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Deadly Buyer Mistates

To avoid deadly buyer mistakes we need to study interest rates. Currently interest rates continue to stay low, and this years housing prices have stabilized, making now an excellent time to purchase a home. I recently had a chance to speak with several leading mortgage lenders in the valley, and all of them agree that they expect mortgage rates to raise a full point by the end of next summer or early winter. Let me try to put this into a perspective that you can understand on what this would do to your monthly payment.

To simplify things, let’s use a $200k loan at 4% interest for 30 years. Your monthly payment (Principal and Interest) would be $955.00 a month.  Using that same loan amount but with a point higher interest (5%), Your monthly loan payment would jump almost $120.00 to $1074.00 a month.  So if you currently qualify for a $955.00 monthly payment with interest rates at 4%, or a $200k loan, after rates increase to possibly 5%, to stay within your monthly budget of $955.00 a month, your loan qualification would drop to $178k. In essence by waiting to purchase a home, you will have lost $22,000 in purchasing power.

$41 Thousand in Lost Equity

$41 thousand  in lost equity is the average amount renters  in the Boise / Meridian market lost by continuing to rent, rather than purchasing a home in 2014. How you ask? In 2014 the average 3 bedroom 2 bath home sold for an average of $175 K. Since then home prices have steadily climbed in value to a current average of $216 K.  This equates to an annual increase of 12%. You would be hard pressed to find any other investment that can generate that kind of return and I’m pretty positive you would like to have and additional 41 thousand dollars in your investment portfolio.

 

 

http://www.livinidaho.com/mortgage-information/You can contact one of my Preferred Lenders:

Heidi Bateman

Academy Mortgage Loan officer 487414

Heidi.bateman@academymortgage.com

Direct  # 208-854-8414

Cell  # 208-353-1246

 

 

If you would like more information on the purchase of your first home or your next home, contact Brad Varland with Livinidaho Realty.