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Home › Forums › Housing › High Interest rates replace high prices?

  • This topic has 86 replies, 12 voices, and was last updated 17 years ago by Anonymous.
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  • December 12, 2007 at 10:02 PM #11191
    Newblet
    Participant

    I live in Orange County and graduated college completely priced out of housing. Now I have $100k for a down payment on a house (I was irresponsible with my money, but I got lucky). I am worried that there might be a possibilty that once housing prices return to sanity the interest rate will have sky-rocketed leaving me with an equally unaffordable mortgage (for the 140k gross household range). Is this a real possibilty?

    December 12, 2007 at 10:27 PM #115739
    patientrenter
    Participant

    Newblet, I wouldn’t fret too much about high interest rates. There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments, and then you can re-finance down the road when interest rates decline again.

    Just make sure that the price of the home is something you can afford – not the monthly payments, the price. If you had to save all the money to buy the house, and you put all your savings to that purpose, how long would it take you? If it would take you 20 years, then you’re not leaving many options for retirement savings or other needs.

    Patient renter in OC

    December 12, 2007 at 10:27 PM #115871
    patientrenter
    Participant

    Newblet, I wouldn’t fret too much about high interest rates. There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments, and then you can re-finance down the road when interest rates decline again.

    Just make sure that the price of the home is something you can afford – not the monthly payments, the price. If you had to save all the money to buy the house, and you put all your savings to that purpose, how long would it take you? If it would take you 20 years, then you’re not leaving many options for retirement savings or other needs.

    Patient renter in OC

    December 12, 2007 at 10:27 PM #115943
    patientrenter
    Participant

    Newblet, I wouldn’t fret too much about high interest rates. There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments, and then you can re-finance down the road when interest rates decline again.

    Just make sure that the price of the home is something you can afford – not the monthly payments, the price. If you had to save all the money to buy the house, and you put all your savings to that purpose, how long would it take you? If it would take you 20 years, then you’re not leaving many options for retirement savings or other needs.

    Patient renter in OC

    December 12, 2007 at 10:27 PM #115901
    patientrenter
    Participant

    Newblet, I wouldn’t fret too much about high interest rates. There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments, and then you can re-finance down the road when interest rates decline again.

    Just make sure that the price of the home is something you can afford – not the monthly payments, the price. If you had to save all the money to buy the house, and you put all your savings to that purpose, how long would it take you? If it would take you 20 years, then you’re not leaving many options for retirement savings or other needs.

    Patient renter in OC

    December 12, 2007 at 10:27 PM #115907
    patientrenter
    Participant

    Newblet, I wouldn’t fret too much about high interest rates. There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments, and then you can re-finance down the road when interest rates decline again.

    Just make sure that the price of the home is something you can afford – not the monthly payments, the price. If you had to save all the money to buy the house, and you put all your savings to that purpose, how long would it take you? If it would take you 20 years, then you’re not leaving many options for retirement savings or other needs.

    Patient renter in OC

    December 12, 2007 at 10:34 PM #115744
    NotCranky
    Participant

    This is a tiny bit different response.

    No matter what happens with the exception of losing your
    job(s) you will be in the drivers seat, if you buy a house you can afford. I usually say buy a house you can easily afford but then I can sense this eerie silence after I do. The theory is that price comes down further to compensate at least partially for interest rates with the added benefit, but not guarantee, of refinancing to a lower rate further down the road.

    Don’t confuse the refinance part with the situations you are undoubtedly hearing about in which people were given the same promise, when values we unreasonably high and rates we artificially low. Never buy needing the option of refinancing as a bailout from the beginning.

    patient renter. “There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments,”
    Why does the o.p. need “low initial payments” on a house they can afford?

    December 12, 2007 at 10:34 PM #115875
    NotCranky
    Participant

    This is a tiny bit different response.

    No matter what happens with the exception of losing your
    job(s) you will be in the drivers seat, if you buy a house you can afford. I usually say buy a house you can easily afford but then I can sense this eerie silence after I do. The theory is that price comes down further to compensate at least partially for interest rates with the added benefit, but not guarantee, of refinancing to a lower rate further down the road.

