> ## Content Index > Fetch the complete content index at: https://www.mortgagemomradio.com/llms.txt > Use this file to discover other available public pages before exploring further. # Should You Buy A Home Now Or Wait For Rates To Drop? - URL: https://www.mortgagemomradio.com/should-you-buy-a-home-now-or-wait-for-rates-to-drop/ - Published: 2022-10-12T21:00:00.000Z - Updated: 2026-09-04T21:32:31.000Z - Description: An open hour of the hard questions: buy now or wait, how you start when a home isn't even on the radar, and whether to take the lower price or the lower rate. Debbie's frame for the whole show: there's never really a bad time to buy, there's just a bad time to sell. October 2022. - Author: Deborah Marcoux - Tags: Podcast, Mortgage Mom Radio, #episode-backfill Mortgage Mom Radio • “Nothing But The Truth! Answers to the hard questions! Should you buy now or wait?” • Live show from Wednesday, October 12, 2022 • 58 minutes • Hosted by Debbie Marcoux, NMLS #237926 *Note: loan program guidelines, loan limits, and rate figures on this page are what they were in October 2022 and have changed since. Treat them as a record of that week, not as current terms. Debbie's rate forecast is her opinion as of that date, not a prediction that came true.* Debbie called this one “nothing but the truth” and opened the floor: ask the hard questions, and she would answer them whether or not the answer was what anyone wanted to hear. What came back was an hour of the questions people actually have — buy now or wait, how you start when a home isn't even on the radar, whether it's better to get the lower price or the lower rate, and whether the loan you're being pitched is the one you should take. Her single most useful line landed early: there is never really a bad time to buy. There is a bad time to sell. ## Key takeaways - **“There's never really a bad time to buy. There's just a bad time to sell.”** Debbie's frame for the whole hour: if you can hold a property five years or more, the timing question mostly answers itself. Selling is where timing actually costs you money. - **The slow market is the low-down-payment buyer's opening.** In 2020 and 2021 you were bidding against forty offers and losing to cash and large down payments. With homes sitting longer, a 3%, 3.5%, or 5% down offer gets looked at — and you can negotiate closing costs or a rate buydown on top. - **Better the lower price than the lower rate.** Her answer to a direct question: take the lower purchase price and the higher rate, because you can refinance a rate and you can never refinance a price. Timing either one perfectly is not realistic — she said it's hard even after 28 years in the business. - **Go look up the actual rate on your credit card.** A client that week was certain her card was at 14%; the statement said 27%. Card rates are tied to the prime rate and had been climbing all year. If you're weighing a home equity line against a first-mortgage refinance, the blended rate across everything you owe is the number that decides it — not the 3% on your first. - **Build the portfolio one small property at a time.** Buy the condo or town home you can afford with the minimum down, live in it a year or two, keep it and rent it out, then buy the next as a primary with a low down payment and a better rate. She has been giving that advice on the podcast since it started. - **Occupancy decides your down payment.** Primary residence means you have to live there. A second home starts around 10% down and requires you to occupy it at least two weeks a year. An investment property starts at 20% down — but that is the one where rental income can offset the debt when you qualify. - **You can have more than one VA loan at a time.** It depends on how much of your entitlement the current loan uses and the loan limit where you're buying. Renting out the departing home is allowed — that is not against VA rules, despite what a lot of people believe. ## Chapters - 00:30Nothing but the truth: an open hour of hard questions - 09:00Q&A: should a parent buy their kid's first home? - 11:00Never a bad time to buy — only a bad time to sell - 13:00Why a slow market helps the low-down-payment buyer - 15:00Q&A: what if buying isn't even on the radar yet? - 16:00Debt consolidation: what to do, and what to avoid - 19:00Blended rate math, and when a first-mortgage refinance wins - 20:00Q&A: buy a condo, live in it, then rent it and buy again? - 25:00Q&A: buy now with rates up and refinance later? - 29:00Q&A: how many times can you use your VA benefit? - 35:00Q&A: can I buy in another state and rent it until I move? - 38:00Q&A: lower price and higher rate, or higher price and lower rate? - 39:00Who should buy right now, and who should sit tight - 42:00Q&A: why are non-qualified mortgage rates so much higher? - 47:00Q&A: when is a loan actually a jumbo loan? - 51:00Q&A: boarder income, and buying a second home ## Questions answered on this show ### “Should my mom buy me my first home and I rent it from her, with where prices are right now?” Debbie had covered the adjacent question the week before — whether Gen Z will ever be able to buy — and her answer here follows from it. If you're a parent with children anywhere from newborn to sixteen, and you're wondering how they'll buy