Posted:Â 18 Nov 2013 04:00 AM PST
We have often talked about the difference between COST and PRICE. As a seller, you will be most concerned about â€˜short term priceâ€™ â€“ where home values are headed over the next six months. As a buyer, you must be concerned not about price but instead about the â€˜long term costâ€™ of the home. Let us explain.
Last month, theÂ Mortgage Bankers AssociationÂ (MBA), theÂ National Association of Realtors,Â Fannie MaeÂ andÂ Freddie MacÂ all projected that mortgage interest rates will increase by about one full percentage over the next twelve months. We also know that many experts are calling for home pricesÂ to also increase over the next year.
What Does This Mean to a Buyer?
Here is a simple demonstration of what impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 even if home prices donâ€™t increase: