Pictures courtesy of google.com

 

So you don't want to buy yet, now because the interest rates are up..Well the market is bottoming out and the interest rates rising go hand in hand.  If you waited for the market to drop and are now upset because the rates went up don't get upset.  This is the norm for the real estate market. You will either pay your price in higher interest rate lower sales prices or higher sale prices and lower interest rates...When the market prices are up, it has been proven that you save 10% when you move in that market, then when prices are dropping believe it or not.

Ok, so you say that we don't have a Seller's market but a buyer's market but we do have a market that has just about bottomed out. If you ad the increase in interest rate to the price of your home, waiting can and will cost you money.

The increase in interest rate of 1% on a loan of $500,000.00 can cost you as much as $250,000 over the life of your loan for 25 years.

Ok, so you are not going to keep your loan for 25 years only 12 than you can cut that in half. SO you will only spend $125,000.00 more.  SO let's wait, how much do you think your home is going to drop from this time next year.

California Association of Realtors economist have predicted 6% drop for the South Bay . Last year according to the Daily Breeze the South Bay increased 12.3%. SO let's assume the economists are right. if your average sale price is $700,000.00 and you drop 6% that would save you $42,000.00 but because you waited for the drop and the rates went up 1% then you are now losing $82,000.00 by waiting.

Sale Price $700,000.00

                  500,000.00 Loan amount

                   125,000.00  Cost of increase of 1% over a 12 year span

                    42,000.00- 6% drop in your SOuth Bay home for 2009

                     83,000.00 Cost for you by waiting to buy a home

IF you stay in your home over the length of your loan (25 years) then you will spend an additional $250,000.00 in mortgage interest paid out.

 You can use this formula for any area that you plan on purchasing but don't be foolish with you money..Penny wise and pound foolish.

With this scenario waiting for the market to drop will not only lose some money but $50,000.00 or more.

Be smart with your money and don't let the media control your investment choices.  Get the full picture with a REALTOR

>Picture courtesy of money.com google images

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