A recent article in the February 25 issue of Time Magazine gave the case against waiting to buy a house. Basically they said that if you are emotionally ready to be a homeowner, have good credit, plan to stay put for five years and have been waiting for the perfect entry point, it's time to get serious--before and inevitable rise in interest rates wipes out your atvantage. "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Jim Svinth, chief economist at Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.
Consider a typical home that sells for $218,900. You put down 20% and get a 30 year fixed rate mortgage at today's rate of 5.5%. Monthy principal and interest come to $994.31 Let's say that 12 months from now same house goes for 10% less or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6% your monthly payment would be $994.94 and you would have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotitiate. And you have spent a year living someplace you would rather not be.
Take advantage now of high inventory and low rates. With this scenario you really can't fail to come out on top.
www.kellerwilliamsasheville.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment