Did you know… It is a great time to buy your next home
Article by Brian Smith, Senior Loan Advisor of Movement Mortgage
The cost of waiting to buy a home continues to increase. In just 2013 alone, the cost of purchasing a home increased roughly 25% for buyers, as home prices surged between 12%-20% in most markets and mortgage rates increased from 3.25% to 4.5%, which resulted in a 13% increase in mortgage payments. Already in 2014, mortgage rates and home prices are continuing to increase.
It is important that buyers consider rising interest rates and rising home prices when thinking about the true cost of a home. Remember, cost is not determined by price alone but by price and AND mortgage rate. The longer a buyer waits, the higher the mortgage payment will be if rates and home prices continue to increase.
For example, let’s take a $250k home that a buyer can buy today with a 4.4% rate; the non-escrowed payment is $1,251 on a 30 year fixed loan.
But if home prices increase from $250k to $261,250 this time next year (which is just an annual increase in value of 4.5%), and rates increase to 5.3%, the monthly payment now increases to $1,450, a difference of $199 per month.
That means a buyer who waits a year to purchase a home, would pay an additional $71,578 in interest and payments over the life of the loan to purchase the same home.
Source: Brian Smith | Senior Loan Advisor | Movement Mortgage
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