In Monmouth County New Jersey, the prices of homes have dropped and may drop a bit more. The media would have you think that the real estate market is BAD. Well it in not bad, it is a great time to buy. Prices have become much more affordable and interest rates are still at historic lows. The predictions are that rates will start to rise soon. So, let’s look at buying now vs. waiting a year.
Let’s say you can buy the house you want today for $400,000, you have a 20% down payment ($80,000) and you can get a loan at 6%. Your mortgage amount would be $320,000 and your payment would be $1919.
You feel that the price of the houses will go down, so you wait. Say a year from now the price goes down by 4%, which brings our example house down to $384,000. You put the same $80,000 down and your mortgage will be $304,000. But rates have risen and you get 6.5%, your payment is now $1921. You will actually be paying a higher payment for the same house that you could have moved into a year ago.
Wait another year and it is even worse. A rise in interest rate always makes a bigger difference in your payment than price.
So don’t wait, buy now. Your new home is waiting for you.