Many buyers are dipping a toe into the market, but not ready to take the plunge. They are concerned that the real estate market hasn’t hit bottom, and therefore they are playing the waiting game. But it’s important to realize that interest rates are at record lows – in fact, the average rates we are seeing now haven’t been seen since the early 1970s. And many people don’t understand that interest rates can make a huge impact on your overall costs – sometimes even more than the actual purchase price of the property.
For example, if you purchased a house priced at the appropriate current market value of $250,000 with today’s rates (30-year fixed are around 4.875%), your payment would be around $1323.00. If, on the other hand, you wait for the price of the house to drop, thinking your market hasn’t bottomed yet, and the price does go down 10% – to $225,000 but rates have risen 1%, you could be looking at the same monthly payment. AND during the time you wasted you were paying rent towards someone else’s mortgage (your landlord!). AND if you are a first time buyer you only have until December 31st to take advantage of the $8,000 tax credit.
Additionally, if you wait too long and “miss the boat”, there could be less inventory when you eventually decide you ARE ready – resulting in fewer options and a more expensive mortgage.
Your realtor should be able to refer you to a lender who can put together this type of break-even-analysis for your specific situation and help you determine if it is the right time for YOU. At Colorado Landmark, Realtors we work with a variety of excellent reputable local mortgage lenders – let us know how we can help!
Broker Associate, Colorado Landmark, Realtors
Twitter = @JenFlyColorado