Waiting for the bottom of the housing market can be very tricky and truth be told when you find it- Well chances are very high that you missed it and it is on the way back up- I wanted to leave and example of what waiting on the fence may cost you in the end. The market here in Idaho is still rocky in cities such as- Boise, Eagle, Meridian, Nampa, Caldwell, Kuna, Star and Middleton. Below is just an example of how interest rates compare to purchasing power. 208-353-7131 or josh@homeswithjosh.com
Let’s say you were going to take out a $200,000 30-year-fixed-rate mortgage in November of 2010. At that time, interest rates were 4.17% (as per Freddie Mac). Your principle and interest payment would have come to $974.54. According to the most recent report from Case Shiller house prices fell 3.9% in the 4th quarter of 2010. The most recent report from the Federal Housing Finance Agency shows a 0.8% fall in prices. Let’s use the larger percentage decrease: 3.9%.
For the sake of keeping the math simple, we will now say you can get the same house with a $192,000 mortgage (4% discount from November price). Interest rates are now 4.95% (as per Freddie Mac).
Your principle and interest payment would now be $1,024.84.
By waiting to pay less for the PRICE of the house, the COST increased over $50 a month. That adds up to more than $600 a year and over $18,000 over the life of the loan.
