With Elysia Stobbe, Author – How to Get Approved for the Best Mortgage without Sticking a Fork in Your Eye: A Comprehensive Guide for First Time Home Buyers and Home Buyers Getting a Mortgage since the Mortgage Crisis of 2008
Interest rates are all over the map nowadays. Because of the Federal Reserve, short term rates have risen and long term rates have dropped. As a mortgage industry expert, Elysia Stobbe sees interest rates trending downward and believes it is still a great time to lock in a 30-year mortgage at very favorable rates. But if the Federal Reserve goes through with its planned increases (four 0.25% quarterly increases for a total increase of 1% in 2016), monthly mortgage payments could rise considerably. However, Elysia cautions buyers against overly finessing mortgage interest rates, because a small fractional rise won’t amount to a significant increase in your monthly mortgage payment.
She also believes people should make a home purchase only if they can comfortably afford a mortgage. To her, the safest loan-to-income ratio should be one-to-four, where your monthly mortgage is no greater than 25% of your monthly income. Because she tends to be overly conservative, she tells us not to take that 25% recommendation as set-in-stone (especially now when mortgage rates are at all-time lows) and to be open to increasing your mortgage outlay to perhaps a third of your monthly income, but only if it wouldn’t put a strain on your lifestyle.