The $8,000 tax credit vs Super low Interest rates
As valuable as the tax credit was for first time home buyers, today's incredibly low interest rates are even more exciting and a better deal over the long run.
Buyers-why wait? Take a look at this example:
Staying budget conscious here. let's say you want to keep your monthly payment just under $10000 per month on a 30 year mortgage and let's see what we can find for you.
Monthly payment $998.57 at today's rate of 4.375%. $200,000 house
Monthly payment $998.57 last year's rate of 5.735% $178,000 house
That's a $22,000 difference, almost three times the amount of the tax credit.
Another way to think about it would be a simple payback on the same house. The payment on a $200,000 mortgage at 5.375% is $1,119.94, or $121.37 per month more than the $200,000 mortgage at 4.375%.
In 66 months, or just over 5 years (the is what experts now recommend for the holding period for real estate), you've saved the amount of the $8000 credit in lower payments (54 months for the repeat buyer $6500 credit). Over the entire life of the mortgage, if you stay there for 30 years, you save $43,693 in interest.
You can certainly obtain a variety of different answers, depending on whom you ask, regarding how long these low rates will last, but no one disagrees that they can't last forever. The time is right now at this very moment in time: record low rates, and fewer buyers to compete with, which means prices are still likely to stay flat. That translates into more affordable for you. Once prices and rates start upward, you'll have missed the best of it.
What a great time to buy! Let the frenzy begin!
For information on rates visit South Central Wisconsin Mortgage Solutions
To find the right house, you need the right agent. Let me introduce you to your new home in Middleton or the surrounding Madison Metropolitan area. Here is what one of my clients had to say about working with me to find just the right new house in Middleton:
I was looking to buy my first home and had specific criteria I was interested in. Barbara Chatterton really took the time to understand what I was looking for and find houses that suited my needs. She helped me through listings and showings, providing honest, detailed explanations every step of the way. Her knowledge of the local markets and contacts in the community are second to none and helped me find the perfect home... before it was even listed!
Buying your first house is a huge deal. I highly recommend Barbara Chatterton to help you through it. ~ Brian Ray
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