Don't wait too long to buy a home in today's market?
While today's market plays to your advantage as a buyer, with reduced housing costs and favorable interest rates, are you sitting by waiting?
When the market turns, today's bargains will be yesterday's missed opportunities.
While it is conceivable that home prices may drop further, it is likely that the decreased prices will be accompanied by increased financing costs due to rate cuts by the Fed. This means that any money saved on paying less for a house in a few months time will be offset by having to pay off your mortgage at a higher interest rate making "playing the waiting game" a waste of time (and very little fun).
This rate increase isn't just speculation. Just a couple of weeks ago, in early February, the fixed mortgage rate jumped a full half-percent, making it the fastest rate increase in 20 years.
The table below demonstrates how even as home prices may drop, monthly mortgage payments basically stay the same; due to increased interest rates:
Scenario 1:
Prices decrease by 5% and interest rates increase by 0.5%
Scenario 2:
Prices decrease by 10% and interest rates increase by 1.0%
Today | Scenario 1 | Scenario 2 |
Home Price $218, 900 | Home Price: -5% $207,955 | Home Price: -10% $197,010 |
Interest Rates 6.04% | Interest Rates: +0.5% 6.54% | Interest Rates: +1.0% 7.04% |
Monthly Payment $1,054 | Monthly Payment $1,056 | Monthly Payment $1,053 |
Table: Kadlec, Dan. "Ignore the Headlines!" Time 25 February 2008
Why should you spend months in a situation that you want out of when you can begin your new lives in your new home today, with less interest?
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