Take Advantage of Today’s Low Interest Rates and Buy Now or Pay Later!
“It’s official! The average interest rates today are now below 2013’s average interest rates… but who knows for how long!
As the following article from Keeping Current Matters shows, the cost of waiting to buy a home can really add up to thousands of dollars per year!
After you read the details and consider today’s low interest rates, let’s run your numbers and see if makes sense to wait another year or so or should you buy that home right now.” – Gail Alm, Mortgage Planning Specialist at Fairway Independent Mortgage Corporation.
Moving Up? Do it Now!
A recent study revealed that the number of existing home owners planning to buy a home this year is about to increase dramatically. Some are moving up, some are downsizing and others are making a lateral move. Another study shows that over 75% of these buyers will, in fact, be in that first category: a move-up buyer. We want to address this group of buyers in today’s blog post.
There is no way for us to predict the future but we can look at what happened over the last year. Let’s look at buyers that considered moving up last year but decided to wait instead.
Assume they had a home worth $300,000 and were looking at a home for $450,000 (putting 10% down they would get a mortgage of $405,000). By waiting, their house appreciated by approximately 10% over the last year (based on the Case Shiller Pricing Index). Their home could now sell for $330,000. That would mean an additional $30,000 in equity assuming they didn’t incur any expenses in selling the home.
But, the $450,000 home would now be worth $495,000. Adding the original 10% down payment ($45,000) to the additional equity ($30,000), they would now have a $75,000 down payment. That would still need a mortgage of $425,000.
Here is a table showing what additional monthly cost would be incurred by waiting:
According to the Home Price Expectation Survey, home prices are projected to appreciate by approximately 6% over the next eighteen months. Interest rates are also expected to rise by as much as another full percentage point in that same time period according to FreddieMac. If your family plans to move-up to a nicer or bigger home, it may make sense to move now rather than later. To read the article at Keeping Current Matters, CLICK HERE or COPY and PASTE the following link into your browser.
Information supplied by Gail Alm, Mortgage Planning Specialist at Fairway Independent Mortgage Corp.
NMLS ID 150812
37156 Rehoboth Avenue
Rehoboth Beach, DE 19971