I have recently talked with a few buyers and they stated that they think there will be a new "Stimulus Plan" coming out soon that will have another home buyers tax credit. Well I said "It is like rolling the dice, do you want to take a chance on interest rates going back up above 5%"? You can wait and get your $8000 tax credit now, or whatever it may end up being -OR- You can get a 30 year loan at an interest rate of approximately 4.5%.
On a $225,000 loan at 4.5% your monthly payment will be $1140 principal and interest. If rates go up, you get the same loan at 5.5% and your principal and interest payment will be $1277. At 4.5% you will be saving $137 per month.
If you keep the home for 10 years that will be a savings of $16,440!! Lets say you stay in the home for the whole 30 years. That 1% difference in your interest rate will save you about $59,000.
Well lets say you will only stay in your home for 5 years max. You can get a 5/1 ARM for a interest rate of 3.34% with a monthly payment of $990. That is a $287 savings per month over the 5.5% rate. Over 5 years that would be a savings of $17,220.
In my opinion we already have a "Stimulus Plan" in place. It is called LOW INTEREST RATES!