Buy a Home Now or Pay More Later? With mortgage rates creeping up toward 5% as 2013 draws to a close, potential home buyers have some decisions to make — and soon. A laundry list of economic issues, including inflation, consumer credit, and rising home prices has the U.S. housing market on the way to making a clean break from the days of the 3.50%, 30-year fixed-rate mortgage for the foreseeable future. The danger for potential homebuyers isn’t that mortgage rates are nearing 5.00%; the real threat is that rates could go higher, to 5.50% or even 6.00% in 2014. Think of it this way: Buyer A snares a $300,000 fixed-rate, 30-year mortgage at a 5.00% interest rate, with the following payments: • Monthly payment = $1,610.46 • Total payment = $579,569.69 • Total interest = $279,769.69 Buyer B grabs a $300,000 fixed-rate, 30-year mortgage, at a 6.00% interest rate, with the following payments: • Monthly payment = $1,798.65 • Total payment = $647,515.44 • Total interest = $347,515.44 Buyer B will pay about $67,746 more for having a 6% mortgage rate, compared to a 5% rate, over the life of the loan. While rates have been in decline the last few weeks, the big picture shows a general rise in rates to between 4.00% and 4.50% before the end of 2013. Which raises this question for potential homebuyers: Should you jump off the fence now, with rates still fairly reasonable, or do you wait and risk having to deal with mortgage rates as high as 5.00% or 6.00% in 6-to-12 months? - Realtor, October 8, 2013
Posted on: Wed, 23 Oct 2013 16:29:06 +0000
Trending Topics
Recently Viewed Topics
© 2015