I know a lot of you are on the fence on whether to buy now or wait to see if home prices continue to drop. While it’s still anyone’s guess what will happen with prices the rest of this year, one thing is certain….Loan Rates WILL climb. We are at rock bottom loan rates right now. Another unknown is how long they will stay this low.
Here’s an example:
A 30-year mortgage for $300,000 at 4.75% interest is a $1,565/month payment.
If the loan rates jumped to 6%, to pay the same monthly payment the mortgage amount needs to be $40,000 less. So if home prices dropped another 10-15% but the mortgage rate increased to 6%, it would be the same as if you purchased a home today at the lower mortgage rate.
Still need a crystal ball for some of this but it’s a given that the loan rate won’t stay this low forever.