Should You Buy a House and Get a Mortgage in 2020?


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 it 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 cashout 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 everyday
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 nght. 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%. Now, lets jump back to buyers of actuall property. Should you get a mortgage to take advantage
of buying a home for the first time? Well, if rates do go down in the mortgage
road and you are able to take advantage of it. That is fantastic but you do have to keep
in mind actual market conditions in the real estate market or wherever you are. For example, Often times in a declining real
estate market sellers will typically not sell and you will see the number of transactions
decline precipitiously . However, the New York City market is unique in having been
in a buyer’s market for several years now. So time will tell but we may see this recent
blip in broader markets cause a cascade effect and cause sellers who have been holding out
to finally give room and lower their prices. Our take away is this, don’t let all volatility
and big swings in broader markets frazzle you. When it comes to your home buying decision
or your refinancing decision make these decisions as if the market has not changed. You should not decide to buy or rebuy simply
because of incremental changes in mortgage rates. You should always evaluate and make the decision
based on your personal circumstances. For example, much more important are is your
lease actually coming up? Do you plan on staying in the city for at
least 2, 3 or 5 years? You should again check out our article on
Buy versus Rent to see the that makes sense to buy versus continuing to rent. Usually, the math boils down to how many years
do you plan to stay in the city. Again, consider your personal decisions and
don’t get frazzled by what’s going on out there. Anyway, we hope you found this video helpful. If you did please hit like and subscribe. We do come out with content on a regular basis. Please feel free to comment below if you have
any questions and of course if you are interested in buying and selling a property and you want
to learn more about how you can save on closing costs please check us out http://www.hauseit.com. Thank you and we’ll see you on the next one.

2 Comments

  • cool video keep up the amazing work

  • Here's a winning strategy…buy property, disinfect it, then advertise it as a coronavirus-free apartment. Lots of people will be vying for it. Lots of people!

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