Not sure about long term, I know since 1971, the rates were significantly higher. Most of the 70s where low ~7.25% to 9%, then inflation and the oil embargo hit and rates went through the roof (can you say 18% in ’81) that was supply side inflation. Supply side inflation just like oil and gas price increases today. From 18% in 1981, it trickled down over the next seven years back to 10 percent. Spent most of the 90s in mid-high 8s. +/- 1%
PS: yah i just double checked my loan documents and called the bank about it and it is confirmend that the max rate is 8.5%. Yah, to me it sounded too good to be true when I first got the loan, but it is what it states. Thanks for looking out for me, I was pretty sure my statement was correct since I like to read the fine print in things(people laugh at me for doing that sometimes, I am pretty anal on checking documents).
Job wise: Yes it is stable also the wife’s job is as well(qualifying for the payments would not be an issue from my analysis/talking to the banks about this).
PS: oh and about the 10-15% or 30% the answer is yes to all three. We borrowed only as much as we can afford through a 30 year fixed but figured saving 1-2 % back then using an ARM was a good decision, but always wondering when/if to refinance, like you said, where rates will be in 2-3 years is something I do not know either and will just monitor things closely. Thanks for the responses, I appreciate everyone’s feedback.
One of the guys working for me lives in Linda Vista, a fact he is quite proud of which is a good thing for him, just not my kinda place. They rebuilt, and had a ton of work down, adding a second story and getting to 3200 Sq. feet. Totally out of cash, he borrowed from 401K, and has no grass or landscaping apparently. Nice guy but he overreached on this one badly.
Now he plans to consolidate it all into an IO loan for just 3 years so they can catch their breath and re-fi. He was hoping to get 800K but so far can only find 725K, as he wanted to consolidate all costs into this.
He spent just over a year renting an apt. across the street, while all this wad done, and had all his payroll taxes knocked off to be able to finish. He claimed 99 dependents to be able to do this.
I don’t know how he is going to see this through. Apparently a nice ocean view so it’s all worth it. All from a house bought for 130K and re-fi’d twice before upgrading.
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