in ten years or how you'll pay for college, buying real estate is a reasonable answer. Her broader point: there's never really a bad time to buy, there's just a bad time to sell. Rates are up, values have started to slip a little, and sellers have gotten more willing to negotiate and help with closing costs. If the plan is to hold the property five, ten, fifteen years, buying into a softer market is not the risk it feels like — the risk is buying a payment you can't carry. ### “If someone is so broke that getting a home isn't even on the radar, how do they work toward it? Is debt consolidation the answer?” She was honest that the question is too open-ended to answer cleanly — it depends on whether the income is good and the debt is high, or the income is the problem, or the person is early in a career with raises coming. But on the debt consolidation piece she was specific. Consolidation itself is worthwhile and worth looking into. What she does not recommend, if you can avoid it, is the kind of program that stops making payments on your debts so they can negotiate the balance and rate down for you. When those payments stop, the late payments land on your credit, your score drops, and you have traded one problem for a bigger one. If you can get a personal loan to consolidate, that's the direction she'd steer you. Then the part everyone should go do today: look up what you are actually paying. A client that week told a member of Debbie's team her credit card was at 14% — the statement came back at 27%. Three, four, five years ago cards were 14, 15, 19, 21%. Card rates are directly tied to the prime rate, and the prime rate had been climbing all year. If you're one of the people who refuses to touch a 3% first mortgage, run the blended number across everything you owe. A first mortgage at $200,000 at 3% plus $100,000 of card debt at 27% blends out somewhere around 12–14% — which makes a refinance at 6.5–7% the better rate on the whole picture, not the worse one. ### “If I buy a condo now and live in it a few years, can I then rent it and buy another home, or do I need to sell it first?” Keep it. This is the strategy Debbie says she has been promoting since the very first episodes of the podcast five years earlier: start with something small. A condominium if that's what you can afford. A one-bedroom, or a two-bedroom if you have a child or one on the way. Put the minimum down to get in, live there a year or two, save, then buy the next one as a primary residence — low down payment, better rate than an investment loan — and rent the first one out. The part that scares people is whether the rent will cover the payment. Her answer: go research what rentals in your area actually cost right now, on Zillow or Redfin or realtor.com. If you've been in a rental for years with a landlord who hasn't raised your rent, you have no idea what the market has done. Rents are climbing across the country — and even in a recession, when property values fall, rents keep going up. She added the honest aside that this is advice she finds easier to give than to follow herself. ### “Can I buy a home in the state I want to be in later, and rent it out until I'm ready to move? Do I have to live in it right after I buy it?” The down payment follows the occupancy, so this is really a question about which of three categories you're in. A **primary residence** gets the minimum down payment, but you have to actually live in it. If your job is in Arizona and the house is in Utah, there is no way to call that a primary residence — you can't get to work from it. A **second home** can be done with as little as 10% down, and you are required to occupy it at least two weeks a year. Renting it short-term the rest of the year is acceptable, since it's a vacation property you also use. An **investment property** starts at 20% down — but that is the category where rental income can be used to help offset the debt so you can qualify while still paying rent in Arizona. So buying out of state is entirely possible. The question is which structure fits, and that comes down to what you can put down and whether you need the rent to qualify. ### “Should I buy now with rates up and plan to refinance at a lower rate later?” Yes — with the caveat she repeats constantly, that she has no crystal ball. Her read as of October 12, 2022: the jobs report that Monday came in strong, which gives the Fed room to keep raising, so she expected a hike at the November meeting and a good chance of another at the first meeting of 2023\. After that she expected rates to hold roughly level for about twelve months while inflation came down, before the Fed could start cutting. Her longer view: when rates do come down, she expects a wave of refinancing *and* a wave of buying, which puts you right back into multiple offers and bidding wars. That's the argument for the first-time buyer to get in while the competition is thin, because the people who eat up inventory when demand returns are the ones with cash and large down payments. Buy today with a five-year hold in mind and you own the home, take the tax deduction, lock the payment, and keep the option to refinance the rate later. ### “How many times can someone use their VA benefits? If I already have a VA loan with a low