I have already had a few of you e-mail me asking what I meant buy, "The purchasing power being diminished or having no effect if buyers are waiting for a price drop when interest rates are climbing".
Here is a simple example.
You are looking at properties and you find a home priced at $150,000. The market has stable inventory but interest rates are on a gradual climb. You feel that if you wait for a couple of months that you can find an equal home for less so you decide to wait thinking "I/We can time the market and get a sale price we want". Her is what can happen and likely will happen if the Federal reserve sticks with it's thinking that it will need to raise long term interest rates to stem of inflation.
Home Price: $150,000.
Interst Rate: 6%
Payment before taxes, Insurance, Etc.=$872./Mo
Home Price: $140,000
Interst Rate Rises to: 6.5%
New Payment before Taxes, Insurance, Etc. $860./Mo.
As you can see from the sample, waiting for a price drop even as much 7% of the current list price can have almost no effect on your monthly payment should interest rates rise even 1/2%. So, if you wait and try to time the market, you may not save any money and you risk losing the $,8,000 tax credit that expires on 11/31/09. This expiration date means you need to have found, purchased and closed title prior to that date. Miss the closing date by even a day after 11/31/09 and you will not receive the tax credit as it stands right now. With many foreclosures in this area receiving multiple offers, it is getting harder and harder to find the right property for you and your family. It's time to act now!
Contact me or my preferred loan officer to get started or for more information.
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