Are we there yet? That is the bottom. May be is my answer. It appears we are there in our beach front market of Gulf Shores and Orange Beach, Alabama. But consider this, interest rates are starting to edge back up and if you keep waiting to try and time the exact moment we are at the bottom you may be looking at a wash or possibly costing you more in the long run.
Take for example a $300K sales price with 20% down. That leaves a mortgage of $240K. If you would have purchased just over a month ago you could have had a rate of 4% on a 30 year fixed. Today that rate is 4.75%. What does that mean for the buyer?
Rate of 4% on a 30 year fixed mortgage with a loan amount of $240K
Monthly Payment: $1145.80
Total Interest Paid: $172,486.82
Rate of 4.75% on a 30 year fixed mortgage with a loan amount of $240K
Monthly Payment: $1251.95
Total Interest Paid: $210,703.30
That is a difference in the monthly payment of $106.15 and over the life of the mortgage that is $38,216.48 in extra interest paid.
Let's see, you had a purchase price of $300K that you are now looking at paying $38,216.48 in extra interest because you wanted to wait to make sure we were at the bottom. That is just over 12.7% of your purchase price because you waited an extra month. Did the market fall 12.7% in the last month? NO!
So, do you want to wait another month, or 6 months, etc... I do not know what interest rates will do, but if rates go to 5% or 5.75% did you save anything by waiting?
There are lots of great buys and if you find the property you want, DON'T WAIT. No one can tell when we are at the bottom, but I can tell you for certain it will cost you more today than it would have a month ago.
If you want to discuss this further or need a good lender to talk to give me a call at 251 981 2225 or visit my website. www.ParadiseInOrangeBeach.com
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