rate, can I keep it and buy another home?” You can have multiple VA loans, and most people don't know that. What determines it is how much of your entitlement the current loan has used, the lending limit for the area where you're buying, and how much you have left. It comes up constantly with active-duty borrowers who bought in one state and got orders to another: there's a very good chance you can keep the first home, put a renter in it — which is allowed, despite the widespread belief that it isn't — and still use your VA benefit again on a new property with zero down. The only way to know is to pull your Certificate of Eligibility and do the math: what you can buy up to with zero down, and how much higher you can go if you have some down payment. ### “Is it better to buy at a higher price with a lower rate, or a lower price at a higher rate?” Lower price, higher rate — because you can refinance the rate later and end up with both. Her caveat was equally honest: timing either one is extremely difficult. How do you know prices won't go lower, or that rates won't go higher? She's been doing this 28 or 29 years and can't time it either. Which is why the decision should turn on your situation rather than the market: are you busting at the seams, is your lease ending, is your landlord raising the rent, has your landlord told you they're selling? ### “Why does the rate seem so much higher on a non-qualified mortgage? If that's the only direction I can go, should I still buy?” Non-qualified (non-QM) loans are the descendants of what people used to call subprime — loans for investors, self-employed borrowers, bank statement programs, and no-ratio products. They are not Fannie Mae, not Freddie Mac, not FHA, not USDA, and not jumbo. Because the lender isn't verifying income the standard way, the risk is priced in, and you should not expect a conventional rate. At the time of this show she described non-QM pricing as running in the high 9s to low 10s, against a conventional 30-year fixed in the 6s to 7s. Should you still buy? It depends on the person. If you don't own anything, you're being pushed out of your rental, the rents where you'd move are very high, you have the down payment, and the mortgage payment lands close to that new rent — then you own the home, you get the mortgage interest and property tax deductions, and you have something to refinance out of. The plan she'd build is exactly that: use the non-QM loan to secure the property now while sellers are negotiating, then refinance into a conventional loan once you've filed the tax returns or hit the seasoning you need. ### “When is a loan considered a jumbo loan? I heard it was anything above $500,000.” Debunked. $500,000 would not be a jumbo mortgage anywhere in the country on loan size alone. Every county has its own loan limits, set according to what it costs to buy there. As of that show — October 12, 2022 — the standard conventional loan limit outside high-cost areas was **$647,200**. Above that, in a normal-cost county, you're into jumbo. High-cost counties are different. Los Angeles, Orange County, Hawaii, and a number of others carry higher limits — in Los Angeles County she could take a borrower into the $900,000s on a high-balance conventional loan, not a jumbo product. FHA limits are a separate schedule again and also vary by county. So the answer isn't a single national number: it's the conforming limit for the county you're buying in. ### “Is there such a thing as a physician loan? Is it similar to a VA loan?” Physician loans do exist, though Debbie did not have one to offer at the time — the product her side had offered previously had gone away. They are not like VA loans in any structural sense. They are portfolio products, meaning the lender is using its own money and writing its own underwriting guidelines, so every one of them is different. Some let a physician into a jumbo loan with 10% down instead of the standard 20%. Some have no mortgage insurance where others do. Some allow a first-and-second combination piggybacked together. Because there's no agency standard behind them, the only way to compare is to find the lenders who offer them and ask each one what their guidelines are. ### “If I'm buying a second home, how do they treat my debt-to-income if I'm renting a room in my primary residence?” Boarder income — rent from someone living in one of your rooms — generally cannot be used. There are some first-time buyer programs, aimed at low-to-moderate income borrowers, that will count boarder income to help you qualify on the purchase. Outside of those, once you own the property and are no longer a first-time buyer, Debbie was not aware of any product that lets boarder income offset your debt-to-income ratio. So in this scenario you get hit for the full payment on the home you own today — principal, interest, taxes, insurance, everything — regardless of the tenant in the spare room. And if the new property is a second home at the minimum 10% down, you have to qualify for that full payment too, with no rental income credited. If instead you have 20% down and buy it as an investment property, then rental income from the new property can be used to offset the debt. The down payment changes which door is open. ### Still deciding whether to buy or wait? The answer depends on your numbers, not the headlines. Call [844-935-3634](tel:8449353634) (844-WE-LEND-4), [start an application](https://www.mortgagemomradio.com/apply/), or run the scenarios with the [mortgage calculators](https://www.mortgagemomradio.com/tools/). Get the weekly rate rundown in the [newsletter](https://www.mortgagemomradio.com/newsletter/). Full transcript (lightly edited for clarity) *Auto-generated captions cleaned for readability. Commercial breaks, theme music, the licensing recitations, and repeated housekeeping have been trimmed; licensing information appears at the bottom of this page. Listeners in the live chat are identified by first name only.