There will always be those who try to "time the market," but there's one factor you can't know — when buying a home will become more expensive.
Certainly you can tell from recent trends whether or not prices and mortgage interest rates are in your favor. Monthly prices have risen year-over-year for three years. Mortgage interest rates are slowly rising, but remain at extremely attractive levels.
You could wait for prices to fall, but there are two problems with that idea. First, it would take an economic recession to lower prices, which could take months or years. With the exception of the Great Recession, you won't know if you're in or out of a recession until the talking heads online inform you.
Second, mortgage interest rates have been kept artificially low for five years. That's a very long time. With steady gains in employment, it's not likely they will go any lower. In fact, higher interest rates could wipe out any gains you could save by waiting to buy.
If you buy a home and get a $200,000 30-year, fixed-rate mortgage at 4.5 percent, your monthly payment will be $1,013.37 and you'll pay $164,813.42 in interest over the life of the loan.The same home at 5.0 percent interest costs $1,073.64, 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.
If your home dropped 5% in value and you were able to buy it at $190,000 and 4.5% interest, your payment would be $962.70, a difference of $50.67 per month, with $156,572.75 in interest over the life of the loan. You'd save $50.67 more per month than if you'd paid $200,000.
At 5.0 percent, your $190,000 home costs $1019.96, or $53.68 more per month than if you'd gotten the loan at 4.5 percent. Your interest payments would total $177,185.99 over the life of the loan. The difference in payments is $20,613.24.
Currently, mortgages for borrowers with good credit are around 4.00 percent. If you had purchased your $190,000 home a year and a half ago when prices were lower and interest rates were at 4.00% interest, it would cost you $907.09 per month and a total of $13,6552.06 in interest.
The question is — did you?
There's never a perfect time to buy a home and you shouldn't buy a home just for financial reasons. Buy your home to raise your family, be close to friends and relatives and to be free from a landlord where you get nothing back but cancelled checks at the end of the lease.
Don't put your dreams off to gamble with the market. Think of getting the home you want at a reasonable price and payment as the best way to beat the market.
Susan Massa Broker Associate CRS SRES ABR Keller Williams Realty 908-400-0778
Are you considering selling your home? . With over 25 years of Experience with Multiple Realtor Designations and Certification I am your Realtor. Call me to arrange MY FREE Home Evaluation Report and The Market Conditions Report. My expertise and marketing ensures you are in Good Hands to sell your home and or Buy a Home.
Thinking of Buying A Home ? The historically low interest rates as well and a good inventory levels are perfect time to BUY Whether buying or selling 2017 has and will continue to be a good year. Whether you are looking to buy your first home or thinking of a second home or needing more space and bedrooms “ IT’S A GREAT TIME”... Contact me with any questions need a market evaluation mortgage information give me a call Susan: Your Hometown Realtor 908-400-0778
For more information on these or other real estate matters, contact Susan Massa Broker CRS SRES ABR at 908-400-0778, email email@example.com or firstname.lastname@example.org www.NJHomeShowcase.com
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