By:
CJ Harrington
Keller Williams Realty
www.cjharrington.com
cjharrington.crs@gmail.com
440.336.0612
Date:
10-05-07
Waiting on an interest rate can cost home buyers more than they think...
"The sooner, the better" may be the best strategy for buying houses. That's because lower interest rates can actually mean higher costs for those who delay the purchase of a home too long. When there are fluctuations in mortgage rates, Americans have a habit of waiting just a little while longer, hoping to save thousands of dollars as the rates dip lower. But, even if the rates do fall further, that waiting strategy can actually cost you more.
For example, a $150,000 house is purchased with a down payment of $30,000 and the balance is financed at a fixed 8.75 percent rate over 30 years. Monthly principal and interest payments come to $944.05. If the buyer chooses to wait until interest rates drop to 8.50 percent and, in the meantime the cost of the house climbs a modest 2 percent, which is a common increase in an interest-driven market, the monthly payment would rise to $945.78. Now after all that waiting trying to save money you have actually lost money and that is the common reality most buyers face.
Housing costs do not always offset lower interest rates. Just remember, "Waiting for interest rates to bottom-out" is a gamble. The bottom may not be the best time to buy. Talk to your local real estate agent or broker today to determine the best fit in housing and interest rate costs for you.
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