Costs (NO POLITICS)

[jbsoonerfan]

Man, things are starting to get tight around here. We have an ARM loan on our house and it just went up $160 a month starting July 3rd due to interest rates. Escrow was raised $40 a month for a total of $200 a month extra on the house payment. Electric has went from about $160 at this time last year to about $240 now. Fuel prices, groceries, etc. it's getting out of control. I'm not making anymore money though.

[Junger]

The ARM makes sense. The Fed Rate went up .75% a couple weeks ago to combat inflation, therefore your ARM went up. But I would look into the escrow increase. Typically escrowed amounts relate to home insurance and real estate taxes. Did your home insurance renewal go up? Real estate taxes may have gone up, but you usually get a notice from your local/state jurisdiction before that happens. Your $160 bill should show you KW/h used/rate and you can compare to your $240 bill. What went up, the rate or the usage? Fuel....yeah, the world is sharing the pain for war. As for groceries, most things have gone up.....but I have found some things coming down. Costco pork ribs have come down $1/lb here! Gonna make some ribs for the 4th!

 

I guess, the only thing I can hope for is that the dynamics of a free market economy start to take hold and our wallets will dictate the prices sooner rather than later.

 

[jbsoonerfan]

Apparently it has to do with property value and I was a little short last year on escrow. As far as electric, we had the HUGE winter storm disaster last year that cost millions(billions) of dollars for electric companies (we even had rolling blackouts) because they weren't prepared. Guess who will foot the bill?

[Junger]

5 minutes ago, jbsoonerfan said:

Apparently it has to do with property value and I was a little short last year on escrow. As far as electric, we had the HUGE winter storm disaster last year that cost millions(billions) of dollars for electric companies (we even had rolling blackouts) because they weren't prepared. Guess who will foot the bill?

 

Most states have a "homestead" exemption where the value of your home is limited in value increase, are you registered for that?

 

That sucks for the storm damage recovery....write your congressman/governor...ask them to pass a bill to limit how much they can pass onto the consumer.

[jbsoonerfan]

8 minutes ago, Junger said:

 

Most states have a "homestead" exemption where the value of your home is limited in value increase, are you registered for that?

 

That sucks for the storm damage recovery....write your congressman/governor...ask them to pass a bill to limit how much they can pass onto the consumer.

I think it's possible because I added on to my house. My house would have appraised for about $120,000 a couple years ago to probably $320,000 in today's market.

 

There is a house less than a half a mile from mine, while being fairly new it is only 2,000 sq ft (mine is 2,500) and they are asking $449,000 and have multiple bids in. Crazy times.

[Deleted account]

6 hours ago, Junger said:

write your congressman/governor...ask them to pass a bill to limit how much they can pass onto the consumer.

Or Santa Claus, I used to coordinate with the staffs of Congress, WH, and DOD, when I had the misfortune of drafting constituent response correspondence, some of the letters are very touching and sad, but most are laugh out loud funny.

[Tennessee Boy]

I bought my first house in 1993 and I thought I had won the lottery because my rate was only 6.75%.  That was the lowest it had been in 20 years.  For over 10 years they were over 10%.  Rates have been extremely low for the last ten years,  especially the last two.  My current rate on a 30 year fixed is 2.75%.   A lot of people are going to get hit hard as rates return to normal.

 

https://www.valuepenguin.com/mortgages/historical-mortgage-rates

[gim]

I just bought a house last month.  I had been looking for over a year.  Although I was pretty specific about what I wanted, my ceiling to purchase went down about 40 grand because of interest rates since last December.  There wasn't anything I can do.  All I could do is watch them slowly creep up.  I feel pretty lucky to have gotten the house I have now in the location that I'm at, even at a 5.25% interest rate.  The nice part is that I sold my previous house for a lot of money.

 

My loan officer thinks that interest rates will drop in about 2-4 years again.  I intend to refinance when that happens, if it does.  Of course no one knows for sure, but she has been a mortgage loan officer for 25 years and certainly she is a lot more knowledgeable on the subject that anyone else I know.

