Is now the right time to buy? Believed the be the question without an answer. We’ve written about home prices raising artificially due to increases in demand because of the Home Buyer Tax Credit. Is that a nationwide issue, or only in certain communities? If it is significant, how much exactly?
Interest rates on 30 year mortgages are going to steadily increase from now until the end of the year. Exactly how much? No one really knows. That increase, I believe, is much more important as far as keeping money in your pocket is. If decide to wait until after the expiration of the Tax Credit you will miss out on either $8,000 or $6,500 in tax credits as well as increases in interest rates.
How much does interest rate cost me? Well, that really depends on how much you borrow and for how long. With residential homes, most loans are 30 year and to get a good interest rate you are expected to put 20% down. So for a residential home, on a $250,000 loan a one percent variance in interest rate could mean an additional $70,000 over 30 years. That is quite a bit.
Does this mean I should buy now? Yes, and no. If you’ve found the home that is right for you, it may be beneficial to roll up your sleeves and make sure you’re able to go under contract before April 30th, and secure the best possible interest rate. If you haven’t done so, it could be a mistake as finding the right home for you is the most important part of home buying. This is a 30 year major financial commitment. It would be wise not to take the decision lightly.
Tags: First Time Home Buyer, Mortgage Rates, Real Estate, Tax Credit