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Buying a Home? Consider COST not just Price

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bigstockphoto_Property_Prices_814896We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the ‘long term cost’ of the home. Let us explain.

Last month, the Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac all projected that mortgage interest rates will increase by about one full percentage over the next twelve months. We also know that many experts are calling for home prices to also increase over the next year.

What Does This Mean to a Buyer?

Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 even if home prices don’t increase:

Cost Waiting blog

Purchasing-Impact

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3 Responses to “Buying a Home? Consider COST not just Price”

  1. Gabe Sanders November 18, 2013 at 5:47 pm # Reply

    Great point. Also should put more emphasis on the home prices rising as well which will make the cost of waiting even more expensive.

  2. Noam November 18, 2013 at 11:19 pm # Reply

    While it’s a good poin,t you are relying on someone’s ability to accurately predict the future, in order to make it. These experts are the same ones that saw the crash coming in 08?

  3. Jason Malikow November 26, 2013 at 10:29 am # Reply

    Another point buyers need to consider is the rising operational costs of home ownership. That means energy costs. Many new homes are being HERS rated, but there are very few existing homes with energy performance ratings. Buyers need to know annual and mortgage life energy costs if they want to make a fully informed decision.

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