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INTEREST RATES: DON’T WAIT TO BUY

Deciding whether to buy a home is a big decision. There are lots of details to consider and sometimes it canmajormarketshift seem overwhelming. Getting to the point where you are ready to pull the trigger can be a long road, but with interest rates going up, waiting could cost you more in the long run.

According to our friends at Legacy Mutual Mortgage, if a buyer waits to purchase a home until prices go down or holds off to save a bigger down payment while interest rates are going up, their mortgage payment will be significantly impacted. Here’s how:

Let’s assume the buyer waits until home prices have gone down by 10%, but in that same time span, interest rates go up by 1%.

$300,000 loan amount                                            $270,000 loan amount

4.0% 30 year fixed rate                                             5.0% 30 year fixed rate

$1,432.25/month = P&I payment                          $1,449.42/month = P&I payment

IF prices go down by 10% but rates go up by 1%, your mortgage payment would actually be higher!

Let’s assume the buyer waits a year to save up a bigger down payment so they can put down 10% instead of 5%, but in that same time span, interest rates go up by 1%.

$237,500 loan amount                                              $225,000 loan amount

4.0% 30 year fixed rate                                             5.0% 30 year fixed rate

$1,215.01/month = P&I payment + PMI               $1,264.10/month = P&I payment + PMI

Even though the buyer put down an extra $12,500 on a $250,000 house, their mortgage payment would actually by HIGHER because of the higher rate!

Now is still a great time to buy, but don’t wait. Find an expert, like the good folks at Legacy Mutual Mortgage, who can educate you on mortgage financing options and answer all of your questions.