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Is now the time to buy?   Is there a cost to waiting?

Should you wait to buy?   You see the news, talking about falling prices.  Logic says you should wait, right?    Well like most decisions in life, it is never as easy or cut and dry as it seems.   Let’s do some analysis to see.

Let’s say you wait a year and you do get the home at 10% less than today.  How sure are you that rates will be as low as today?   If the fed starts lowering short term rates, that causes inflation, which in turn hurts the long term mortgage backed bonds.    Odds are, rates will be   1/2% to 1% higher in a year.    If this happens the price reduction will wash with the higher interest.   The main difference is you will have 29 years left on your mortgage instead of 30!   

IF this is a home you only plan on keeping a few years, then WAITING is far better, but if it is a home you are going to keep 10+ years, then NOW is as good a time as any!   Plus if you wait to long you won’t be able to take advantage of the $7500 Tax Credit.

 

Today

One year: Assume 10% price reduction

Purchase Price

$300,000.00

$270,000.00

Rate

6.00%

7.00%

Payment Term (months)

360

360

Payment

$1,798.65

$1,796.32

Payment Difference

$2.33

 

 

 

 

Current Rent Monthly

 

$1,200.00

Wasted Rent- 1 Year

 

$14,400.00

 

 

 

Total spent

$647,514.57

$661,074.03

  • Savings by moving now: over $14,000
  • Shopping for a home for another 12 months:  Your time, gas, and  stress
  • Moving into a new beautiful home NOW:  PRICELESS

Trying to predict the bottom is not always the best strategy.  What we do know is NOW there are some great home values out there, and along with still historically low interest rates, now looks like a great time to buy!

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* Terms and Conditions Apply - Rate referenced above is guidance and is based on available rates from our lender network as of December 16, 2011 for a 7/1 adjustable rate refinance, a loan amount of $250,000 in Virginia, 2.675 discount points, at least 20% equity in the subject property, a single-family home, primary residence, minimum 740 credit score and verifiable income for the borrower(s). Rates mentioned in any advertising are guidance and are based on a sampling of available rates from our lender network. FHAInfoCenter  is not a lender. Specific rates and terms offered to our applicants by specific lenders and providers within the network may vary, though our lenders and providers understand they are in a competitive environment and offer highly-competitive rates directly to our applicants. Rates are subject to change daily without notice. Not available in all states. Payment amounts shown do not include taxes or insurance.

 

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