Did you feel the bounce?

For many months the interest rates have been trending down, down, down...until the first week of November 2010 that is. That week they hit their lowest point in recorded history at about 3.75% for a thirty year loan. Many people got lucky and got in on this great rate. As of this writing they have rebounded and have hit as high as 5% for a 30 year loan. My first mortgage was at 11.5% back in 1979 so I still think 5% is a fantastic rate! 

Let's compare how much money someone borrowing $300,000 over 30 years saves when comparing the two rates. At 3.75% the principle and interest would be about $1,389 per month. At 5% the payment on the same amount would be about $1,610 or $221 more per month or $79,727 over the life of the loan. In 2009 and 2010 while rates were at all time lows, many people decided to wait to sell their house and buy another until they could get a little more money for the house they were selling. 

Do you already understand how waiting is not always the best strategy? Even if you only stayed in the next house 15 years it would still cost close to $40,000 more in the long run in the hopes of maybe selling your old house for $10,000 more in a few years. If you wait for the value of your house to increase, chances are that the house you want to buy will increase in value also. So, if prices go up and interest rates go up, it could cost you close to $100,000 in the long run just by trying to gain another few thousand dollars on the sale of your old house. As the economy recovers, interest rates are bound to close in on 6% as soon as the end of 2011. I got this from Businessweek.com... "Lending Tree chief economist Cameron Findlay recently sat down with Fox Business News to give them his mortgage rates forecast, predictions for the mortgage refinance market and more. Cameron says economic conditions lead him to expect mortgage rates will rise 180 basis points to 6% by the first quarter of 2011." 

Always keep the "big picture" in mind when thinking about selling and buying a house. I would be happy to provide a private analysis regarding your personal situation if you have any questions about your "big picture". Dale Ross, Keller Williams Signature Realty. 281-599-6575. RDR@DaleRoss.com.