Brittany Simonelli

I realize this is an old question, but I am sure this question is on most buyer's minds. You really should consider the interest rates and the ever changing mortgage market. Rates are heading up and there will likely never be another time when prices are low and rates are the lowest they have ever been! None of us have a crystal ball and know what next year will bring, however if you can afford to purchase a home right now, it is certainly a buyers market. Consider the dollars and cents:

If there is a 1/2% point increase from 4.5% to 5% interest on a $250,000 30 yr loan will cost you $27,000 over the life of the loan. Imagine if rates go up even more in the next year to let's say 6%, that is $83,250 over the life of the same 30 yr loan.

That same $250,000 home would have cost $1429/month principal and interest with todays rates at 4.5%, at 6% its $1661/month.

My point is that as next fall you will not be able to afford the same house you can now. You will need to decrease your purchase price range to make up the difference in the rate. Your $250,000 budget becomes a $215,000 budget if the rates go to 6%. The prices would need to drop 14% over the next year to make up the difference.

Home prices in my area have been trending upward, as most areas across the country. - Thu Dec 2, 2010