Homebuyers have been reaping rewards of a struggling economy since the recession. Housing prices and interest rates dropped to historic lows in 2009, and have not fully recovered in the years that followed.
Like all good things—if you’re a homebuyer, that is—the bargain is coming to an end.
At this writing, the rate for a 30-year, fixed rate mortgage is 4.01%. Three months ago, it was 3.579%. On the plus side, the current rate matches where we were in January 2016. We had a dip this year, but it’s not expected to happen again.
When you compare these numbers with the significantly higher rates in the early 2000s (approximately 6.3%), does this small change make enough difference to push the procrastinators off the fence?
Let’s look at the price of procrastination as mortgage rates are rising.
Purchase price: $295,000
30-year FRM
At 3.6% $1,341 per month
At 4.6% $1,512 per month
Over the life of the loan, paying one percent more for your mortgage will cost you an additional $61,560.
Housing prices are rising. The Federal Housing Finance Agency (FHFA) House Price Index posted a 6% increase in the past twelve months.
Based on the above scenario, you’ll spend $171 every month because you decided to wait. Are you getting more value? No. In fact, while you’re waiting, the price of your new home is increasing, along with the mortgage rate. That home you could have bought for $295,000 is probably going to cost you about $312,000 in six months or so.
If you don’t mind spending more money for a home, you can continue to wait, but be prepared to tack on the price of procrastination to your budget.
At Smith Family Homes, we believe in building more than a house. We’re building a place to host memories with friends and family.
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152 Thunderbird Dr. Ste 207
Richmond Hill, GA 31324
Prices, promotions, incentives, features, options, amenities, floor plans, elevations, designs, materials, and dimensions are subject to change without notice. Square footage and dimensions are estimated and may vary in actual construction. Actual position of house on lot will be determined by the site plan and plot plan. Floor plans, interiors and elevations are artist's conception or model renderings and are not intended to show specific detailing. Community improvements and recreational features and amenities described are based upon current development plans which are subject to change and which are under no obligation to be completed. Community Association fees may be required. Options shown not available in all locations, selections in photos shown may no longer be available or offered, can change at anytime - See agent for details.