* ### Nothing but the truth Welcome to Mortgage Mom Radio. I'm Debbie Marcoux and I am the Mortgage Mom. It is Wednesday, it is 1 p.m., and we are going live as usual. Today we're doing nothing but the truth. I want you to ask me hard questions. Ask me about the economy. Should you buy, should you wait, should you sell? What do I think about home equity lines of credit? What are some of the things you've been watching and hearing that you want to know — is it real, would that work, is that advice you should follow? Because we've just entered this whole TikTok world, I've found myself scrolling for hours, and with a mortgage and real estate show, the feed serves me people talking about getting equity lines of credit, paying your mortgage down faster, buying investment properties, fixing them up, cashing them out, keeping them as rentals, using the cash to buy another one. There's a lot being fed to you as a consumer that may not be your expertise. If you want to ask me what I think of it, this is the show to ask. ### Q&A: should a parent buy their kid's first home? A listener asks: *“Should my mom buy me my first home and I rent it from her, with where house prices are right now?”* That's a very good question, and we covered something close to it recently — the question was whether Gen Z will even be able to afford a home someday. My answer then was that if you're a parent today with children anywhere from newborn up to fifteen or sixteen, and you're thinking about whether they'll be able to buy in ten years when they're starting a family, or how you're going to pay for college, buying real estate is always a good answer. I want you all to know: there's never really a bad time to buy. There is just a bad time to sell. Right now, interest rates are up, property values have started to slip a little — which is actually a benefit — and sellers are getting more aggressive about negotiating and helping with closing costs. If you can get into a property right now, even if values come down a bit further and it's no longer worth what you paid — and I think that's the biggest fear most people have — real estate is a long haul. I want you to hear that. If you plan to hold that property five years, ten years, fifteen years, if it's your forever home, then it doesn't matter when you buy. What matters is that you're getting into something affordable, that you're budgeting for the payment, and that it's something you can carry. You can always refinance the loan later to get into a better payment and rate if rates come back down. ### Why a slow market helps the low-down-payment buyer Right now things are slower. Buyers have backed off because homes are less affordable with higher rates. And on the seller side — why would you sell a home with a 3% interest rate to go buy something at 7%? So a lot of people who'd normally be ready to move are staying put. Activity is coming down, and that is actually helping buyers get an offer accepted. Think back to 2020 and 2021, when there were multiple offers and you were bidding against forty other people for one house. It was very difficult for the low-down-payment borrower to get an offer accepted. To win, most people had large down payments and really high credit scores. We weren't talking VA, FHA, or USDA — we were talking conventional loans with large down payments, and a very good chance of an all-cash buyer. Those were the ones eating up the real estate in 2020 and 2021. Right now, because it's taking longer for a seller to sell, they are going to be more open to an offer that comes through the door with 3% down, 3.5% down, 5% down. That gives the buyer without a huge down payment the chance to get in. And it's great pricing, because you can negotiate to get some closing costs paid, which helps enormously when you're trying to put the down payment together. You might even be able to get the seller to help buy your interest rate down to make the payment more affordable. So is there a good time to buy? You should always be thinking about buying. Is there a good time to sell? Yes — if you're selling, you do need to be thoughtful about the timing. ### Q&A: when buying isn't even on the radar yet A listener asks: *“If someone is just so broke that getting a home isn't on the radar, how does one go about working toward that? Do you do debt consolidation? What's your advice?”