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Registered Apr 14, 2010

country_stroll's most recent comments:

  • On Mon, 19 Aug 2013, 3:37am PDT in Could the 30yr mortgage be coming to an end?, country_stroll said:

    Which means that housing prices would crater. It's not just a 3% rise in rates, but the fact that the monthly mortgage payment can fluctuate along with the Libor.

    For obvious reasons, many home buyers will still want to buy with a 30 yr fixed. If there is a market, someone will find a way to meet the need. That is the American way.

    What exactly is Fannie Mae guaranteeing anyway? Are they guaranteeing to make investors whole if the borrowers default? Yes. But so what? Jumbo loans aren't guaranteed, and they are fixed loans too. Are Jumbo loans 3% higher than conforming loans? No. In many cases they are less. Why? Because the Jumbo borrowers are more credit worthy.

    The real question is who takes the risk if rates rise during the loan term. With Fannie Mae, the investors that buy MBS trade rate risk for payment risk. The government guarantee of interest and principal offsets concerns of investors losing money from inflation if rates rise during the 30 yr term. Since 30yrFRm rates are artificially low, the rate risk is artificially high. As rates normalize to 7-8%, then the risk of rising above that drops, and so does the 30yrFRM premium over floating rates. In fact, a 30yrFRM should be cheaper than a 1 yr ARM if rates were above 10% and looked to be falling in the near term.

    So, why all the concern about the 30yrFRM? Well, the concern is the same as the MID> elimination of any government subsidy will lower housing prices. Lower housing prices mean fewer originations for companies like Approved Mortgage, since many houses can't sell if the price falls below their principal balance.

  • On Wed, 14 Aug 2013, 4:06am PDT in Mortgage rate spike finally hits housing, country_stroll said:

    Does anyone have anything intelligent to say on this board anymore? Why bother reading the comments when it consists of stupid rebuttals of stupid assertions. Pathetic. And it's there not their, Goran_K. Learn the language.

    Rates matter. A rise in rates is the same as a rise in prices. When prices rise demand falls. I find the above discussion between iwog, Goran_K and zesta completely irrelevant and a distraction from the topic. Was that the intent?

  • On Fri, 28 Jun 2013, 12:00am PDT in Who puts 20% down on a house? Not nearly as many as you might think, country_stroll said:

    Why would I take financial advice from an author that doesn't even understand the difference between average and median? The author says that most people don't put 20% down, and then goes on to talk about the average down payment. Really?

    The average down payment is the total of all down payments divided by the total number of homes purchased. So if two people put 50% down and four people put 5% down then the average is (50+50+5+5+5+5)/6 = 20%. This metric tells you nothing about the percentage of households putting down 20% or more. In this example, 67% put down less than 20%, and in fact most only put down 5%.

    This is what happens in California. Most first time buyers put little down, and most move-up buyers put a lot down. Since we have had falling interest rates over the last 30 years, equity for move-up buyers has generated massive move-up down payments through no effort on the part of the owners. Thinking that this will continue in a rising rate environment isn't gambling, it's struthious naivete.

    I can only assume that the author didn't have actual data available to perform a proper analysis, or was too lazy. I saw this same average down payment data published a while ago.

    What did the author think the mortgage lender was going to say? Don't get a loan from me right now, wait a few years? Please. The lender is going to say whatever he thinks to get the borrower to commit to the loan, so they get their commission.

    Another commenter pointed out that avoiding PMI is the very reason for putting down 20%. How is this left out of the calculation? What is the author's basis for predicting that rates would double and yet prices would rise 12%? This seems to be an industry shill piece designed to push prudent borrowers off the fence based on specious arguments.

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