 

As for gas prices...not much you can do.  Drive less.  Drive slower.  Oil is a globally-traded commodity and there is a pent up demand for it because of the pandemic.  I think gas will drop after Labor Day when summer travel season ends.  Whenever Russia decides to leave Ukraine, that will also help.  The worst thing that could happen is a major hurricane in the Gulf that wipes out platforms or a major refinery.  Then prices will really skyrocket.

 

As always, as @slonezp says, the biggest budget eaters are your kids.  "Get rid of your kids and the money flows like water."  LOL

[the reel ess]

I'm an estimator for my job. I recently repriced a 14 month old quote and the material costs rose by 40%. That's our cost for them. In that time, freight continually rose and we had to increase our handling, rigging and labor rates.

[Deleted account]

14 minutes ago, Tennessee Boy said:

I bought my first house in 1993 and I thought I had won the lottery because my rate was only 6.75%.  That was the lowest it had been in 20 years.  For over 10 years they were over 10%.  Rates have been extremely low for the last ten years,  especially the last two.  My current rate on a 30 year fixed is 2.75%.   A lot of people are going to get hit hard as rates return to normal.

 

https://www.valuepenguin.com/mortgages/historical-mortgage-rates

Yup, almost 2 decades of little inflation and low interest rates has created the impression that it's the status quo, it's not, The Piper is here, so plan and spend accordingly. Look at the 70s for a reference point, but on steroids.

[Captain Phil]

Think about this.  Since the Great Ression of 2008, the Fed's target for inflation was 2% annually.  They never got close.  If they did, what would prices be now?  All that is happening is we are catching up for lost time.  Some people think a 5% mortgage rate is bad?  We bought our first house in 1966 and it had a 6% mortgage.   In the eighties we had an 18% reverse mortgage where we owed more on the house each year!  When you have an adjustable rate mortgage, you are at risk of having your rate increased.  Our current mortgage rate is less than 4% and it will stay that way until we sell.  Florida limits homestead tax increases to no more than 3% annually. We also have no State income tax.   Our State constitution does not allow deficit spending.  Florida currently has a budget surplus. 

[Choporoz]

35 minutes ago, the reel ess said:

I'm an estimator for my job. I recently repriced a 14 month old quote and the material costs rose by 40%. 

That's a concern of mine.  I got quotes months ago for work at my house.  Unfortunately,  the guy I chose (but hadn't signed with yet) has had to delay a number of times.  Pretty sure I'm looking at 40% or 50% more than I thought back in February. 

[the reel ess]

14 minutes ago, Choporoz said:

That's a concern of mine.  I got quotes months ago for work at my house.  Unfortunately,  the guy I chose (but hadn't signed with yet) has had to delay a number of times.  Pretty sure I'm looking at 40% or 50% more than I thought back in February. 

I have some friends who were trying to build a new house in a development at Garden City Beach, SC. The guy went down and stayed with in laws and got a job. The builder had them sign a contract and never started the house. 6 months later the contract ran out and no house. I suppose the builder never signed the contract. But he offered another contract for about $90K more. He is simply speculating on the lot. So they never moved and he's back here in town, working and back at his old job.

33 minutes ago, Captain Phil said:

Think about this.  Since the Great Ression of 2008, the Fed's target for inflation was 2% annually.  They never got close.  If they did, what would prices be now?  All that is happening is we are catching up for lost time.  Some people think a 5% mortgage rate is bad?  We bought our first house in 1966 and it had a 6% mortgage.   In the eighties we had an 18% reverse mortgage where we owed more on the house each year!  When you have an adjustable rate mortgage, you are at risk of having your rate increased.  Our current mortgage rate is less than 4% and it will stay that way until we sell.  Florida limits homestead tax increases to no more than 3% annually. We also have no State income tax.   Our State constitution does not allow deficit spending.  Florida currently has a budget surplus. 