* What's hard about that question is that it's very open-ended. Do they make good money but carry high debt? Do they not make good money? Are they just getting started in a career where they'll see raises over the next few years? It's hard for me to know what education to give without knowing which it is. But definitely, if you have a lot of debt, consolidation can be very good. What I don't recommend, if you don't have to go that direction, is one of those debt consolidation companies where they stop making the payments on your debts so they can negotiate with the creditor — to bring the interest rate down, or negotiate your ten thousand dollar balance down to five. These usually go by names like consumer credit counseling; there are many companies that do them. The problem is that when they stop making payments to get the credit card company's attention, it also affects your credit. You get late payments on your report, your score drops, and that turns into a whole other ball of wax. If you can get a personal loan to do the consolidation instead, I'd suggest that. ### Go look up your actual credit card rate One person reached out today and spoke with someone on our team about needing an equity line of credit or a refinance — she isn't sure which is best yet, but she's got these credit cards. When we asked what the interest rate was on the card she was talking about, she said, well, it's 14, I think. Then we got the credit card statement and the rate was actually 27. I want to make sure everybody heard that and your ears perked up. Three, four, five years ago the credit cards were at 14, 15, 19, 21%. The prime rate is going up, and I've said it numerous times on this show: every single time they raise the prime rate, credit cards are directly tied to that. So as rates climb with the prime rate, the rates on those cards climb too. If you have not checked what you are actually paying right now on your card, I would highly suggest that you do. I have a lot of clients who are absolutely adamant that they want an equity line of credit — they don't want to touch the fantastic rate they locked in on their current mortgage a couple of years back — but they need their debts paid off. What they don't realize is the blended math. If you owe $200,000 on one loan and $100,000 on another, and we look at $100,000 at 27% against your first at 3%, that blended interest rate could be somewhere in the 12, 13, 14 range. A first mortgage refinance at six and a half or seven percent is a far better rate over everything blended together. Let that resonate. Go back, look at your debts, figure out what you're paying in interest, and then talk to us about your options. ### Q&A: buy a condo, live in it, rent it, buy again? Piper asks: *“If I buy a condo now and live in it for a few years, can I then rent it and buy another home, or do I need to sell it first?”* That is a fantastic question, and it's what I typically promote — and I wish I stuck to my own advice. I was talking to my mom today about strategy, about what we should be doing right now and where we should be moving money. At the end of the day your real estate portfolio is part of how you're diversified. You've got money in stocks, maybe in crypto, maybe in treasuries or bonds — and you own a home, or you need to. Right now, with where the economy is, I personally feel something tangible like real estate is very important, because it's an actual tangible asset. That's my opinion. You can go back to my podcast, to the very beginning five years ago when the first episode went up, and hear me say this: the best way to build your real estate portfolio is to buy something small. Start with a condominium if that's all you can afford. Get a one-bedroom. Get a two-bedroom if you need it because you have a baby, or a baby on the way, or two kids you can bunk into the second bedroom. But if you can get into a one-bedroom, get into a one-bedroom. Put the minimum down that you can to get into it. Save your money. Live there a year or two. Then go buy another one, hold on to that first property, and rent it out. I know that when I say that it's scary, because you're thinking, that's a big payment, am I going to be able to cover the rent? So start researching. We all know Zillow and Redfin and realtor.com — go look at what rentals in your area actually cost right now. If you've been living in a rental for years with a fantastic landlord who doesn't raise your rent, you're well below market and you may not realize what's happening in the rental world. Rents are skyrocketing and they will continue to. That's across the nation — not just here in California, or where members of my team are in Tennessee, Idaho, and Arizona. It's everywhere. And even in a recession, if property values drop, rents will continue to go up. That's just what happens. So you should very easily be able to cover the rent on the little condo you bought and lived in. Then you move, and you buy another — a two-bedroom or a three-bedroom, still smaller — as a primary residence, with a low down payment and a better rate than an investment loan. You live there a year or two, save, rent that one out, and go buy another. I think it's very important for everybody to hold real estate. I know things are more expensive than they were, and I know it's hard to go out and get what you want — you feel outbid and out-priced, you can't get the single-family homes, you're going to have to look at town homes and condos. But guess what: that might be the very best plan of action you can take. If you're in an apartment today, would it really be that bad to go to a condo? ### Q&A: buy now and refinance later? Debbie's mom asks: *“Should I buy now with rates up and then plan to refinance at a lower rate later?”