Should I Buy a House Now or Wait?
September 2nd, 2010 categories: For Buyers
At a picnic, a wedding, golfing or just “hanging around” the 2nd most asked question is “should I buy a home now or wait?”.
It’s a fair question if you have never owned real estate – but current homeowners (you) already have a good idea how much interest you’ve been paying on a 30 year fixed mortgage.
But to put it in simple terms-yes with current unusually mortgage rates -now is the time to sell and buy.
Just do the math- for a 30 year fixed rate mortgage for $150,000 at an interest rate of 4.55% (easily obtainable for qualified buyers) the table below shows what will happen when the Fed no longer has these ridiculous low low interest rates.
| Interest Rate | Payment | 30 years of Interest |
|---|---|---|
| 4.55% | $764.59 | $125,216 |
| 4.75% | $782.47 | $131,689 |
| 5.0% | $805.23 | $139,883 |
| 5.25% | $828.31 | $148,190 |
| 5.5% | $851.68 | $156,606 |
| 6.% | $899.33 | $173,757 |
| 7.% | $997.95 | $209,263 |
A person today buying a home and mortgaging $150,000 @ 4.55% pays $764,59 a month and $125,216 in interest if they take 30 years to pay off the loan.
The buyer who waits and maybe gets a 5% rate will pay $805.23 monthly and additional $14,667 in interest. And the lucky person who really waits and snags a 6% interest rate will be paying $899.33 a month ($134.74 more than @4.55%) and an additional $48,541 in interest.
Add to those numbers the lower sale prices and the bottom line equals a very good time buy real estate.
You don’t have to be “right brained” or “left brained” to understand how much money you lose by waiting and that today’s real estate market is balanced favorably towards buyers. The next consideration most homeowners grapple with is adjusting to lower sale prices on their existing properties- but if you look at the lower prices on the property you purchase-sometimes it is almost a “wash’”.
Don’t get me wrong- for many of us it is a giant leap right now so if you need help figuring out “your numbers” call or email me now!
In case you’re wondering -the 1st question everyone asks a Realtor- “What’s my house worth?” or “”What did the neighbor’s house sell for?” – Let me know if you need those questions answered!
| Discussion: 2 Comments »
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Why not wait until the prices and interest rates actually start to go up? Why guess the bottom when you can actually wait to see it.
Everyone said don’t wait in early 2010 and they ended up paying .5 to 1% higher mortgage rates.
Wait until the banks unload.
This mortgage comparison tool is really helpful http://www.houza.com.