Should I buy this house with high interest rate or wait?

New / Eng
Tc270Nw150

New Eng

Tc270Nw150
May 15, 2019 41 Comments

I found this lovely house in Castro Valley. My offer of 1 million got accepted and I'm in the inspection period. I can only put %10 down and the lender could get me 900k loan with %4.25 7 year ARM. That was the best I could get, boa and wells fargo only offered 700k loan with slightly better rate.

My partner and I have good stable jobs with total liquid TC of 450k this year. (It was 150k last year, that's why we don't have much cash or assets.) We live in a shitty rental apartment with $2500/mo and our living condition is not good. We really want to move to our own house and improve quality of life as it's getting depressing. We can save about 150k in the upcoming year. My lender says we can put down this money and refinance next year with the cost of $1500.

Should we buy the place now with high rate, or wait and buy next year? There's also no guarantee that rates don't go up next year.

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TOP 41 Comments
  • New / Other
    DuQvV7y

    New Other

    BIO
    Did stuff. Hustled hard. Retired
    DuQvV7y
    You should look at a 30 year bank rate charge before terming 4.25% high.

    2% rates were the product of housing meltdown. Historically rates were in the 6-8% range.

    In the 90s, the norm was 8-12% which was lower than the 11-14% of the decade before.
    May 15, 2019 6
    • New / Eng
      Tc270Nw150

      New Eng

      Tc270Nw150
      OP
      Thanks!
      May 15, 2019
    • Cadence / Product
      luna.

      Go to company page Cadence Product

      BIO
      .
      luna.
      You can always refinance if there is no lock down or other toxic parts in the loan... dont get stuck on the rate
      May 15, 2019
  • Do you love the house? It sounds like you really want to be homeowners. Go for it. Don't suffer another year.
    May 15, 2019 1
    • New / Eng
      Tc270Nw150

      New Eng

      Tc270Nw150
      OP
      Yes I love it and it's in between our jobs. Commute gets so much better for one of us.
      May 15, 2019
  • Microsoft / Product
    Brazuka

    Go to company page Microsoft Product

    PRE
    Bain & Company
    Brazuka
    7 year duration is the most concerning. The monthly mortgage will be crazy high and if one of you lose the job you'll be in trouble, especially since you mentioned you don't have a lot of assets.
    May 15, 2019 4
    • Vistaprint / Eng
      vp.dev

      Go to company page Vistaprint Eng

      PRE
      Cimpress
      vp.dev
      I don't think the loan is for 7 years. A 7/1 ARM means there rate is fixed for the first 7 years. And even after the 7 years there are limits on how much the rate can increase each year. I don't get what's concerning either.
      May 15, 2019
    • New / Eng
      Tc270Nw150

      New Eng

      Tc270Nw150
      OP
      Yes 7 arm does not mean it needs to be paid off in 7 years. Imagine that!
      May 15, 2019
  • More important thing is how did your Tc go from 150k to 450k in a year πŸ˜‚
    May 15, 2019 3
    • He got married to a 300k wife?
      May 15, 2019
    • New / Eng
      Tc270Nw150

      New Eng

      Tc270Nw150
      OP
      Partner was not in the job market last year. I made 150k last year, changed job to 270k. Partner got 180k base and a whole lot of paper money.
      May 15, 2019
  • SAP
    mDmE28

    Go to company page SAP

    mDmE28
    Are you sure that a house in Castro Valley worth 1M? Do not forget Alameda County is the worst in the Bay
    May 15, 2019 5
    • What's wrong with Castro Valley? We bought here a couple of years ago and are happy. Kids not in school yet though but hearing good things. Plenty of 1M+ houses around where we are at (upper CV)
      May 15, 2019
    • New / Eng
      Tc270Nw150

      New Eng

      Tc270Nw150
      OP
      Some people have wrong impressions on east bay, but it's been growing fast. The zipcode on this house has been 4th highest growing in the nation.
      May 15, 2019