* Yes, I do agree with that. I think that's an opportunity. But I want to make sure I'm letting you all know: I do not have a crystal ball. Nobody knows exactly what's going to happen. There can be twists and turns nobody expected that change where the forecast is pointing today. As of today — October the 12th — I believe we're going to see some more rate increases. The jobs reports came out just on Monday telling us the economy was strong, that there wasn't a lot of unemployment, and that gives the Federal Reserve the opening to say the economy is holding, people still have jobs and are making money, so we can afford to keep raising rates. So I do think at their next meeting in November we'll see another rate hike, and there's a very good chance we see one at the first meeting of 2023 as well. From there I think we hold steady, and whatever rates land at is the level we're going to see stay around for probably a solid twelve months. That would be my guess. I think it will take that long before they feel inflation is coming down to a level where they can start to re-stimulate and drop rates. A couple of years from now, my belief is that rates will come down — and when they do, I think we'll see a lot of refinancing start again to lower the payments people got into over these last couple of years. But I also think we'll see a massive stimulation in purchasing. It's going to create more people wanting to get out and buy, and you're going to be back to multiple offers, back to people jumping on the bandwagon while things are more affordable. Which brings me back to the first-time buyer today: you should be looking at trying to get something now, because the people who will eat everything up as demand returns are the ones with all cash or very large down payments. My best advice is that the home you buy today is one you plan on keeping. That doesn't mean you're staying in it — it means you're holding on to it for at least five years. If you can see that playing out, then you do not have to worry if values come down further. They will go back up, and they will go back higher than they'd ever landed before. In the meantime you've owned a home, you've taken the tax deduction, nobody can kick you out, your payment hasn't gone up, you've locked in a rate, you're budgeting — and you always have the opportunity to drop that payment later. ### Q&A: how many times can you use your VA benefit? Carrie asks: *“How many times can someone use their VA benefits? If I already have a VA loan with a low rate, can I keep it and buy another home?”* You can have multiple VA loans, and a lot of people do not know that. What it depends on is how much of your eligibility you've actually used in the loan you currently have outstanding. Depending on where the home is located, the lending limit for that area, and how much loan and eligibility you've already used, that determines whether you can have two VA loans outstanding at one time. Many times we do see that to be an opportunity. Especially for somebody active in the military who is in one state, bought a home, and now has orders to move to a new state and would like to buy there: there's a very good chance you could hold the house you have today, put a renter in it — which is okay with the VA, that is not against VA rules, though a lot of people believe it is — and still use your VA benefit again on another property in another state with zero down. The only way to know whether you can is to reach out. We have to get your Certificate of Eligibility and do the math, and let you know what number you could buy up to with zero down, and then how high you could go with some down payment if you have one. ### Q&A: buying in another state before you move Piper follows up: *“Or can I buy a home in the state I want to be in in the next years, and rent it out until I'm ready to move there? Do I have to live in it right after I buy it?”* I want to explain this in a way everybody can make sense of. If you're trying to do a minimum down payment, you have to be able to live in and occupy the property. So if your job is in Arizona and you're trying to buy a property in Utah, we can't do a minimum down payment on the house in Utah, because you work in Arizona — you need to be able to get to your job, and there's no way to say you're living in that home. Now, you can buy a home as a *second home* with as little as 10% down. Second homes require you to occupy them at least two weeks a year. So if you wanted to do a short-term rental during the time you don't use it, because it's more of a vacation property, that is acceptable — but you have to occupy it for yourself a minimum of two weeks per year, and it requires a larger down payment. You can also buy the property as an *investment property*. If you need rental income to help offset the debt to qualify, because you live in Arizona and you make rent payments in Arizona, then you'd need a larger down payment — investment property down payments start at 20% down. So absolutely, out of state is great. You can always buy a second home you could eventually move yourself into if you're trying to get to a different state than you're in today. We just want to talk about what you're trying to do and what the goals are, then figure out where you should be looking. ### Q&A: lower price and higher rate, or higher price and lower rate? Michelle asks: *“Is it better to buy at a higher price with a lower interest rate, or a lower price at a higher interest rate?”