Date Archives: March 2011

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.

Jim Joeriman

General Manager

Coldwell Banker Riviera Realty, Inc.

Mailto: GM@RivieraRealty.com