Yesterday we talked about mortgage rates and we saw how they have risen over this year. We also learned that four major analysts, Fannie Mae, the National Association of Realtors, Freddie Mac, and the Mortgage Bankers Association are projecting that by the third quarter of 2014, interest rates will be around 5%.
Today let’s look at the potential cost of waiting a year to purchase a home. See here:
This chart shows that if someone purchased a $400,000 home last year at the interest rate of 3.5%, their monthly principal and interest would have been $1,796.18.
Now let’s say that person waited a year and decided to purchase a few months ago in June or July when interest rates were at 4.5% (they are higher now). At that point, the house would have cost the buyer $420,000, his interest rate would have been at 4.5%, and his monthly payment would have gone up to $2,128.08.
By waiting a year, this buyer would have to spend $20,000 more just to buy the house. His interest rate would be a full 1% higher than last year, and he’d be paying more every month– a total of $331.90 more! That’s a substantial amount of money a month.
To add to this, the numbers shown in the chart represent this summer, when interest rates were 4.5%. Now we are around 4.7. This buyer would be paying EVEN more if he bought the home today.
Things that make you go hmmm…
See you on Monday with lots more real estate news! Happy Weekend!