* I personally think that if you can buy at a lower price with a higher rate, you can refinance later to bring the rate down — so you got the best of both worlds. You got the best price, and later you got the best rate. The hard part is that it's very difficult to time the market. How do you know you're buying at a lower price and prices won't go lower? How do you know you're getting in at a higher rate and rates won't go higher? Even for somebody like me who has been in the business 28 years — I might be at 29 now, I've been saying 28 for a while and need to go count — it's hard to time the market. ### Who should buy today, and who should sit tight So think about who should be looking at buying today. If you are busting at the seams, you don't have enough room, you've got to move, you need a bigger house — and you own a home today — you should be figuring out whether you can rent out the home you own, condo or town home or whatever it is, come up with a minimum down payment of three and a half or five percent, and go buy something that works for what your family needs. If you don't own a home, you're renting, and you're busting at the seams and need something bigger, I will bet almost anything that when you research what a bigger rental in your area costs, you're going to realize you should really just own a home. Same for somebody whose landlord has been raising the rent each year, or who has been told at the end of this lease the landlord is selling and you'll need to find a new rental. If you're in that situation and you're looking around for a new rental — stop, call us, and find out what you can do. There are down payment assistance options we can do for you. It is always best if you can come up with your own money; when you have three to five percent of your own, we can get you a better rate and qualify you for a higher sales price. But if you need down payment assistance, it's there. Before you throw away the opportunity, find out whether buying is something you could do right now. Call us before you go sign a lease with another landlord. ### Q&A: why non-qualified mortgage rates are higher Heidi asks: *“Can you explain why the rate seems so much higher on a non-qualified mortgage? If that's the only direction I can go, should I still buy, and why?”* We do have a lot of people calling about that kind of program. What she's calling non-qualified, or non-QM, is very much the same family as what you may have heard called subprime — loans for investors, for self-employed borrowers, bank statement loans, no-ratio products. These are not Fannie Mae, not Freddie Mac, not FHA, not USDA, not jumbo. They are not the normal tax-return, W-2, pay-stub kind of loans. So do not expect to get the same rate you'd get on one of those. Should you still buy? It really depends on the person. If you don't own anything, you're getting pushed out of the place you're in, the rents where you'd go are very high, you talk to us about the mortgage options, you have the down payment, and the monthly payment would be very similar to the new rent you'd be paying — then why wouldn't you? At least you own a home, you have the tax deduction of the mortgage interest and the property taxes, and you can always refinance later. That's the conversation we'd want to have: how do we get you out of the non-QM loan and into better financing? We need to know more about you. How long have you been in business? Do you only have one year of self-employment behind you, and that's why you need this? Because after you file your 2022 tax returns in a couple of months — and we're already in October — you'd be able to refinance. You're a perfect candidate. You can secure the home, negotiate right now with sellers who are hoping for offers, and then refinance into a straightforward Fannie Mae or Freddie Mac loan to get the payment down. I do want everybody to hear this on those products: you are going to need a bigger down payment. You'll typically need 20% down; some of the bank statement products will go to 10% down. And I'm going to tell you, the interest rates are not great — they are quite a bit higher than a normal rate. You're talking high nines, low tens. So if you're going to consider one of those programs, plan on a bigger down payment. ### Q&A: when is a loan a jumbo loan? A listener asks: *“When is a loan considered a jumbo loan, and what's the down payment on it? I just heard it was anything above $500,000.”