It seems that every day we read conflicting information about what the real estate market is doing. One day sales are down and the next day they are up. One report tells you that prices are falling and the next report tells you that they have stabilized. It makes you wonder if there is ever a good time to jump into real estate. You are waiting for the perfect conditions when prices are at there lowest and interest rates are low.
If you have already calculated what you can afford in monthly payments, it doesn’t really matter if prices fall are if interest rates rise. What matters is what the combination of price and interest produces as a monthly payment. If price fall and interest rates rise, has waiting for the lowest price reduced your monthly payment?
The median price of homes in Mt. Pleasant, SC has been moving in the range of $214,000 to $229,000 in the last few years. Let’s pick $218,900 as a median price for a 4 bedroom, 2.5 baths home. Mortgage interest rates have been around 5% recently for a 30 year fixed rate mortgage. If you put down 20% your monthly principle and interest payment would be $940. What happens if the price decreases by 5% but interest rates go to 5.5%? Or if the price decreases by 10% but interest goes to 6%?
Price Down 5% Down 10%
$207,900 $197,010
Interest Rate 5.5% 6%
Monthly P/I $945 $945
While the price of the home decreased, your monthly payment changed by less than $5.00!
There are great homes available for you and your family. Interest rates will rise. Why are you waiting? Call me for more information.