How to reduce mortgage rate with low income but high assets
"In your shoes, I would  pay off the mortgage with the after tax investments and be done. You have different goals than I do in that you want to keep the debt.  So, I would  start calling mortgage brokers and asking for someone who does ""manual underwriting"".    Manual underwriting essentially means they use common sense and look at your situation for what it is instead of saying ""income=10K means disapprove mortgage"".   It may be that your situation is different enough from mortgage guidelines that you can't now get a conforming mortgage (i.e. one that is readily re-sellable to another mortgage holder).   If that is the case, you can look for a small bank or credit union that would be interested in adding your loan to their portfolio and not reselling it." The bit I don't quite understand is why you are thinking about staying in debt in the first place - you're basically thinking about shuffling around assets and liabilities in order to stay in debt? I think what I would do in your situation is to liquidate enough of the investments you have and pay off the mortgage. This doesn't change your net worth position less the fees etc that you might incur, but it'll save you the interest for the mortgage over the remaining term of your mortgage.
As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? What would the rates be in future is speculation. It depends on quite a few things, overall economy, demand / supply, liquidity in market etc ... Chances are less that rates would show a dramatic rise in near future. Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? Nope. House purchase decision are not solely based on interest rates. There are quite a few other aspects to consider, the housing industry, your need, etc. Although interest rate do form one of the aspect to consider specially affordability of the EMI.  Is refinancing an option on the table, if I made a deal at a bad time when rates are high? This depends on the terms of current mortgage. Most would allow refinance, there may be penal charges breaking the current mortgage. Note refinance does not always mean that you would get a better rate. Many mortgages these days are on variable interest rates, this means that they can go down or go up. How can people afford 10% mortgage? Well if you buy a small cheaper [Less expensive] house you can afford a higher interest rate. The question regarding your snapshot is fine, but the real question is what are you doing to improve your situation?  As John offered, one bit of guidance suggests you have a full year's gross earnings as a saving target. In my opinion, that's on the low side, and 2X should be the goal by 35.  I suggest you look back, and see if you can account for every dollar for the prior 6-12 months. This exercise isn't for the purpose of criticizing your restaurant spending, or cost of clothes, but to just bring it to light. Often, there's some low hanging fruit in this type of budgeting exercise, spending that you didn't realize was so high.  I'd also look carefully at your debt. What rate is the mortgage and the student loans? By understanding the loans' rates, terms, and tax status (e.g. whether any is a deduction) you can best choose the way to pay it off. If the rates are low enough you might consider funding your 401(k) accounts a bit more and slow down the loan payments.  It seems that in your 30's you have a negative net worth, but your true asset is your education and future earning potential.  From a high level view, you make $180K. Taking $50K off the top (which after taxes gives you $30K) to pay your student loan, you are still earning $130K, putting you at or near top 10% of families in this country. This should be enough to afford that mortgage, and still live a nice life.  In the end there are three paths, earn more (why does hubby earn half what you do, in the same field?), spend less, or reallocate current budget by changing how you are handling that debt. It looks like with the sale of your current home you have enough liquidity to obtain credit on the best terms without tapping your wife's IRA. The biggest factor to consider is the deduction on mortgage interest which reduces the effective interest on your mortgage significantly, particularly as you jump into a higher tax bracket. Along these lines, deferred retirement savings should have a higher priority than paying down the mortgage or your student loans. Student loans should probably be your biggest priority to pay down. With the mortgage deduction, a 4% rate becomes effectively a 3.4% rate if you are in the 15% bracket, but as low as 2.6% effective rate if you are in the 35% bracket. Both of these are lower than the 3.5% rate that you can get on the student loans after refinancing.  This also assumes you aren't hit with the AMT. This is probably worth the cost of a quick consultation with a tax professional to go over these options and how they affect your taxes. What you propose is to convert unsecured debt into secured debt. Conversion of unsecured debt into secured debt is not generally a good idea (several reasons).  The debt you currently owe does not have assets securing the debt, so the creditor knows they are exposed to risk, and may be more willing to negotiate or relax terms on the debt, should you encounter problems.  When you provide an asset to secure debt, you lose freedom to sell that asset.  When you incur debt their is usually a spending problem that needs to be corrected, which is typically not fixed when a refinance solution is used.  You do not mention interest rate, which would be one benefit to conversion of unsecured to secured debt, so you probably are not gaining adequate benefit from the conversion strategy. This strategy is often contemplated using 'cash-out' refinancing to borrow against a home you already own, and the (claimed) benefit is often to lower the interest rate on the debt.  Your scenario is more complicated in that you have not purchased the home (yet).  