Posted on 07/20/2023 5:56:19 AM PDT by millenial4freedom
In December 2021, when the 30-year fixed mortgage rate still averaged 3.1%, a borrower could get $700,000 mortgage that required monthly payments of principal and interest of just $2,989. Fast-forward to Wednesday, and a $700,000 mortgage taken out at the current average mortgage rate of 6.90% would equal a $4,610 per month payment, which is $583,000 more over 30 years than that mortgage issued at a 3.1% rate. When adding on insurance and taxes, that monthly payment could easily top $6,000. Not to mention, that calculation doesn't account for the fact that U.S. home prices in June 2022 were 12% above December 2021 levels and 39% above June 2020 levels. Mortgage planners like John Downs, a senior vice president at Vellum Mortgage, have the hard job of breaking this new reality to would-be homebuyers.
However, unlike last year, Downs says most 2023 buyers aren't surprised. The sticker shock, the loan officer says, is wearing off. Just before speaking with Fortune, Downs wrapped up a call with a middle-class couple in the Washington D.C. area, who told him they were expecting a mortgage payment of around $7,000. "The call I just had was a typical area household. One person makes $150,000, the other makes $120,000. So $270,000 total and they said a payment goal of $7,000. I'm still not used to hearing people say that out loud," Downs says. Even before these borrowers speak to Downs—who operates in the greater Baltimore and Washington D.C. markets—they've already concluded that these high mortgage payments will be "short-lived," and they'll simply refinance to a lower payment once mortgage rates, presumably, come down.
(Excerpt) Read more at finance.yahoo.com ...
And I’ll be waiting to scoop up those properties on the cheap when they all default.
Funny.
Be more accurate to say “I can pay it back with inflated dollars in the future.”
I done can’t read good no how…
Are they stating $7K a month?
The DC market area, wealthiest zip codes in the land. Who cares what they pay. They apparently don’t.
Typo...................
Yes, I’m afraid they are.
I guess my definition of middle class is different.
It’s happening on car notes too.
Unlike real estate cars rarely appreciate and even though I warn people they still think the car will be worth more than they owe so they can just refinance it.
I assume a min down payment of 5% @ $35K or 10% @ $70K or 20% (you get the picture) wasn’t included....
“And I’ll be waiting to scoop up those properties on the cheap when they all default.”
That’s what I am looking to do on the North Carolina coastline.
I wonder if they have considered the odds of one of them losing their six figure job?
The DC metro market is totally dependent, directly or indirectly on government growing out of control.
So far that has been a good bet.
It’s ok, the baked potato in the White House will soon offer Fed mortgage forgiveness for people who over-committed.
Middle class is now $270,000? Wow! I just fell way behind
I think I’ll find a nice beachfront house and become a squatter.
Buy your wheelbarrow to haul tomorrow’s dollars round in today...before that price goes up, too!
Buckle up, folks
Yep. It wasn’t that long ago when “homebuyers take on $7,000 mortgages” meant people were borrowing $7,000 to BUY A HOUSE, not a $7,000 per MONTH mortgage PAYMENT.
The thought of a 7k/month mortgage makes my stomach do handsprings. What do these people do for a living to possibly swing that?
“people they still think the car will be worth more than they owe”
Wow. People really think that?
Of course, if you keep cars ten years like we do and pay it off in four years, that does come true. We have six years with no payments and the car is worth a lot more than the remaining debt (which is obviously zero).
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.