Why now is a good time to buy
January 6, 2009 – 10:24 amIf the financial predictions are correct, 2009 will be a tumultuous year for our economy. Duh! Who doesn’t know that. But here’s what you may not know. Analysts predict that prices will continue to fall slightly but interest rates are slated to increase.
From my personal analysis and from those who are smarter than me, it’s better for the average buyer to buy before the rates go up. Let me give you an example.
You fall in love with a 3 bedroom, 2 bath home in West Ashley, currently priced at $200,000.00. With your good credit (720 and up) you qualify for an interest rate of 5.5%. On a standard 30-year fixed mortgage (don’t even get me started on Interest Onlys or ARMs) your mortgage would be $1135.58 per month.
When that house price drops 10% as predicted to $180,000.00, the interest rates may be inversely effected and go up at least 1 point to 6.5%, meaning you would be paying $1137.72 for something that’s marketably less equitable. Sure, maybe it’s only a few dollars a month more, but those few dollars aren’t buying you anything real. You’re simply giving the mortgage company more profit.
Plus, you have to weigh the risk of waiting. When houses sit on the market, they have a nasty tendency of still including appliances that break down, need maintenance, etc. Just like a car, the longer they sit the more deferred maintenance they will experience.
I”ve gotten a lot of feedback from buyers about waiting out the process. If you’re doing it to increase your downpayment then by all means go for it. But if you’re doing it just to get a better deal, think again. The deal you get won’t be as sweet as it seems.
