I recently read a quote attributed to Donald Trump. He said "I'm pretty sure this is a great time to go out and buy a house. And if you do, in ten years you're going to look back and say, You know, I'm glad I listened to Donald Trump."
Sure prices could continue to drop. However interest rates may continue to rise. The result of dropping house values and rising interest rates is that a house could be worth less but cost more.
The monthly payment (Principal and Interest) on a loan of $225,000 with an interest rate of 4.7% is $1166.94. Should the interest rate climb a mere 3/4 of a point to 5.45% the monthly payment on that same $225,000 jumps to $1164.94. That is a $103.54 per month increase in the monthly payment. Don't pull out your calculator, the increase is just short of a 9% more per month.
If the maximum monthly mortgage payment a buyer qualifies for is $1164.00, and the mortgage rate increases from 4.7% to 5.45% they will now only qualify to borrow $206,000.
The point should be clear. Interest rates have a high impact on the cost of a home. With the above example, you would pay over $12,400 more over the course of ten years.
I am betting that home values will be far higher in ten years, so will interest rates.
Is now a great time to buy a home? Yes. To see all the homes for sale in two multiple listing services in Ocean and Monmouth Counties, visit www.riviierarealty.com.
Coldwell Banker Riviera Realty, Inc.