4 years ago

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
NYC Seller Closing Cost Calculator: https://www.hauseit.com/closing-cost-estimator-for-seller-nyc/

Should I get a mortgage now in 2020 in light of the Coronavirus epidemic and lower rates in general as well as the market pandemonium? Well, rates certainly are lower and the 10-year and 30-year treasuries has recently hit all-time lows. And of course, keep in mind that the mortgage rates are typically based or referenced at least in some part off of the 10-year treasury note. This is an interesting question because Google searches have hit an all-time high for mortgage and should I buy a home in recent weeks.

We'll demystify this topic in the following video. My name is Chris at Hauseit. Hauseit is the largest assisted For Sale By Owner and Buyer Agent Commission Rebate company in New York City, established 2014. The first consideration before going out and getting pre-approved and having a bank run your credit is to actually get a few quotes from major lenders in your area and see if they've actually lowered rates along with broader market interest rates. Even though the 10-year treasury has gone down significantly to all-time lows in recent weeks banks surprisingly have not kept up.

We've interviewed a few major bankers headquartered in New York City that are national or rather global in nature and they've mostly told us that their rates have held steady and not gone down despite recent market plunges in the stock markets as well as all-time lows in interest rates. For example, a major New York based financial institution told us that their rates have held steady from approximately a week or two before at 3.5% for a jumbo 30-year fixed rate mortgage for a refinance and 3% for a 30-year fixed rate jumbo loan for a new acquisition. Keep in mind that mortgage interest rates will always necessarily be higher than the risk-free rate which in this case would be the appropriate treasury bond of the same maturity.

Of course, you can be patient as at some point banks may simply need to reduce their mortgage rate to keep up with competition but it seems at the moment that many major banks are holding steady until the turmoil dies down a bit. So, to answer the question in short check rates with multiple lenders and see if rates had actually gone down in response to the market turmoil.

Another interesting question we get is from homeowners who had paid down most of their mortgage and are considering a cash out refinancing to take advantage of both lower rates as well as lower broader market equity indices. Many homeowners are thinking about capping their home equity to purchase stock for the long run. Is this a good idea? Well, first of all please consult your financial adviser we do not offer financial advice. But just from a real estate professional's perspective we ask you to consider a few things. One of the pros of getting a cash out refinance is the fact that leverage is very unique. It is non marked to market which means that unlike a stock portfolio margin loan the lender does not "want to market" your holdings every day and potentially ask for a margin call if the value of your portfolio has declined. This can be extremely risky in a declining market but by borrowing through a mortgage you won't have the risk of marked to market checks at all and you will have the financing for term without any checks on the underlying asset value. This can certainly help you sleep at night.

Another unique factor about mortgage leverage is the fact that it is very long term. For example, the most common tender for a mortgage is 30 years. This is almost unheard of in any other avenue of lending. Lastly mortgage debt is typically non-recourse and you can certainly make it non-recourse by purchasing a property or owning a property in an LLC. This means that if you default on the debt the lender typically only has recourse meaning they can only go after the asset or the home not your other personal assets. Again, this certainly is the case if the property is in an LLC.

So, should you go out and tap your home equity and buy the stock market? Again, this is something that you should consult with your financial adviser but from a real estate professional's perspective we ask you to keep a few things in mind. One, there are refinancing fees. Please check out our recent article on 'Should I refinance my home?' and our related video to learn more about how much it costs to refinance a home. For example, on a 700k dollar mortgage you might expect total fees of approximately 1%.

Save 2% When Buying in NYC: https://www.hauseit.com/hauseit-buyer-closing-credit-nyc/
NYC Seller Closing Cost Calculator: https://www.hauseit.com/closing-cost-estimator-for-seller-nyc/
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Hauseit LLC, Licensed Real Estate Broker
Tel: (888) 494-8258 | https://www.hauseit.com
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