will be priced out (through interest rate spikes) and are making offers on any marginal property they can instead of waiting. If rates keep around 5.75% there will be a lot of short sale contingents coming back to market and loan mods that won't be able to be done. Rates are really driving peoples purchasing decisions right now.

The rates are still historically low..The monthly change in payment isn't going to make a difference in qualifying for most people.

As of Friday, for a qualified borrower, I had 5.25% 30 YR Fixed.

For a $400K loan, the difference in payment between 5.25% and 4.75% is $123 month.

There is still an option to buy down to 5% or below. HLS