Should You Marry Him? My Boss will Tell You.

January 11, 2011

A few people, okay two people, have asked me actual real questions about mortgages and interest rates.  It’s time for some real information other than me talking about how I love my hair and shopping.  And we all know that I sure as heck don’t know anything about this industry, so that’s why I pulled in my fab boss Chad to give us the scoop! 

What’s the Deal with Interest Rates, Should You Buy a Home, and Who Should You Marry?

An Interview with the Boss, Chad Helmcamp

Just the Assistant:  First thing’s first…I’m seeing signs and Internet ads galore saying “Interest Rates at Historic Lows,” and it just gives me the heeby jeebies.  So, are they really at historic lows?

Boss:  Great Question.  Yes, interest rates are at historic lows.  Are they as low as they’ve ever been?  Not today.  The lowest levels we’ve ever seen were in 2010.  We saw 30 year fixed rate mortgages with interest rates in the low 4s.  That’s never happened before. 

The thing I don’t like about those Internet ads you’re seeing is that the goal of those ads is simply to make the phone ring, and when you call those numbers they say things like, “You don’t qualify for that loan we advertised, but you do qualify for this other rate.”

But to go back to the main question, prior to 2003, you didn’t see rates below 6%.  Since 2003, they’ve consistently been below 6%.

JA:  So, what does that mean for someone who does not own a home?

Boss:  Basically it’s the opportunity of a lifetime.  Rates couldn’t be much better than they are right now.  And there is great potential that rates will be higher a year from now than they are today.  US economic indicators as well as inflationary concerns around the globe are all making us anticipate a rise in interest rates.  Typically, interest rates rise as the economy improves.

[Note:  this is why he’s the Boss, folks.  Because he knows how to use the phrase “US economic indicators as well as inflationary concerns around the globe” in a sentence.]

JA:  Okay, so let’s say you live in Houston, you’re paying around a thousand bucks a month in rent, and let’s say you’re good looking and you’re not a bank robber or in the mafia.  How do you figure out if it’s a good idea to buy a home?

Boss:  I’d say you need to look at your own budget.  If you have a good job and some savings, most financial experts agree that you are better off owning than renting.  The reason is, you don’t get the benefits renting that you do with owning.  For example, when you own a home, you currently get a tax deduction for the interest you’re paying, and you’re building equity with every payment you make. 

And that’s not to mention the market factors.  If you buy a home in an ideal location, let’s say inside the Loop in Houston, chances are you are going to realize market appreciation.  Over time, the demand to live inside the Loop is only expected to grow, which increases your home’s value.

JA:  Okay, let’s say you’re a girl with a boyfriend.  And probably, maybe the boy is going to propose soon, hopefully.  Should you wait him out?

Boss:  In my opinion, I’d advise a woman to never wait on a man.  Let him know you’re serious about the future.  And plus, if you buy now, maybe he’ll propose a year from now and you can build equity in the meantime.  Then, you can buy another house and I’ll help you on both of them!  But really, just call me and I can help you decide.

JA:  Okay, what if you’re the boy?  Do you buy first?  Or ask the girl to marry you first?

Boss:  It depends on what type of credit the girl has.  She might have a lot of debt, which could make it harder for you to get certain loans if you’re married to her.

[Note:  Do you know who you’re dating!?  You better find out what kind of debt this gal is hauling around!  Here are some helpful hints to find out:

Boy:  Oh darling you look so skinny in that outfit.  Anorexic even!  What’s-your-credit-score?!

If the gal tells you she’s the picture of financial health, marry her on the spot and call us and we’ll get you a home loan.  But if she fumbles even for a second, you call us and get that home loan before popping the question.

This could also work in reverse.  Gal:  Oh honey you look so buff today.  You look like you’re on roids even!  What’s-your-debt-to-income-ratio?!]

JA:  Let’s throw some numbers around.  How much money do you need to buy a home?

Boss:  What’s good for the first time home buyer to know is that there are several parts that make up how much money you need.  Those parts are:  the down payment, taxes and insurance, and closing costs.

So to start with there is the down payment.  Let’s just focus on the three most popular loan types:  Conventional Loans, FHA Loans (government backed loans), and VA Loans (Veteran loans).

For a conventional loan, the minimum down payment needed is 5% of the purchase price (ex. $100,000 home?  $5,000 down payment).  For an FHA loan, the minimum is 3.5%, and for VA loans, you can go as low as nothing down.

JA:  Wait a minute, other than the VA loan, because I’m pretty sure my friends know good and well if they’re a veteran or not, how in the world do you know which loan to choose?

Boss:  You call me.  Because even if a loan program seems obvious, like if you’re a veteran, that might not be the best loan choice.  For instance, there are some veterans who are better off with conventional mortgages.  So I always encourage people to call and talk to me.  I can help them figure out what will save them the most money.

Back to the money you need to buy a home.  The second part is property tax and homeowner’s insurance and if needed, flood insurance.

And finally there are closing costs.  This is what we charge, plus whatever the Title Company charges.

[Note:  I have no clue what a Title Company is, even though I hear the word every day.  All I know is that the Title Company is where you go to sign all the papers when you seal the deal and they usually have candy on the table and nice pens that you are probably not supposed to steal but I think I might have stolen once, or twice]

Boss:  Concerning money you need to have in order to buy a home, I try to tell people, “If you’re aiming at spending the least amount of money up front to buy this home, you need 6-9% of the purchase price ready to put down.”

Just the Assistant:   Thanks so much Boss!  Now go answer all those phone calls! 

Click here to send us any questions.  Well, I say us.  Send them to me, and I’ll ask the Bosses.  And send me your proposal pictures if you find out the boyfriend/girlfriend is in good financial standing!