Why It Might Be Cheaper To Buy Now

Found this great article in the Realtor magazine about why it maybe cheaper to buy this year, with interest rates going up, it is really something to think about. As always you can contact Lynn Nichols with any questions or check out my website at www.MarylandHomesbyLynn.com

Mortgage rates are nearing the 5 percent mark, prompting many home buyers to rush to take advantage of rates while they’re still low. 

“Most people agree it is only a matter of time before rates hit 5 percent,” Peter Grabel, a mortgage loan originator at Luxury Mortgage Corp. in Stamford, Conn., told realtor.com®. “The housing market has clearly turned the corner in most areas. I think a year from now, people will look back and realize that this was a great buying opportunity.”

Some forecasts show rates could edge even higher to 5.5 percent or even 6 percent in 2014. The Federal Reserve has announced that it will soon start tapering its $85 billion monthly bond-purchasing program, which is expected to send mortgage rates rising from recent record lows. 

Currently, 30-year fixed-rate mortgages are averaging 4.2 percent, according to Freddie Mac. 

In a recent blog post, realtor.com® illustrates the effect of rising mortgage rates on buyers’ pocketbooks: 

1. Example: A buyer gets a 30-year fixed-rate mortgage at a 5 percent interest rate on a $300,000 loan.
   Monthly payment: $1,610.46
   Total payment: $579,569.69
   Total interest: $279,769.69
2. Example: A buyer gets a 30-year fixed-rate mortgage at 6 percent interest rate on a $300,000 loan.
   Monthly payment = $1,798.65
   Total payment = $647,515.44
   Total interest = $347,515.44

The buyer with a 6 percent interest rate would pay about $67,746 more over the life of a loan than the buyer who was able to get an interest rate at 5 percent. 

Source: “Buy a Home Now or Pay More Later?” realtor.com® (Oct. 8, 2013)

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