A common theme today: Sellers are reluctant to list their homes because they do not want to give up their low mortgage rate.
There are a few things to consider before you make that knee jerk reaction:
- Why do I want to move? Would a move give me a better quality of life? More space, less space, better location etc?
- Would the answer to any of the above make life better? (why wait?)
- Do I have any other debt?
- It is easy to get tunnel vision and focus on JUST the current mortgage rate. In reality the average home owner is sitting on more credit card debt than every before in history, and at some crazy high rates. The average interest rate on a credit card is 25% with many major cards sitting at 29.9%. Home equity lines are also Much higher than mortgage rates are today.
- Would you move if selling your home put you in a better financial position while giving you better quality of life: (space location etc)
So many people went a little crazy improving their homes in the past few years as many were forced to Live, Work, Teach, vacation... All under the same roof. While some of the improvements went into HELOCs, a considerable portion is in very high interest rate credit card debt.
There is now over $1 Trillion in credit card debt in the country, while we are also sitting on historical highs for home equity as well.
If you want to move- Consider a blended rate: NOT just the Mortgage, but the home equity loan, your credit cards, and any other debt you may have.
Here is a real life example for a current client. They had a lot of the concerns I mentioned above, but they need more space for a growing family. One big concern is the increase in mortgage payment (which they can easily qualify for) I went through a pretty thorough analysis of their current debt and here is what we came up with:
Remember the piece above about record equity? They have a lot of equity in their starter house they purchased a handful of years ago. I have it structured so we will take $30,000 from their net proceeds and pay off some credit card debt. That 30K will pay off 6 credit cards and eliminate over $1,000/month in monthly payments. Even at today's higher interest rate we can get them a larger home with a payment that is pretty similar to the current debt + the current PITI. What they thought was not affordable currently becomes affordable, and when rates do finally settle back down- there should be an opportunity for them. Even a 1% drop in rates could save them $250/month, and its pretty likely we will see a larger drop than that.
So don't get so laser focused on just one thing when there are likely to be many moving pieces to everyone's individual scenario, adding up the smaller bills and seeing what your total payments are can be eye-opening. Let's start having these conversations and move forward with our goals and our lives!
Give me a call for all your mortgage needs.
Mortgage Loan Originator NMLS# 248937
or my blog: http://activerain.com/blogs/rrauf
Office: (732)908-4868 Cell (732)740-0175
Since 1987 I have been helping my clients fulfill their dream of home ownership! CMG Home Loans is located at 222 Commons Way Toms River, NJ 08755. NMLS #1820. Visit www.RobertRauf.com for more information. NJ Mortgages, New Jersey Mortgages, Mortgages in NJ, mortgage in New Jersey, Mortgages in New Jersey, Toms River NJ 08753, Toms River NJ 08755, Brick NJ 08723, Brick NJ 08724 Mortgage in Ocean County NJ, Mortgage in Monmouth County NJ, Jackson NJ 08527, Howell NJ 07731, Lacey 08731 08734, Beachwood 08722 Bayville 08721,