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The Case Against Waiting to Buy
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"Finance costs will rise as the economy recovers,
so trying to time real estate might not pay off"
In February 2008, a notable TIME Magazine writer contributed a piece to the current issue explaining that if you are emotionally ready to be a homeowner, and have been waiting for "the perfect entry point (then) now is the time to get serious about buying - before an inevitable rise in interest rates wipes out your advantage." In short, the article claims that anything you might gain by a further fall in home prices could very well be offset by rising financing costs.
Presumably, if you are currently on the fence about buying today, your hope is that if you wait 6 months, or maybe a year from now, that prices will continue to fall and you'll save money, if you can just wait until the bottom of the market... The TIME article paints a different picture of the scenario.
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TODAY |
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COST IN 12 MONTHS? |
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$300,000
with 20% down on a
30 year fixed mortgage
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Typical Home Price |
$270,000
if prices drop an
additional 10%
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5.5%
current rates
after recent
declines
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Interest Rate |
6.5%
if rates jump a full
point as the
recession ends
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$1,362.69
priciple & interest
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Monthly Payment |
$1,365.27
principle & interest
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CONCLUSION:
If you waited a year to buy, you would
have saved nothing and spent a year living
someplace you'd rather not be.
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(Take a look at the Full Article here)
Sources: TIME Magazine and Lending Tree |
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