If you want it, get it! Why wait?

I named this post "If you want it, get it!" because there is one thing we know, home prices and mortgage rates are low and both are expected to change.

There is a common theme throughout the U.S.. Buyers are not sure if they should buy now. The reason is because they don't think the real estate market has hit the bottom. This is a valid concern but lets take a closer look at the real estate market and the mortgage expectations.

This is the reality. Home prices are still dropping in most markets across the United States, but what is effecting the monthly payments the most. The way interest rates are changing and expected to change, for most buyers it would be better for then to find the house now, make an aggressive offer and get locked in on what are still historically low rates.

Let's run the numbers. I will use real life interest rates from May-August of 2008

Home Price/Loan Amount = $500,000

Interest Rate = 6% Low May interest rate

Monthly Payment = $3730

Total interest paid for life of loan = $625,233

360 month interest and principle total = $1,341,691

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Home Price/Loan Amount = $500,000

Interest Rate = 6.7% High August interest rate

Monthly Payment = $3956

Total interest paid for life of loan = $705,667

360 month interest and principle total = $1,424,000

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Home Price/Loan Amount = $480,000

Interest Rate = 6.7% High August interest rate

Monthly Payment = $3798

Total interest paid for life of loan = $677,440

360 month interest and principle total = $1,367,041

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You can see by the numbers waiting for the price to come down wasn't advantageous. It would have been better off for the buyer to offer $490K on a home in May and get that great interest rate than to wait for the price to drop and pay the higher interest rate.

Why did I wait???

Nobody can say when the market will shift. It's better off to be safe than sorry. In the title I said, "If you want it, get it!" What I mean by that is find the home that fits your needs and wants, you already know you will pay less for that home now than you would have this time last year, and make an aggressive offer. You never know what the seller will except.

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