Should I buy A Home Now, Or Wait?
Posted by Jovani Frank
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On a dollar to dollar basis the market my discourage you as a buyer, but there's a few things you might not be taking into consideration. In the long run this market might actually save you money...
Market closing price is in average, slightly over asking, take an average home of $500k, and assume you'll be paying over asking price due to seller's market, let's say $510k.
Now calculate the cost of money if you were to finance a purchase under market value (in a buyer's market), let's say $490k at a rate of 4.10% vs. $510k at a rate of $2.6%.
You will realize that the impact of the interest rate offsets the increment in price hands down.
In a 30 year loan, with 20% down look at the financials...
For the $510 @ 2.6%
Total Payments: $784k
Total Principal + Interest: 588k
Total interest: 180k
Monthly: $2178
For the $490 @ 4.1%
Total Payments: $871k
Total Principal + Interest: $681k
Total interest: $289k.
Monthly: $2,420
A monthly of: $2,427 will allow you today to purchase a $570k home...we are talking about a delta of $80k!!! I don't see many deals in that price range closing $70k over asking...
A 2 minute calculation will save you a lot of money and may land you a good deal that you didn't expect.
Written by
Lions Gate Realty
Jovani Frank - The Realtor
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Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the HRIS.
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