First Time Home Buyers - The ACTUAL DOLLAR COST of Waiting to Buy

By
Real Estate Agent with RE/MAX Commonwealth

I suck at math, which is why I went to law school rather than business school, a decision I still periodically regret.  So I am eternally grateful to Charles Dailey for posting this link to HIS post on one of my comment pages.  It QUANTIFIES the cost of waiting to purchase a $125,000-$250,000 home, assuming that the buyer (i) misses the tax credit window; and (ii) the interest rate on the mortgage increases 1/2 point, such as to 5.5% from 5.0%. 

Ouch.  I knew it wasn't a small number, but $13,928.74 to $19,857.47 is a lot of money.  Like, buying-a-car-kinda money.  And this just assumes a 1/2 point interest rate increase.  If the interest rate increased more than that, we'd be getting into high-performance-German-car-kinda money.

So don't miss the chance because you think you have plenty of time.  No time like the present, folks.

Comments (4)

Douglas Fischer
East Oahu Realty - Selling Honolulu, Hawaii Condos - Honolulu, HI

Yes, I have something similar on my website.  Actual numbers help illustrate a perfect storm.  Buyers, when seeing the figures, soon see the light.

Nov 13, 2009 05:36 AM
Douglas Fischer
East Oahu Realty - Selling Honolulu, Hawaii Condos - Honolulu, HI

Yes, I have something similar on my website.  Actual numbers help illustrate a perfect storm.  Buyers, when seeing the figures, soon see the light.

Nov 13, 2009 05:36 AM
Charles Dailey
iLoan - NMLS ID#4474 - Saint Paul, MN

Sorry, I didn't know the spreadsheet got cut off.  Let's try again:

Purchase Price

$125,000.00

$150,000.00

$200,000.00

$225,000.00

$250,000.00

$275,000.00

$300,000.00

$325,000.00

Loan Amount

$120,625.00

$144,750.00

$193,000.00

$217,125.00

$241,250.00

$265,375.00

$289,500.00

$313,625.00

10 year monthly payment differential assuming ½ point change to rate

$4,482.53

$5,379.03

$7,172.04

$8,068.55

$8,965.06

$9,861.56

$10,758.07

$11,654.57

10 year amortization differential assuming ½ point change to rate

$1,446.21

$1,735.45

$2,313.93

$2,603.17

$2,892.41

$3,181.65

$3,470.89

$3,760.13

tax credit

$8,000.00

$8,000.00

$8,000.00

$8,000.00

$8,000.00

$8,000.00

$8,000.00

$8,000.00

Potential Loss of Waiting

$13,928.74

$15,114.48

$17,485.97

$18,671.72

$19,857.47

$21,043.21

$22,228.96

$23,414.70

Jan 01, 2010 10:06 PM
Charles Dailey
iLoan - NMLS ID#4474 - Saint Paul, MN

Here's another factor one may want to consider.  This chart contemplates interest rates going up by 0.5%.  The MBA is forecasting that interest rates will hit 5.7% in the 4th quarter of 2010 so these numbers don't even look as good as they should.  Realistically, the savings should even be higher if we're to believe the MBA.

Jan 01, 2010 10:10 PM