    Don’t confuse the refinance part with the situations you are undoubtedly hearing about in which people were given the same promise, when values we unreasonably high and rates we artificially low. Never buy needing the option of refinancing as a bailout from the beginning.

    patient renter. “There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments,”
    Why does the o.p. need “low initial payments” on a house they can afford?

    December 12, 2007 at 10:34 PM #115948
    NotCranky
    Participant

    This is a tiny bit different response.

    No matter what happens with the exception of losing your
    job(s) you will be in the drivers seat, if you buy a house you can afford. I usually say buy a house you can easily afford but then I can sense this eerie silence after I do. The theory is that price comes down further to compensate at least partially for interest rates with the added benefit, but not guarantee, of refinancing to a lower rate further down the road.

    Don’t confuse the refinance part with the situations you are undoubtedly hearing about in which people were given the same promise, when values we unreasonably high and rates we artificially low. Never buy needing the option of refinancing as a bailout from the beginning.

    patient renter. “There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments,”
    Why does the o.p. need “low initial payments” on a house they can afford?

    December 12, 2007 at 10:34 PM #115912
    NotCranky
    Participant

    This is a tiny bit different response.

    No matter what happens with the exception of losing your
    job(s) you will be in the drivers seat, if you buy a house you can afford. I usually say buy a house you can easily afford but then I can sense this eerie silence after I do. The theory is that price comes down further to compensate at least partially for interest rates with the added benefit, but not guarantee, of refinancing to a lower rate further down the road.

    Don’t confuse the refinance part with the situations you are undoubtedly hearing about in which people were given the same promise, when values we unreasonably high and rates we artificially low. Never buy needing the option of refinancing as a bailout from the beginning.

    patient renter. “There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments,”
    Why does the o.p. need “low initial payments” on a house they can afford?

    December 12, 2007 at 10:34 PM #115906
    NotCranky
    Participant

    This is a tiny bit different response.

    No matter what happens with the exception of losing your
    job(s) you will be in the drivers seat, if you buy a house you can afford. I usually say buy a house you can easily afford but then I can sense this eerie silence after I do. The theory is that price comes down further to compensate at least partially for interest rates with the added benefit, but not guarantee, of refinancing to a lower rate further down the road.

    Don’t confuse the refinance part with the situations you are undoubtedly hearing about in which people were given the same promise, when values we unreasonably high and rates we artificially low. Never buy needing the option of refinancing as a bailout from the beginning.

    patient renter. “There’s a good chance you’ll be able to find some lender who will give you a loan with low initial payments,”
    Why does the o.p. need “low initial payments” on a house they can afford?

    December 13, 2007 at 5:25 AM #116001
    NeetaT
    Participant

    I hope interest rates skyrocket. If a 10% interest rate means fewer people qualify, this should hasten the downturn.
    I would rather own a $200k home at 10% than a $400k home at 5%. This just means lower property tax which is an overwhelming burden to homeowners.

    December 13, 2007 at 5:25 AM #115997
    NeetaT
    Participant

    I hope interest rates skyrocket. If a 10% interest rate means fewer people qualify, this should hasten the downturn.
    I would rather own a $200k home at 10% than a $400k home at 5%. This just means lower property tax which is an overwhelming burden to homeowners.

    December 13, 2007 at 5:25 AM #115965
    NeetaT
    Participant

    I hope interest rates skyrocket. If a 10% interest rate means fewer people qualify, this should hasten the downturn.
    I would rather own a $200k home at 10% than a $400k home at 5%. This just means lower property tax which is an overwhelming burden to homeowners.

    December 13, 2007 at 5:25 AM #116038
    NeetaT
    Participant

    I hope interest rates skyrocket. If a 10% interest rate means fewer people qualify, this should hasten the downturn.
    I would rather own a $200k home at 10% than a $400k home at 5%. This just means lower property tax which is an overwhelming burden to homeowners.

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