I have clients tell me everyday.....Michael, I am going to wait until the market bottoms to "Buy". While that thought may be on the minds of many consumers, the possibility of a significant drop in home price coupled with a terrific downward trend in mortgage interest rates is rather remote.
The real question becomes...."Can You Afford to Purchase if Prices or Interest Rates Rise?????".
Potential buyers and investors have given considerable thought to both housing prices and interest rates recently for two reasons: First, they have been intrigued by comments from national economists about statistics supplied by the U.S. Census Bureau and Department of Housing and Urban Development that showed a 10.2 percent drop in the rate of new single-family home sales between July 2006 and July 2007. Second, mortgage money for many homes will be far more difficult (and possibly more expensive) to obtain, given the subprime fallout and reports that borrowers in the "Jumbo" category (loan amounts greater than $417,000) were facing increased scrutiny.
The idea of "Saving My Money Until Home Prices Come Down" has probably become a contradiction in terms - at least for the forseeable future. Yes, housing is cyclical but it usally does not go backward for very long, if at all. The additional money you "May Save" now, probably "Will Not" offset the potential appreciation or the fatter monthly payment that "Could" result "If" interest rates "Rise".
For instance, if a $250,000 home appreciated 5 percent in the next year, could you sock away an extra $12,500 in after-tax savings to counter that gain???......maybe not. This also "Does Not" take into consideration additional "Tax Savings" from the mortgage-interest deduction. Or, if the market remains "Flat" and "Mortgage Interest Rates Rise", will you still even be to "Qualify" for the home of your choice.
Folks....you have alot to consider......don't shoot yourself in the foot. You may find yourself saving on the "Front-End" only to lose it on the "Back-End.
Take Care & God Bless....See You Next Time!
Michael Patterson
Re/Max Gold Realty
Direct: 301-785-0893
Email: michaelpatterson@remax.net
http://www.annapolis-maryland-realestate.com/
http://www.easternshorehomehunter.com/
http://www.maryland-waterfront-realestate.com/
Monday, October 8, 2007
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