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Dorchester grandma
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 Posted: Sat Jul 28, 2007 5:40 pm GMT Post subject: Backed out once again |
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I had made a low ball offer for a condo recently which was accepted. However it would have been a "short sale" which means that it would be a long drawn out process, not short at all. The seller had paid 169. I had offered 155 so her bank loses $14,000
My interest rate of 6.125 would have been locked in for two months. After that I would have to pay an $800 fee to extend the rate should rates go up even higher. The seller is in dire straits, about to foreclose, so would not pay this. Since the place was not exactly what I had wanted (too small) and I see prices dropping daily, I decided that I don't want to wait several months for this deal to go through. Better deals might be coming soon (?)
Interest rates may come back down again and I would be stuck with today's higher interest rate. When you are "locked in" it is for better or for worse. About 2 months ago my rate as a first time homebuyer would have been 5.125. There are too many "ifs" here and certainly if this had been a better fit (a larger place with a porch) it would have been worth waiting for, paying the fee etc.
So here I am again still renting and checking the new MLS listings every day hoping for a miracle to appear EVEN A BANK OWNED SINGLE FAMILY WHICH IS NOT A DILAPIDATED WRECK! |
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admin
Site Admin
Joined: 14 Jul 2005
Posts: 1826
Location: Greater Boston
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| Posted: Sat Jul 28, 2007 7:16 pm GMT Post subject: Re: Backed out once again |
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| Dorchester grandma wrote: | | Interest rates may come back down again and I would be stuck with today's higher interest rate. When you are "locked in" it is for better or for worse. |
Are you ruling out refinancing for a particular reason or had you not considered it? Yes, the rate is fixed for the life of the loan, but if rates fall you can get the new rate by taking out a new loan to pay off the original loan in its entirety. Of course, there may be prepayment penalties which you would need to factor in, and maybe it would also be harder to qualify for refinancing in the future if the credit tightening continues or if prices have fallen too far. However, there is at least the possibility that you could take advantage of lower rates in the future even if you bought now. This is one of the reasons that I would prefer to buy when rates are high since that would leave open the possibility of refinancing to a lower rate in the future, whereas buying when rates are low (and they still are) doesn't leave much upside potential.
Your other points seem valid and I think you made a good choice. Best of luck in your continued search.
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Dorchester grandma
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| Posted: Sun Jul 29, 2007 12:02 am GMT Post subject: Why no refinancing? |
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| I did check into refinancing however then I would lose the Soft Second mortgage for first time homebuyers and it would end up costing me more. Refinancing did seem like the obvious choice however it seems that you can't win. |
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john p
Joined: 10 Mar 2006
Posts: 1820
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| Posted: Mon Jul 30, 2007 6:10 pm GMT Post subject: |
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| I think you made the right move. You learned some important things and the market is trending in the right direction. Best of luck. |
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