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Waiting to Buy a Home May Not $ave You Any $

By Ed Gillespie

Mortgage and Lending with WealthWise Mortgage Planning, a Division of American Pacific Mortgage Corporation NMLS #1850 NMLS 244226

February 05, 2011 04:47 PM

Waiting to Buy a Home May Not $ave You Any $

Are you holding off on buying Sacramento real estate because you believe that property prices will continue to drop? Think the payment will be lower the longer you wait?

Let's look at an example. While I can provide financing on homes throughout California, I am located in the Sacramento area and will use this area as my example.

Say you buy right now, getting a $200,000,t 4.75%, 30-year fixed, Sacramento mortgage. Your monthly principal and interest payment would look like this:

sacramento mortgage

Interest rates have been extremely low lately. Many industry experts, however, believe that the low rates we have been seeing are not going to last forever.

Let's say you buy one year from now instead. The loan amount is only $180,000 because of a decline in home prices but the interest rate is 6% fixed, 30-year. Your monthly principal and interest payment would look like this:

sacramento mortgage

No savings at all! In fact, the payment is slightly higher! So, why wait? See if you qualify for a mortgage-get "moving"!

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Evelyn Kennedy

Alain Pinel Realtors - Alameda, CA

Alameda, Real Estate, Alameda, CA

Ed:

I hope prices have stabilized. They seem to have flattened out in the Bay Area. Some cities have even seen a slight increase in prices. Hope there continues to be a very gradual rise in prices here. Good luck with your business.

Feb 05, 2011 05:04 PM

MichelleCherie Carr Crowe .Just Call. 408-252-8900

Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA

Family Helping Families Buy & Sell Homes 40+ Years

Nicely done analysis Ed. I hope buyers read and follow the advice.

Feb 05, 2011 05:14 PM

Tim Lorenz

TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA

949 874-2247

The increase in interest rates will cause many to lack the afordability to purchase the home they desire.

Feb 05, 2011 05:41 PM

Ed Gillespie

WealthWise Mortgage Planning, a Division of American Pacific Mortgage Corporation NMLS #1850 - Folsom, CA

Thanks, Evelyn! That's great news about the Bay Area! Best wishes for 2011!

Thanks, Michelle! I certainly understand why our state's buyers are hesitant to move forward with a purchase. But, as you know, it really is an excellent time to buy and there are great tools like Job Loss Protection programs that can add confidence.

Feb 05, 2011 05:42 PM

Very true, Tim. And the increases can come upon us quickly.

Feb 05, 2011 05:44 PM

Ryan Dressel

Stage Right Design, Inc. - Roseville, CA

Sacramento Home Staging

Great Information here Ed! Thank you for sharing.

Feb 06, 2011 03:13 AM

Thanks for stopping by, Ryan!

Feb 06, 2011 05:55 AM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Ed - What a great example of what is already happening. While rates are still low, they are starting to tick up. As you pointed out, even if median prices decrease a little, if rates continue to increase like they have been, it will cost buyers more to buy less.

Feb 06, 2011 02:35 PM

Thanks, Donne! And underwriting guidelines are likely to get ever more stringent which can have the effect of keeping some future buyers out of the market.

Feb 06, 2011 02:53 PM

Bob & Leilani Souza

Souza Realty 916.408.5500 - Roseville, CA

Greater Sacramento Area Homes, Land & Investments

You're absolutely right, Ed...anyone looking to buy a home using financing would be better off buying while rates are still low! :)

Leilani

Feb 09, 2011 08:30 AM

Gabrielle Kamahele Rhind

KGC Properties LLC, Tucson Property Management & Real Estate - Tucson, AZ

Broker/Owner

GOOD MORNING ED! A nice visual to explain the difference between now and later -- the price will soon be forgotten, the interest rate - you will be reminded of it every month! -G

Feb 20, 2011 12:59 AM

Good point, Gabrielle! I didn't even think of it that way!

Feb 20, 2011 05:15 PM

Waiting to Buy a Home May Not $ave You Any $

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