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Money Magazine: Buy Now Not Later

Money Magazine: Buy Now Not Later

photoWe have often suggested that potential home buyers consider rising interest rates when thinking about the true cost of a home. Remember, cost is not determined by price alone but by price and mortgage rate. The longer a buyer waits, the higher the mortgage payment will be if rates continue to increase (as is projected by Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Bankers Association).

Money Magazine, in its latest issue, agreed with our analysis as they also warned their readership of the same ramification if they waited to buy a home.

Here is what they said:

“BE MINDFUL OF RATES. The average interest rate on a 30-year fixed loan is predicted to climb from the current 4.4% to 5.3% by the 2015 spring buying season, according to Freddie Mac. For a $250,000 loan, that means that a borrower who waits would pay $136 more per month and an additional $49,090 in interest over the life of the loan. Will you need a big loan? Better to act soon before rates tick up.”

And the monthly increase Money mentioned did not take into consideration that prices are also projected to increase over the next year. Here is what the additional cost would be if prices rise by the 4.5% projected by the latest Home Price Expectation Survey and interest rates go to 5.3%.

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2 replies
  1. bob
    bob says:

    Flip a coin… I’ll call “heads” now, what’s the question?

    The time to buy a home for your family is when you feel it’s time – not when somebody else creates a hype that compels you to do so.

    The best time to buy in this cycle was just over a year ago, and is unlikely to repeat in our lifetime (but, alas – I’m old).

    What I would suggest that can be more meaningful than the guesswork of timing is the preparation that most buyers are not even aware of – but has the potential to save them a bundle. PUT LIPSTICK ON THE PIG! The pig is your middle mortgage credit score and is responsible for more pricing additions (interest rate and fees) to your home financing than ANY other single issue – and often more than all others combined!

    Once done, AND you’ve made-up your mind that you’re ready to buy… WRITE THAT CONTRACT, my friend!

    Reply

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