All Forum Posts by: Simon Ashbaugh

@Simon Ashbaugh

This is flawed thinking from an investors standpoint, in my opinion.

I would ALWAYS prefer to buy at a higher rate lower price, than lower rate higher price.

Why?

You can NEVER change the purchase price, but you can refi in a few years when rates go down. If my deal works at 8-10%, imagine how good it will be when I refi at 5-6%.

If you buy at a high price, low rate...cool the deal works now. If you ever want to get $ out of that property, you're going to be paying a higher rate. If you want to build any kind of equity you'll need to hold for 10-15 years. Not only that, but it will take you longer to build equity because you bought at a higher relative price.

Interest rates drive demand. We literally saw that over the last 2 years. Higher rates slow demand, and prices will follow. It may take 6 months but if you want to sell, you'll have to drop the price.

 It may go up to those numbers, but it won't necessarily, right?  I don't exactly know how all these things work, but haven't fixed rate lenders essentially already priced those future rate increases into their current rates?

My adjustable HELOC rate, which is based on prime, is still 2 points lower than fixed mortgage rates. Fixed rates are well above prime already. I would assume a big part of that is because they know the fed has said they'll raise more, so they're getting out ahead of it and pricing those into their fixed rates already.

I could be totally wrong on that, but that's mostly how it worked earlier this year.  The Fed raised 1.5pts and fixed rates shot up from 3% to 6% (more than 1.5pts) because the fed said they'd raise more.  Then the fed raised a couple more times and the rates stayed pretty steady around 6% (those raises were already priced in).  It wasn't until the fed said they weren't done and that they were going to raise at least 3-4 more times that rates shot up again.  

@Simon Ashbaugh

Well the Fed has literally told us interest rates will go up. So my bet is they will go up. That's the primary reason housing prices have gone down lately...because demand is down...due to interest rates. The supply didn't change. The demand only changed because of rates, and demand moves much faster than supply