Higher interest rates make it harder to qualify for a loan and to pay it.  Recent jumps have made it much harder to afford payments.

​

How much of my income should I devote to housing expenses?  Ideally only 28-30%.  Remember your other loan commitments

​

Should I buy down my rate?  Paying points up front can be considered, but make sure that you plan to stay in the house long enough for it to pay off. 

​

What about an ARM?  These offer the hope that you can refinance at a lower rate in the future, but can also allow increased rates.  Could you afford it?

​

Should I use my 401K for a down payment?  Think twice as you will have to pay penalties up front and lose the retirement investment.  Taking out a loan against your 401K is a little better, but has the same costs if you fail to make payments for some reason. 

​

What about selling stocks?  This is a better option, but will subject you to capital gain taxes.  Try not go become cash poor as houses often come with sudden big expenses.

​

Can I refinance later?  Maybe, if interest rates go down, something we don't know.  There will be refinancing costs up to 1.5%.