I bought a brand new 2010 Chevy Silverado 4WD extended cab for $22K during the Great Recession. I had to shop hard to find it at a dealer going out of business, but new ones were available all over for about $30K. A comparable truck is in the 50s now. Hell, my truck is still worth more than $20K. I don't have miles on it and it runs like new. It might be 20 more years before I buy another. 

[Bird]

Real Estate market has ballooned beyond belief here since Covid and since working at home has limited travel so people from the city are migrating here.

 

Currently there's very limited houses available and if one gets listed, it's gone.

Hang in there ?

 

[Deleted account]

11 minutes ago, Bird said:

Real Estate market has ballooned beyond belief here since Covid and since working at home has limited travel so people from the city are migrating here.

 

Currently there's very limited houses available and if one gets listed, it's gone.

Hang in there ?

 

There is also organized forces driving up real estate prices. Houses going for mega bucks in San Fran, NYC, suburbs of DC, and certain places in the south makes sense. Iowa, Osh Kosh, and other sticks doesn't. That bubble will burst in time, as they always do.

[gim]

1 hour ago, Captain Phil said:

In the eighties we had an 18% reverse mortgage

 

My parents had about a 15% mortgage on their first house too in the 1980's.  So ya, it can get a whole lot worse.

[TnRiver46]

I’ll be driving around this evening delivering food for some extra cash. It’s nice to have a way to make some money after work 

[Deleted account]

31 minutes ago, TnRiver46 said:

I’ll be driving around this evening delivering food for some extra cash. It’s nice to have a way to make some money after work 

https://www.npr.org/2019/07/30/746600105/1-in-4-food-delivery-drivers-admit-to-eating-your-food

[Captain Phil]

If you are waiting for the real estate market to crash before you buy a house in Florida, you are out of luck.  This is not 2008 when homes were financed by anyone who could fog up a mirror.  Those buyers had no skin in the game, so they walked away flooding the market with repossessions.  Today's home prices are raising because labor and materials prices are rising.  Unless they start giving land, labor and materials away, this will continue.  When a home comes on the market in Central Florida today, there are multiple offers before the ink is dry on the listing contract and most are cash buyers.  

[NavyToad]

LOL! It’s Voodoo.

[12poundbass]

16 hours ago, jbsoonerfan said:

Man, things are starting to get tight around here. We have an ARM loan on our house and it just went up $160 a month starting July 3rd due to interest rates. Escrow was raised $40 a month for a total of $200 a month extra on the house payment. Electric has went from about $160 at this time last year to about $240 now. Fuel prices, groceries, etc. it's getting out of control. I'm not making anymore money though.

Can you get a fixed rate mortgage before rates go up again? 

[jbsoonerfan]

1 minute ago, 12poundbass said:

Can you get a fixed rate mortgage before rates go up again? 

Just started the process on Monday. Tried back in Jan when rates were even lower but my wife still had a mortgage in her name so we had to wait till that sold to do it again. 

[12poundbass]

31 minutes ago, jbsoonerfan said:

Just started the process on Monday. Tried back in Jan when rates were even lower but my wife still had a mortgage in her name so we had to wait till that sold to do it again. 

Look into getting a stream lined loan. This is what we just got on our house. This benefits to this loan is you can refinance when rates go down, there’s no credit check needed, no equity needed, and no appraisal. The closing costs are minimal as well. Again this is for refinancing down the road.

 

So our plan is to refinance once interest rates lower, and if they keep lowering we’ll refinance again. 

[jbsoonerfan]

1 minute ago, 12poundbass said:

Look into getting a stream lined loan. This is what we just got on our house. This benefits to this loan is you can refinance when rates go down, there’s no credit check needed, no equity needed, and no appraisal. The closing costs are minimal as well. Again this is for refinancing down the road.

 

So our plan is to refinance once interest rates lower, and if they keep lowering we’ll refinance again. 

Did you do this through your local bank or do you have a link to more info. I haven't officially filled out an application with this company yet, just given them some basic info.

[DanielG]

Live long enough and you cycle through this dozens of times. This one is different but then again many of them were different too but in other ways. Up, down.  Seen it over and over.