Inventory of homes for sale is up, prices are down, and interest rates are near record lows. The end of summer means more sellers will be motivated to entertain offers below their asking price or for creative terms (hence, our FREE Sunday tour of free and clear homes in Seattle. See previous posts).
So should you buy now? or wait for prices to come down?
Well, here's what happens when mortgage rates rise, as they are expected to do in the near future:
What a difference an interest rate increase can make!
Sales price: $400,000
Loan amount: $320,000 (20% down = $80,000)
Mortgage rate: 4.50%
Mortgage payment: $1621.39
Total paid: $583,700.40
Now say home prices fall 10 percent over the next year or two, while mortgage rates rise from 4.50 percent to 6.00 percent, which isn't necessarily unlikely.
Sales price: $360,000
Loan amount: $288,000 (20% down = $72,000)
Mortgage rate: 6.00%
Mortgage payment: $1726.71
Total paid: $621,615.60
Hmmm...maybe it is time to buy after all....give me a call and I'll send you automatic email updates of homes that meet your buying criteria, as soon as they hit the market (or before!).