May 19, 2011

Buy Now Vs Buy Later

If your waiting or the market to decline some more before buying that new home, you might also want to consider what effect the interest rates will have on your payment.

Take a look at this scenario for something to think about.

If you're sitting on the fence and thinking about whether to buy a house now or wait and see if the market keeps declining this might interest you. You see even as the market goes down and interest rates rise you may save money by buying now. Let's look at somebody buying a $300,000 home. Let's assume they're getting an FHA mortgage with 3% down payment. That would bring the loan amount to $291,000 if we use a 5% interest rate, for a 30 year loan your monthly payment for principal and interest would be $1,562, add taxes, insurance, and PMI which is mortgage insurance and your payment would be $2,062 a month. If you wait till the market drops so the price of that same home comes down $10,000 that make the sale price $290,000 for the same FHA loan at 3% down the loan amount would be $281,300 now let's assume the interest rate goes up 1% to 6%. Your payment then becomes $1,686 with taxes insurance and PMI the payment becomes $2,170. Interesting, buy now and you would save $124 month, over a five-year period it adds up to $7,440 and over the 30 year life of the mortgage you would save $44,640.

Just something to think about.

If you’d like any information or want to see any Bellingham Real Estate feel free to email me at or give me a call at 360-739-6981

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