* We can debunk that for you. $500,000 would not be a jumbo mortgage anywhere in the country if we're talking by loan size. There are loan programs we could put you on that would be a jumbo program even if you don't hit the conforming limits for your area, but since you mentioned $500,000, I'll stick to what's jumbo and what's not based on loan amount. Every single county across the nation has different loan limits, and those limits are based on what it costs to purchase a home in that area. Hawaii, Los Angeles, Orange County — many places across the nation are what they consider high-cost areas. Even in Baltimore there's some pretty expensive stuff going on. Every county has a different limit. But there's a standard limit that applies across the nation, so it doesn't matter where you live: if you are not in a high-cost area, as of today, October the 12th, 2022, the conventional loan limit is $647,200\. FHA is going to change based on your area as well, and has completely different limits. So focusing on conventional and jumbo: here in Los Angeles County we can actually take you up into the $900,000 range with a high-cost conventional product, not a jumbo. But across the nation, if you're not in a high-cost area, your conforming loan size is $647,200 — and jumbo would be above that number. ### Q&A: physician loans Mark asks: *“Is there such a thing as a physician loan? Is it similar to a VA loan?”* There are some banks that have physician loans. We had one we used to offer that has since gone away, so I don't personally have a physician's loan to offer right now. But they do exist. You have to figure out who has them, and then they're all going to have different guidelines — completely different from one another. Some will let you into a jumbo mortgage with 10% down instead of the standard 20%. Some may not have mortgage insurance where others would. Some will offer a first-and-second combination, piggybacking an equity line or equity loan with the first mortgage. Every investor that offers a physician's loan is doing it to their own underwriting guidelines. These are what we consider jumbo, and all jumbo loans are portfolio products — they are not Fannie Mae, not Freddie Mac, not government loans, and they don't follow the basic guidelines set for us by the big institutions for conforming loan sizes. It's all portfolio lending: a bank has its own money and can choose whatever guidelines it wants to put on the money it lends. So the lender you go to determines what the product looks like and how it works. ### Q&A: boarder income and buying a second home Mark also asks: *“If I'm buying a second home as an investment, how will they take into account debt-to-income if I'm renting a room in my primary?”* He clarifies that he lives in the house and has a tenant in the second room. When you have somebody living in a bedroom, in most circumstances we cannot use any of that rental income. There are some first-time buyer programs out there — low-to-moderate income programs — that will allow what's called boarder income, meaning somebody living in one of your rooms, to help you qualify when you buy. But once you're past that piece and you own the property and you're no longer a first-time buyer, I am not personally aware of any programs or products that will allow boarder income to help your debt-to-income ratio. So in that situation, even with a tenant in the bedroom, we're going to hit you for the total mortgage payment, taxes, insurance, everything on the home you own today. And if you're buying the next property as a second home with a minimum of 10% down, you'll have to qualify for that complete payment as well. Now, if you have 20% down and buy it as an investment property, then we would be able to use rental income from the property you're buying to help offset your debt-to-income ratio. ### Wrap-up Those are all the questions I got today, and it couldn't have worked out any better — we're right at the one-hour mark. If you want to be part of the show and ask your questions, you've got to join us live on YouTube, Twitch, or Facebook. Text the word MOM to 844-935-3634, that's 844-WE-LEND-4, and you'll get one text a week with the link. Same number to call the office, and you can book a phone consultation at mortgagemomradio.com. If you're in a situation today where you have to find a new rental in the next six months or so, do me a favor: do the research, figure out where you'd need to rent and what that will cost per month — and then call us and find out whether buying a home is possible for you. That might be the very best direction for you to go anyway. We'll see you next week. Debbie Marcoux is licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, NMLS ID #237926, and additionally licensed in AZ (0941504), FL, GA, HI, ID, IL, NV, NC, OR, TN, TX, and WA. Rates and figures discussed were current as of the air date of October 12, 2022, reflect national conforming averages, and are not an offer of credit or a rate quote. Debbie Marcoux is not a financial advisor; consult qualified professionals about your individual situation. Loan program guidelines described on this page — conforming and high-balance loan limits, minimum down payments, second-home occupancy requirements, non-qualified mortgage terms, VA entitlement rules, boarder income eligibility, and down payment assistance availability — are as they were described on air in October 2022 and have changed since. Nothing here is a statement of currently available program terms or an offer of credit. Debbie's interest rate forecast is her opinion as of that date. Tax questions belong with a qualified tax professional.