😅🙃 UNDERSTANDING INTERESTS, MORTGAGES AND RATES
In this video we are going to talk about why on majority of cases is more convenient to buy!
“If you don’t own it means you are renting and that’s 100% interest.”
“In New York we have historical data that says in 10 years you will never loose money, you might just break even, not make profit but you will never loose money.”
*important disclaimer: this video was recorded on 9/22.
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hello guys how are you this is Javier co-founder of the Thrive Real Estate Team and usually as usual as always I'm joined by my partner Thomas yes a very wet Thomas I don't know if you are in New York City today but it's a downpour there's been hailing it's been some cats and some dogs falling out of the trees it's kind of why I'm just like this today as opposed to dress slightly better than this because the sky is sad it's sad because the interest rates went up like the interest rates go up the water comes down it's usually it's directly scientifically proven now for real the interest rates uh defense raise the rates yesterday if you're watching this today which you probably are not because we need to edit this but uh the feds raise the rate on the 21st by 75 basis points that is basically point five percent in the big scheme of things so I think most people are probably confused what that actually means right right um if I didn't work in real estate uh I probably would have no idea what basis points were um how they affect the mortgage market so the base points by that point 3.75 yesterday to what three and a quarter three and a half yeah so so the defense usually give you a range of a quarter point of what their target interest rates are inside belief two three three five or something like that yeah so it's basically like in the low threes where they where they went out to now a lot of people think that the interest rates going up by the FED immediately affects the mortgage market and it's gonna make it mortgage more expensive however it actually went down a little bit yesterday but then it came back up again today it did the reason why that happened is because the interest rates that the feds said it's not that they have nothing absolutely nothing to do with a mortgage Market but they have very little to do with the mortgage market so essentially Banks also have to borrow money correct and defense doesn't rate at what the bank pays on interest for that money that's your term and a daily literally overnight this is how much money you can or should be charging other Banks to lend money to them overnight so essentially Chase calls up Bank of America and says hey I need to borrow 100 million dollars and Bank America goes okay that'd be 3.25 a little bit less cash flow than that but yes uh now so what this feds are setting is the very short-term lending rate what the mortgage rate uh navigates with or dances is a long-term bonds so you have to look at the bond market at a 10-year bond market usually to really understand where the mortgage age rates are going to land so for instance if you look back to the end of June when the basis points were not as high as they are today the mortgage rate was still at 5.80 correct give or take right um so today we're at I was it six four six five six six two eight six six thirty year it was the last number that I believe I saw so in between those two time periods in the middle of August we actually came down there was a dip in the market yeah and that was all unrelated to what the FED said right so the FED didn't do anything in between um but the the rates were high then they were low ish uh and then they were high again again really it's all still very low I think what the what we're trying to Target here with the banks want to Target is like an eight percent and that's going to be considered normal um but we're not there yet yeah actually the feds were looking at a hopefully reaching some somewhere the four or five Mark so I that's a mortgage at eight percent yeah um might be might be somewhere there uh 67. so bringing it back to a more digestible interest rates go up they are not directly tied to the FED correct they're not so really another thing that you have to think about you touched on this when you said the banks are looking at a 60 to 90 days out um the FED has the banks have to take into account that when they're giving you your pre-approval right you get pre-approved today for something that you're actually going to borrow 90 days to 100 days from now that's kind of one of the things that affects the interest rates is they're looking at oh the interest rate could go up again but when you get your pre-approval you're not your rate could still be less than what the number is today absolutely but it's important to know if you're a buyer or if you're a seller right now interest rates are higher than they have been since 2008 they are not that high compared if you compare from like the 60s or the 70s they were 18 19 um even in the 80s they were super high and you know it's funny I remember when I was a kid uh there was a time and like my savings account was like six seven percent right now experiencing the same right it's just on a savings account what I did not know because I was a child I had no understanding of mortgages but the Fed rate was so much higher and the mortgage rates were so much higher that that's why the savings accounts were paying so much more money you really weren't it's all just a skip so in 2000 at the turn of the century 2K into YK and all that craziness defense had the rate back then around seven percent and right now people are freaking out because we're at 3.1 3.2 terms of however we forget that 22 years ago the economy was fine everybody was buying and selling no problem I say that because we have to take perspective of where we're coming from we come from an artificially low interest rate time and now we're just going back to normal we're going back to it to normal to temper and inflation that it's obviously happening and a couple of things to realize you know if you're not buying that means you're or you don't own your place that means you're renting and that's 100 interest so yeah all that money is going nowhere right if you were to buy now if you're a seller and you can put on the market in the market now if you're a buyer if you're buying now it sounds like 6.6 and it's an effects or eight 5.9 and a 30 jumbo which is most of the mortgages in New York by the way jumbo so when you hear that 6.16 or 6.6 if you're buying anything above 900 a million dollars which are most of the transactions in New York really look at their jumbo loan which is right now 5.85 as of this morning I think don't call me on that but it's around there and um when you are buying now at that price if the interest rates go down you can always refinance if the interest rates go up you're loved at the interest rates that you pray that you got today when you will never be able to do is change the market environment then right now is balanced between buyers and sellers in the future we don't know New York we have historical data that proves that in a 10-year period you're not going to lose money you might just break healing you may not profit but you're not losing money if you compare it to paying full rent that is losing money the other one the other one is building Equity so there's also many other different loans that are not the fixed loan you're adjustable rate mortgage loans gives you a little bit less of a of a interest rate if you could actually put more money down a month of 15-year fix it also is a little bit of an interest rate their interest only loans that some people are very scared of I found that people from across the ocean in the other side are much more amicable to interests only loans currently they use them a lot in the European Union yeah so don't be scared about the interest rates owning a home will always make you a little bit wealthier with the building of the principle with the building of the equity regardless of how much interest you're paying almost always you're gonna end up winning comparing to rent that's right like there's no way out of that if you stay somewhere more than five years you can't stay less than five years and in many cases or anything makes more sense well if you're going to stay somewhere less than five years buy the condo rent the condo out for a couple years and let someone else pay your mortgage if you have questions on how to do that reach out to me my name is Thomas this is Javier and yeah like share post ask questions bye