Mortgage rates keep climbing and bernake has indicated that the Fed may start to raise its rates soon in an attempt to curb inflation. 

Many experts are stating that we will likely see the Fed increase rates before the end of the year. 

Anyone who is thinking about buying a home and thinks that it make sense to wait and see, might want to consider where rates are going before sitting out too long.  Even if values are still dropping in the area that you are looking to buy, if the rates keep climbing and at the same time the loan guidelines keep tightening, then you may not be able to buy in the area you are watching when you are ready.

Say that you could buy a home for $250,000 and you were putting 20% down.  A typical $200,000 conventional, fully amortizing, mortgage with a note rate of 6.25% over 30 years has a payment of $1,237.47.  If the rate goes to say 7.75% (similar to the average rates from 1997-2000), the payment then goes up to $1,432.82, that's almost $200 increase for the same $200,000! 

Now let's look at the same scenario with a $15,000 savings on the home price.  If the price came down to $235,000, your new loan would be for $188,000 (with 20% down).  Your payment, if your rate was 7.75% would be $1,346.86 which is still 109 MORE in payment with a larger portion of each payment going toward interest each month.

 View Current Rates www.ratesmi.com

If you feel there is a good reason to wait to buy a home, other than if you are a cash buyer, please comment here!

Thanks