If you're like many people I talk with, you'd really like to buy a new home.  Your family is getting too big (or small) for the present place.  You'd like a view, or a bigger yard, or a shorter commute, or a different school district. Or (bigger still) you're tired of lighting a match to rent money every month.  

 

One person told me last week she is looking for a new home because she wants "new neighbors".  That's sad, but whatever the reason, many people tell me they don't want to buy now because the price might go down next year.  It may, but the other factor that impacts your decision is mortgage rates, which are unlikely to stay at the current historic lows for much longer.   

 

Windermere Mortgage Branch Manager Mark Boeck gave me this simple example:  Suppose the home you'd really like to buy today is $350,000. With a 95% loan at 4.5% (that's the 30-yr. fixed rate as of 7-27-11) the payment = $1,685. 

 

Now suppose you wait a year and the price actually has fallen 5% (a pretty big assumption) BUT by then mortgage rates are 6.5% (which not too long ago we thought was a pretty good rate).  Now you buy for only $332,500, with the same 95% loan at 6.5% and your payment has jumped $312, to $1,997.  That $312/mo "eats up" your $17,500 purchase savings in just 56 months.  After that, it's costing you $3,744 every year. 

 

Here's the worst case of all.  Suppose home prices DON'T go down 5% (or at all) and mortgage rates DO go up?   Now the 95% loan on the $350,000 home has a $2,102 payment and you're spending over $5,000 extra every year.

 

So it's clear there's a pretty big risk in waiting.  An easy to use calculator that will let you work with whatever prices and rates you'd like is right here on my web site under the "Buyer-Seller Guides" tab, or just click here

 

Mark Boeck and I can do even more for you than that calculator.  He's at MBoeck@Windermere.com or 503.497.5367.  I'm at DaveSutton@Windermere.com or call or text 503.505.9722

 

So now you're waiting because why?