GET OFF THE FENCE ALREADY!!!

off the fence

 

Agents want to shout this from the top of their lungs.   But you won't know it is too late to buy until we are past the bottom of the market.  The question is...are we on the last downward slide before we head up or are we heading up?   The answer is - it really doesn't matter.  If you can buy at the bottom of a bell curve...it doesn't matter where you are --- buy!   It is always the best time to buy when you are at, approaching, or leaving the bottom and you don't know you are until you have left the bottom and it is already gone.  

So....here are the top 7 reasons why you should get off the fence and buy now:

  1. Owning a home (for a long period of time) builds equity and stability
  2. You can negotiate the BEST prices and TERMS when the market is slow
  3. You need to live somewhere - stop throwing money away on rent
  4. Even if prices go down you've started paying off that mortgage - (29 years to go!)
  5. Just a 2% rise in interest rates can dramatically impact your affordability
  6. When inflation kicks in (and it will sooner or later) home prices rise and rents rise more
  7. Everyone knows it is sound investment advice to --- Buy when everyone is desperate to sell and sell when everyone is desperate to buy --- but we let our fears stop us from making good sound decisions.

I didn't even mention (okay here I mention it) - the mortgage interest deduction!!!

 Not convinced?   Here look at what the difference in rates and pricing do to your over all costs and payments:
  • At a rate of 4.25% with 20% down on a $500K home your mortgage payment (without PITI) is about $1968 - (the total cost over the life of the loan would be about $708,305)
  • At a rate of 6.25% with 20% down on a $500K home your mortgage payment (without PITI) is about $2463 - (the total cost over the life of the loan would be $886,542)
  • So, for a similar payment - prices would have to fall about 20% in order for you to have the same mortgage payment at 6.25% - so now you can afford a $400K home with 20% down (without PITI) your mortgage payment is about $1970 - (the total cost over the life of the loan would be $789,512)

 This shows you that INTEREST RATES can matter even more than prices over the long run - prices can fall as much as 20%, but if interest rates increase just 2% in this example you will pay $80,000 more for the home.   Interest rates were as high as 18% on homes - so don't think it won't happen again.

If you would like more information about your situation or to speak to us about purchasing or selling your home or trading up or down - we would be delighted to talk with you and provide you with good information.

Yvette Chisholm, Associate Broker, MD, DC, VAAlan Bruzee & Yvette Chisholm Alan Bruzee, Associate Broker, MD, DC, VA
Long & Foster Real Estate, Inc.
 Rockville/King Farm Office 301-548-9700
402 King Farm Blvd #150 Rockville, MD  20850

Telephone: 301-758-9500

www.BruzeeChisholm.com


 

14 Comments on Buyers - Get OFF the Fence Already!!!

OCT
20
2011
130,414 Points 1 Featured Post Localism Sponsor Attended Rain Camp

Powerful - powerful post - Just the info on mortgage rates laid out the way you did - is valuable for buyers - thanks for sharing!
8:42pm • #1
Called Shot Master

Yvette this is a great post!   Buying now is really scary, but can be the best decision that you make.
8:55pm • #2
472,749 Points 34 Featured Posts Called Shot Master

I hit the suggest button. You spelled this out so well for the consumer. Nice work.
9:25pm • #3
OCT
21
2011
978,393 Points 114 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Yes, those pesky interest rates, even at 1% can add quite a bit to the overall PITI.  I love #3 . . . indeed!!
2:53pm • #4
757,907 Points 105 Featured Posts Outside Blog Called Shot Master

Yvette, this is a great example of why it is better to buy when rates are low. Sellers shouldn't wait until those rates start to climb.
3:20pm • #5
111,010 Points Outside Blog

Very good advise.  Any going under contract now and closing in 60-days we get a full years interest deduction on their mortgage for 2012 where as if they go under contract in March or April and close in May or June, they are losing almost half of their interest deduction.  Buy now and start saving!
3:57pm • #6
354,302 Points 30 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

You nailed it on this one!

Thanks for the excellent post.

Patricia
7:14pm • #7
620,846 Points 11 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

I agree with Patricia Feager. Job well done. I wasn't a real estate agent at the time but I believe in the early 90's,interest rates were 18% like you said. So people who can afford to buy a house have to take advantage of this once in a lifetime Golden Opportunity.
9:05pm • #8
OCT
22
2011
774,050 Points 95 Featured Posts Outside Blog Called Shot Master

I like the examples you used with the interest rates. We can sit a wait for the perfect home price bottom, but if we miss the interest bottom, we lose anyway. Thanks Yvette
1:13am • #9
774,050 Points 95 Featured Posts Outside Blog Called Shot Master

I like the examples you used with the interest rates. We can sit a wait for the perfect home price bottom, but if we miss the interest bottom, we lose anyway. Thanks Yvette
1:16am • #10
165,839 Points 8 Featured Posts Outside Blog Called Shot Master

Thanks everyone!   It is true that we all need to look at the big picture and our ultimate goals when purchasing a home.  Buying a home to make quick money is gone for a while!  
8:55am • #11
139,547 Points 3 Featured Posts Outside Blog

Yvette...excellent post.  For those looking to buy at the absolute bottom of the market, the bottom is only visible in the rearview morror.  If you can see the bottom, you're too late.
9:39am • #12
165,839 Points 8 Featured Posts Outside Blog Called Shot Master

Absolutely true!   Our 20-20 vision is really easy when we look back.   Thanks!
10:19am • #13
OCT
24
2011
165,839 Points 8 Featured Posts Outside Blog Called Shot Master

Oh, YEAH!   A FEATURE...THANKS ACTIVE RAIN STAR GODS!!!  : )
12:13am • #14


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Yvette Chisholm, Associate Broker - Rockville, MD 301-758-9500

Rockville, MD

More about me…

Long & Foster Real Estate, Inc.

Address: 402 King Farm Blvd #150, Rockville, MD, 20850

Office Phone: (301) 254-7800

Cell Phone: (301) 758-9500

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The real estate market, trends, the agents, what is hot and what is not - Rockville, Montgomery County, Maryland



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