In today’s market many people who are looking to buy think that it would be better to wait it out for 6 months to see if the prices will go down. Consider the bigger picture. Even if the prices of homes go down, the potential increases in the interest rates will prevent you from actually saving any money.
Rates are at an all time low once again and it is time to act now instead of waiting for the rates to go up to where they were last year. If you look at the rates in July of last year, they were as high as 7.125%. If that trend repeats this year, and you wait those six months, the increase in your monthly mortgage payment would make the decrease of the sales price irrelevant. Here is an example of buying your home today with a rate of 6.250% or waiting 6 months for the purchase price to go down $25,000:
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TODAY
$400,000 Purchase Price
$80,000 Down Payment (20%)
$320,000 Loan Amount
At 6.250% = $1,971 Monthly P&I |
IN 6 MONTHS
375,000 Purchase Price
$75,000 Down Payment (20%)
$300,000 Loan Amount
At 7.125% = $2,022 monthly P&I |
With this scenario, waiting 6 months for the prices to go down will actually cost you $51 more per month in your mortgage payment. That also saves you over $18,000 over the life of the loan of 30 years. With the rates as low as they are, it is a good idea to take advantage of this oppurtunity now and purchase the home that you really want instead of waiting in hopes that the prices will drop.
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