Wednesday, March 09, 2016

Refis' are about to collapse. And that's a good thing.

Back in the housing crisis people lost their houses because they had a resetting mortgage. Many with poor credit got taken out in the first few years. Those with good credit could get a 10 year reset. At the time - you could not buy a house without a resetting mortgage.

I know because I was one of those people. And my reset was 4/1/2016. I got refi'd two years ago. But there are still a bunch of people underwater. And apparently the people who write about real estate don't understand why they aren't even trying to refi. I do understand.

People don't talk about it much anymore, but I think it's people in the middle market who are still underwater. Everyone pushed into the low end of the market making those houses rise in value markedly. The high end has also enjoyed good gains, but those in the middle - like my house have almost been stuck in time. My rental is up about 50%, but my house I probably only have like 20 grand in equity after 10 years.

I was close to the tail end of resets. Meaning most of these are going to be happening over the next year or so. I know one of these guys. I haven't asked in a handful of months now because as things recover it gets more and more uncomfortable. I've talked about him may times over the years because he was paying 7% the whole time.

If I were him I'd be pretty bitter. I was paying 6% up until two years ago and I was super bitter. Every deadbeat got refi'd before that guy who obviously was responsible because he still has all his shit.

At any rate, those resets are starting really soon, and that guy will enjoy a rate more in the 3.62 range. not 7% like he'd been paying. I bet he's not the only one. Why would he rush to refi right now?

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