Though it may be a good idea to purchase a home, that choice depends on a different set of considerations (children, job stability, rental vs. buy costs, lifestyle, expected appreciation, etc) from how to best handle a large debt (income vs. expenses, how to increase income or reduce expenses, lifestyle, priorities, etc). Another consideration is that you already have a problem with the large debt owed to one (set of) creditor(s), and you have a plan which would shift the risk/exposure to another (set of) creditor(s) who may have been less complicit in accruing the original debt.  Was the debt incurred jointly during the marriage, and something you accepted responsibility to repay? You mention that you make great income, and you specify one expense (rent), but you neither provided the amount of income, total of all your expenses, nor your free cash flow amount, nor any indication of percentages spent on rent, essential expenses, lifestyle, nor amount available to retire debt.  Since you did not provide specifics, we can take a look at three scenarios, scenario #1, $4000/month income scenario #1, $6000/month income scenario #1, $8000/month income Depending upon your income and choices, you might have < $500/month to pay towards debt, or as much as $3000/month to pay towards debt, and depending upon interest rate (which OP did not provide), this debt could take < 2 years to pay or > 5 years to pay. Have you accepted the responsibility for the debt?  It will be a tough task to repay the debt.  And you will learn that debt comes with a cost as you repay it.  One problem people often encounter when they refinance debt is they have not changed the habits which produced the debt.  So they often continue their spending habits and incur new unsecured debt, landing them back in the same problem position, but with the increased secured debt combined with additional new unsecured debt.  Challenge yourself to repay a specific portion of the debt in a specific time, and consider ways to reduce your expenses (and/or increase your income) to provide more money to repay the debt quicker. As you also did not disclose your assets, it is hard to know whether you could repay a portion of the debt from assets you already own.  It makes sense to sell assets that have a low (or zero) return to repay debt that has a high interest rate.  Perhaps you have substantial assets that you are reluctant to sell, but that you could sell to repay a large part of the debt? $100K of mortgage debt at 4%, 30 years will result in a $477/mo mortgage. It would take about $23K in income to have 25% of the monthly income cover the mortgage.  This means, that with no other large debts, a bank will lend you about 4X your income.  If, instead of 25%, we decided that having 20% of income go to the mortgage, the ratio drops to just over 3X.  In the end, it comes down to keshlam's advice regarding a budget. I think the question can't be answered as asked, given the fact that you offer no numbers. For the average person, credit card debt, student loans, and cars payments add up to enough to chip away at the amount the bank will lend you. Since (per one of the linked questions) the maximum debt service should be 36%, you start with that and subtract all current payments.  If this doesn't suffice, let us know what, exactly you're looking for . You can't max out your retirement savings. There are vehicles that aren't tax-advantaged that you can fund after you've exhausted the tax-advantaged ones.  Consider how much you want to put into these vehicles.  There are disadvantages as well as advantages.  The rules on these can change at any time and can make it harder for you to get your money out. How's your liquid (cash) emergency fund?  It sounds like you're in a position to amass a good one.  Don't miss this opportunity. Save like crazy while you can.  Kids make this harder. Paying down your mortgage will save you interest, of course, but make sure you're not cash-poor as a result.  If something happens to your income(s), the bank will still foreclose on you even if you only owe $15,000.  A cash cushion buys you time. "Generally, when you own something - you can give it as a collateral for a secured loan. That's how car loans work and that's how mortgages work. Your ""equity"" in the asset is the current fair value of the asset minus all your obligations secured by it. So if you own a property free and clear, you have 100% of its fair market value as your equity. When you mortgage your property, banks will usually use some percentage loan-to-value to ensure they're not giving you more than your equity now or in a foreseeable future. Depending on the type and length of the loan, the LTV percentage varies between 65% and 95%. Before the market crash in 2008 you could even get more than 100% LTV, but not anymore. For investment the LTV will typically be lower than for primary residence, and the rates higher. I don't want to confuse you with down-payments and deposits as it doesn't matter (unless you're in Australia, apparently). So, as an example, assume you have an apartment you rent out, which you own free and clear. Lets assume its current FMV is $100K. You go to a bank and mortgage the apartment for a loan (get a loan secured by that apartment) at 65% LTV (typical for condos for investment). You got yourself $65K to buy another unit free and clear. You now have 2 apartments with FMV $165K, your equity $100K and your liability $65K. Mortgaging the new unit at the same 65% LTV will yield you another $42K loan - you may buy a third unit with this money. Your equity remains constant when you take the loan and invest it in the new purchase, but the FMV of your assets grows, as does the liability secured by them. But while the mortgage has fixed interest rate (usually, not always), the assets appreciate at different rates. Now, lets be optimistic and assume, for the sake of simplicity of the example, that in 2 years, your $100K condo is worth $200K. Voila, you can take another $65K loan on it. The cycle goes on. That's how your grandfather did it." Reducing your income by 20k is guaranteed to lower your tax bill by less than 20k (because there are no tax rates greater than 100%).  Your goal shouldn't be to minimize taxes but to maximize total net income.