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Beware: Don't Miss the Boat(s) on Your Pinellas Real Estate Purchase! How Rising Mortgage Interest Rates Hurt Your Bottom Line ... Even in a Declining Market

Real Estate Agent with Coldwell Banker Realty SL3136605

As Pinellas real estate prices have continued to drop each month, some Pinellas home buyers continued to play it cool, sit back and wait until a particular Dunedin Fl neighborhood becomes affordable in their eyes.  Beware!  There's another boat you don't want to miss. 

Conventional interest rates had been hovering at historic lows of 4.75% - until this week, where they ended at 5.27%!  It is unlikely they will stay in these low ranges, whether the 4's or the 5's for any length of time say most experts.  Mortgage interest rates are tied to the bond market which has begun to take hits due to the state of the economy.  Money.com had this good synopsis Thursday if you want to delve deeper.

So, if you're waiting for that $200,000 home to fall another $10,000 or 5% - this will take about three months in our current market.  Now its September 1st and you're going to offer $190,000 and save about $50/mo on your mortgage payment.  But wait!  Interest rates have risen one point to 5.75%.  Now your mortgage payment is $125.00 MORE than it would have been last week.  This scenario has now cost you an additional $75.00/month - for the next THIRTY YEARS!!

$200,000 home with an 3.5% FHA 30 year loan:

4.75% = $1006.78/ mo payment
5.75% = $1126.30/mo
6.75% = $1251.79/mo

Some will say, "not a big deal."   Really?  A 2% jump in interest equates to an additional $3,000 per year and over $162,000 over the life of the loan.  Hmmm... 

What's the other boat?  Trying to time the bottom of the market.  A post for another day!

In the mean time, visit us at The Pinellas Peach or Suncoast Dream Homes for lots more Pinellas County Real Estate info.