There Is No Better Time Than Now!
- In a buyer’s market, buyers wait for signs that prices are getting lower.
- In a seller’s market, buyers don’t wait because they’re afraid prices will get higher.
- Both markets move on the fear of paying too much.
Right now, buyers have the best of both worlds – even though prices are on the rise, home prices have rolled back to nearly a decade ago, and mortgage interest rates are still at a record low. Yet, many buyers are still waiting for “a sign” that it’s the right time to buy. Should you wait for lower prices or lower interest rates before you jump in?
A quick visit to a mortgage calculator will show you the following:
- If Tom buys Betty’s home for $200,000 with a 30-year, fixed-rate mortgage at 4.5%, Tom’s monthly payment would be $1,013.37 and Tom will pay $164,813.42 in interest over the 3o year period. • The same home at 5% interest costs $1,073.64 a month, a difference of $60.27 more per month and $186,511.57 in interest over the life of the loan. -The difference in interest payments alone is $21,698.15 in 3o years.
- If seller Betty’s home dropped 5% in value and Tom was able to buy it for $190,000 with a 4.5% interest, Toms’s payment would be $962.70, a difference of $50.67 per month, with $156,572.75 in interest over a 3o year period. Tom would save $50.67 per month than if he’d paid $200,000. • At 5%, his $190,000 home costs $1019.96 a month, or $53.68 more per month than if he’d gotten the loan at 4.5%. His interest payments would total $177,185.99 over the life of the loan. -The difference in payments is $20,613.24 in 30 years.
Home prices today are well below the peak of the housing boom in 2005, and mortgage interest rates are at all-time lows. On the MS Gulf Coast, prices are steadily rising and national interest rates have gone up several times in the past year.