Q for all the real estate experts (mortgage, refinance)
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Would you....
Buy a house this summer (by the skin of your teeth) and grab these excellent interest rates ....
OR
save for a year, buy a house next spring with a nicer financial cushion, but risk a higher interest rate?
I am assuming the cost of housing will be the same next spring but I am concerned that interest rates might be back up to 6%. WHat would you do?
As for the tax incentives, they do not apply for us since we make over 150,000 (which I believe is the cap).
I guess I am afraid of losing out on this "good time to buy"...
All things being equal, buy the house at a lower price. (Most real estate agents are going to tell you to buy now, they need business).
So for instance, if you buy a house and can afford a payment of 2,000 per month..you get to that payment with (completely made up) with a 300K house price and one interest rate, or a 250K price for the same house and higher interest rate..take the 250K house. There is more chance for appreciation with the lower price, you can more easily pay down principal with extra payments, if you have to bail out you won't be as stuck with a depreciated asset, etc. Get the price as low as possible. Wait. Take the money you've saved while waiting and knock off more principal up front via downpayment.
Would you....
Buy a house this summer (by the skin of your teeth) and grab these excellent interest rates ....
OR
save for a year, buy a house next spring with a nicer financial cushion, but risk a higher interest rate?
I am assuming the cost of housing will be the same next spring but I am concerned that interest rates might be back up to 6%. WHat would you do?
As for the tax incentives, they do not apply for us since we make over 150,000 (which I believe is the cap).
I guess I am afraid of losing out on this "good time to buy"...
FYI on the cap, there is a phase-out range of $20,000; up to $150,000 it's the full $8,000 credit, anywhere between $150,001 and $170,000 the amount declines.
Buy now. Interest rates are forever, unless you pay a lot of money to reduce them if rates come down in the future. For example, $300 per month over a 30 year mortgage = $108,000 (I'm using $300 as an example...it could be more or less depending on what happens to rates).
House prices would have to drop much further to make up for an increase in interest rates.
The difference between 4% and 7% on your monthly payment is pretty huge.
Buy now. Interest rates are forever, unless you pay a lot of money to reduce them if rates come down in the future. For example, $300 per month over a 30 year mortgage = $108,000 (I'm using $300 as an example...it could be more or less depending on what happens to rates).
House prices would have to drop much further to make up for an increase in interest rates.
The difference between 4% and 7% on your monthly payment is pretty huge.
How much do you think housing prices will plummet if interest rates were to rocket up to 7%? Enough to make up the difference.
How much do you think housing prices will plummet if interest rates were to rocket up to 7%? Enough to make up the difference.
I don't think housing prices will plummet at all if rates hit 7%. Not sure why you think rising interest rates would bring prices down, nor do I understand how 7% would be a "Rocket". It's a reasonable rate for a mortgage if you look at history. 3% difference on a mortgage payment is huge though and I would grab the lower rate. Just my opinion. House prices would have to drop quite a bit to make up the difference and I do not believe they will.
I don't think housing prices will plummet at all if rates hit 7%. Not sure why you think rising interest rates would bring prices down, nor do I understand how 7% would be a "Rocket". It's a reasonable rate for a mortgage if you look at history. 3% difference on a mortgage payment is huge though and I would grab the lower rate. Just my opinion. House prices would have to drop quite a bit to make up the difference and I do not believe they will.
Because they would make already expensive mortgage payments un-affordable, and therefore you'd have less qualified buyers, and therefore if you really need to sell, you'll have to take less.
Because they would make already expensive mortgage payments un-affordable, and therefore you'd have less qualified buyers, and therefore if you really need to sell, you'll have to take less.
There is no harm to shop around to see whether there is something that you like and it is fairly priced. But there is absolutely no reason to hurry up just looking at the low rates. Keep in mind the following:
i) There is no sign that rates will increase any soon, but every market indicator suggests prices will go further down.
ii) Very few people live in their homes for 30 years. Unless you plan to do so, interest rates only affect your payments during the time period you stay. Price, however, determines your equity once you want to sell and move on.
iii) You always have the option to refinance, or better yet, pay early. You cannot renegotiate the price though.
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