potential mortgage — rates low, but home prices high
Hi Ms. Savage. I enjoy hearing you on WGN and appreciate the hard work you do in answering questions for people. My question is about potential a mortgage.
Where I currently live(Washington state) the house prices aren’t worth it in my opinion. 2 bed, 1 bath houses, under 1000 sq.ft. routinely go for 225k and up. I also may be transferring within a year for work. My job is pretty secure, but my wife’s job may be a bit unstable, as she is an assistant for a real estate agent that does foreclosures. Obviously, there hasn’t been a lot of business there lately. I know that eventually those floodgates will open, but we don’t know when.
We have good credit, mid 750 and up, credit history is good. I did have a short sale due to a divorce that closed in March of 2014, but I can’t see it on my credit report. Not sure if I am not looking in the right place. Our debt to income ratio is, in my humble opinion, amazing. 1 credit card with a $20,000 limit, and we rarely carry a balance. She has student loans, but they are under $10,000. That’s it.
I have seen how cheap mortgages are, the record breaking low interest rates and all, it makes me want to get house. However, with the uncertainty of possibly moving, and my perceived lack of worthy housing here, is there a way to get a mortgage type of loan for a future purchase? Almost like locking in a loan at the historically low rates of today for a purchase in the near future. Something that could help streamline a buying a home and removing some roadblocks.
Thank you for your time and all your effort
Terry Says
What an interesting question. What you didn’t explain are two key facts. First no one’s job is for sure, ever, but do you plan to stay in that area no matter what — because of family reasons, etc? Second, how expensive would a monthly mortgage payment be at these rates (including taxes) compared to what you are paying in rent??
If you’re going to live there forever, and aren’t looking for jobs in another part of the country, then this would be a good time to lock in a mortgage. But there are no “mortgage futures” that can give you a promise of today’s rate next year. So it’s a decision you have to make NOW!
And, could you continue to pay your mortgage (or even your current rent) without your wife’s income?? You might have a problem either way — but such is life. There are never guarantees. You have to hold your breath and believe in the future. Home prices will go down when interest rates go up — scaring buyers off. Good news, bad news. At that point the mortgage will cost much more.
Suggest you go house hunting, make friends with her real estate agent about pending foreclosures, and try to find a bargain from someone who is about to be forced to sell. Letting them out of their mortgage with a bit of equity might give you the best of both worlds — a realistic home price and a fixed, 30 year mortgage below 3%. Do that right now — as many homeowners are becoming more desperate –and you could be giving them a holiday present by saving them from foreclosure and letting them walk away with a little money, and their honor.
