Has the market reached the bottom?
If you are one of the many future home buyers who is waiting for the market to hit bottom before you buy, there is one thing that you are not considering—the rise in interest rates that is now occurring. In November of 2010 the average rate for a 30-year loan was 4.1%. In January of 2011 the interest rate was 4.7%. The interest rate for January 2012 is projected to be 5.1%. So, what happens to your buying power with the change in interest rates? Let’s take a look and see.
Buy a home for $300,000 with an interest rate of 4.1% and your monthly payment is $1,159.
Buy a home for $294,600 with an interest rate of 4.7% and your monthly payment is $1,222.
Buy a home for $276,924 with an interest rate of 5.1% and your monthly payment is $1,285.
Which payment would you rather have? Which house would you rather have?
The bottom of the market may be just around the corner, but your buying power is diminishing while you wait. So the question you need to ask yourself is: “How much buying power am I willing to lose before I buy?”
Home prices are down and interest rates are on the rise. How much longer are you going to wait?