Crystal Ball.

My crystal ball is failing me. Here's the issue with our housing situation. We have two options.

1. Buy now
2. Buy later

Easy enough right? Buy later when the economy has rebounded?

Here's the problems. First if we look at option #2. Current interest rate on a 30 year fixed rate mortgage is 5.23%. Total interest paid on a $200,000 loan is $196,695.23. Depressing really. But what happens when it goes up to 7%? $279,017.80 (or a difference of over $80,000). In the 70's, interest rates were really high (prime rate got up to 21% or so). So let's assume it goes up to 12%. That's $540,601.07 paid in just interest (and doesn't even take into account the larger payment). So by the calculations, it would make more sense to buy now.

Unfortunately there are issues with option #1 also. Our house is still "ours" and we are still liable for the payment. If the new buyers can't get the loan after the year is up, then we still have a house in Diamond. Not a big problem at this point but if I would lose my job (since I'm in manufacturing it's a big possibility) then it's "Hi ho. Hi ho. Off to bankruptcy court we go". Actually it wouldn't be quite that bad. We'd have to move and then we'd have to sell 2 homes plus rent a home at the new town where we moved. Which is pretty bad by itself.

Anywho... My crystal ball is broke and I can't tell about the future. I'm not sure what to do but I think it would be wiser to put off the house until our house is completely off our hands. Just to play it safe. Unfortunately life doesn't come with an instruction booklet.

nc