Low rates?

[jzsnow]

We are saving for a down payment while waiting for some credit issues to fall off. What do you think the interest rates will be like in 2014? 

I know no one knows, but you guys are far more knowledgable than I am on this subject!

[JM-AM]

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@jzsnow wrote:

We are saving for a down payment while waiting for some credit issues to fall off. What do you think the interest rates will be like in 2014? 

I know no one knows, but you guys are far more knowledgable than I am on this subject!

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I personally have no idea, but with our economy status, raising rates too high will just burden the economy even more, just my opinion and three cents.

If you watch the 10 year treasury yield you will notice how rates are changing and if going up and down. If the yield goes up, the rates tend to go up with them, and vice versa if they go down. This is not the only factor, and also doesnt determine how much they go up or down, but can give you an idea if they are increasing and or decreasing.

When rebuilding your credit and takes time, my first concern would be more how lender qualifications change. Depending on the type of loan and lender qualifications you may have to be working even harder to improve your scores. Lets say for example you are trying to reach a 620 mid score, once you reach that 620 mid score, lenders minimum score requirements have changed to 640, or even higher.

While the rate being low actually qualifies you for more home to buy according to income, most people do not need that big of a home. So lets say you qualified at todays rate for a 300K home, even if rates were to increase lets just say 1 point and go back up to 4.25%, you would probably have to settle for a 280k home. This was just an example and the numbers are in no way the reality of true qualifications.

[tooleman694]

If the feds keep on buying mortgage securities, the rates should stay very low for a while.

[jzsnow]

Well, we need a larger size home. We have 5 kids, and we homeschool, so room is a necessity! We are in Alabama, so col isn't high, and are hoping for a homes in the 175k range, while financing 155k. Our income is only 65k a year, but our debt is only student loads at $35 a month ( we are on income based payment plan for family of 7). While we could probably afford more, we oly want a payment of $900,max, so that our kids will not have to give up tko, ballet, gymnastics, soccer, chess,tennis....and whatever activities are yet to come! Right now we live in a mobile home that we paid cash for a few years ago,so we owe nothing on it. 

Wth all that said, we are hoping to buy in the summer of 2014, when the last of the negatives fall toff the credit report. But, as you said, if rates go up, we won't get as much house as we need. Which would leave us stuck here for longer.

[jzsnow]

How long is a while? 2 years possibly?

[tooleman694]

QE3 has no end date, they are buying 40 billion a month till things start really moving again.

Iv heard they want to keep the rates as low as possible till 2015.

[JM-AM]

Either way in my opinion you will still be fine at the 175K home price, even if rates were to climb a little.

What may cause you issues is the housing market in many areas has picked up tremendously and home values are increasing. While values are increasing homeowners and builders are asking more money for these homes.

In the last year builders I do business with have increased their prices on new home construction by approximately 30K, plus or minus upgrades.

[tooleman694]

That is very true.

The home we are building right now, now is costing 50k more for someone that now wants to build in our neighborhood. And they are expected to go up even higher.

[HopefulGardner]

My loan officer told us that the feds are trying to get out of the mortgage busniess, and have been taking more and more steps to do so, by raising their rates, and requirements. So much so that in my area a FHA loan is actually counterproductive to a conventional.

[tooleman694]

FHA is always counter-productive to conventional.

Conventional typically the cheaper route to go if you can do it.