Why am I telling buyers to buy now in Silicon Valley? I will give you a couple of reasons. The first being the incrediblely low interest rates that increase your purchasing power. Most Silicon Valley mortgages are jumbo mortgages and you can afford more house now than you will probably qualify for by next Spring. In addition, prices are increasing in Silicon Valley and if interest rates increase you will be hit with a double whammy.
Let's look at what a change in interest rates does to a jumbo mortgage. *
$1,000,000 house with 20% down would give you a mortgage of $800,000
30 Year Fixed Loan
Interest Rate Mortgage payment
4% $ 3819.32
5% $ 4294.57
6% $ 4796.40
Looking at the long view historically 6% is a low rate on a mortgage. No matter what your politics and who is in office next year the probability of interest rates increasing are extremely high. Going from 4% to 5% will increase your payment over $ 475 a month and if rates return to 6% your mortgage payment will increase by over $ 977 a month.
Now what if prices go up to 5% and interest rates are 5%?
That makes a $ 1,000,000 home become a $ 1,050,000 home with a morgage of $840,000 based on 20% down
With a payment of $ 4509.30/month, that makes buying in the Spring almost $ 700/month more than buying today
See why I am encouraging my buyers to buy now? Any change in price and interest rate can really impact the Silicon Valley buyer.
If you want to discuss if buying is right for you please give me a call.
*-Rates provided are for information purposes only, for actual loan information contact a loan officer