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I think this definitely means "don't buy now unless you have to", and also implies "sell right now if you have to sell" .... so thats a really cool thing !!
I think it’s a gamble. If interest rates go up a lot you could price yourself out of the market.
If you buy later at higher interest you will have to refinance to get yourself out of the terrible rate. Add at least 15,000 to closing costs to refi.
So yeah, so 15-20K by buying next year. Get a higher payment for a couple of years until interest rates drop then buy yourself the rate you should have had if you bought the year before. You will be down money by then AND back to 30 years until your home is paid again.
15-20K by buying next year. Get a higher payment for a couple of years until interest rates drop then buy yourself the rate you should have had if you bought the year before. You will be down money by then AND back to 30 years until your home is paid again.
Not really as cool as it seems.
You will also be plus all the cash you gained by holding off... and ahead by the tax effect of paying more interest. Net-net it's a win.
I think it’s a gamble. If interest rates go up a lot you could price yourself out of the market.
If you buy later at higher interest you will have to refinance to get yourself out of the terrible rate. Add at least 15,000 to closing costs to refi.
So yeah, so 15-20K by buying next year. Get a higher payment for a couple of years until interest rates drop then buy yourself the rate you should have had if you bought the year before. You will be down money by then AND back to 30 years until your home is paid again.
Not really as cool as it seems.
I think its a gamble either way, even to think interest rates will drop after they shoot up and IF they shoot up in the near future (crystal ball ?) I mean whatever logic you have to support a rate increase now will be the same to prevent a drop in the rate in the next couple of years, if I had a decent downpayment now, its better to purchase a house at a lower price (means lower loan). It takes about 5 years to wipe out 20k from your principal. And if my house is worth less in a couple of years, then regardless of the interest rate, I cannot even re-finance, so you might be stuck in it for a long time and not just a couple of years.
No only that, if I had to sell after say 6-7 years (for whatever reason) 20k may be the key to breaking even on the sale after the 6% commissions....
Atleast for the sellers who have to sell soon its a clear message.... SELL SELL SELL and SELL now !!
I think its a gamble either way, even to think interest rates will drop after they shoot up (crystal ball ?), if I had a decent downpayment now, its better to purchase a house at a lower price (means lower loan). It takes about 5 years to wipe out 20k from your principal. And if my house is worth less in a couple of years, then regardless of the interest rate, I cannot even re-finance, so you might be stuck in it for a long time and not just a couple of years.
No only that, if I had to sell after say 6-7 years (for whatever reason) 20k may be the key to breaking even on the sale after the 6% commissions....
Atleast for the sellers who have to sell soon its a clear message.... SELL SELL SELL and SELL now !!
A crystal ball maybe, but many experts predict a rise in interest rates soon. The low rates are being used to stabilize the market. As soon as we hit bottom and all this government money has been spent we run the risk of inflation and repeating the bubble all over again. This will be combated with increasing interest rates. It will happen, its only a matter of when.
No matter what, if you are buying a home today or next year you need to plan on being in it for at least 5 years to even think about making a profit on it.
I would say yes, Sell now. I would also say if you can afford it, why take the chance, home prices are down and interest is affordable, buy.
The old adage in the stock market is to try to avoid catching a falling knife. I think there is still a fair amount of downward movement heading our way in the local real estate market. I don't think you'll miss the boat at all by waiting things out for another year or so. The signs will be there when a bottom is being put in and you should have time to respond at that point.
*Full disclosure - I am currently a homeowner - purchased in Jan 2006.
The old adage in the stock market is to try to avoid catching a falling knife. I think there is still a fair amount of downward movement heading our way in the local real estate market. I don't think you'll miss the boat at all by waiting things out for another year or so. The signs will be there when a bottom is being put in and you should have time to respond at that point.
*Full disclosure - I am currently a homeowner - purchased in Jan 2006.
A year at most. Its all about timing at this point. Wait to long and you could find yourself priced out of the market due to high interest rates. Wait to little and you could lose about 15-20K IF you buy when things reach full bottom and BEFORE interest rates go up.
If you buy in 20K cheaper and have to Refi in 2-3 years and pay 15K to get it done all the while paying 2-3% more interest id say you pretty much broke even.
I think it’s a gamble. If interest rates go up a lot you could price yourself out of the market.
If you buy later at higher interest you will have to refinance to get yourself out of the terrible rate. Add at least 15,000 to closing costs to refi.
So yeah, so 15-20K by buying next year. Get a higher payment for a couple of years until interest rates drop then buy yourself the rate you should have had if you bought the year before. You will be down money by then AND back to 30 years until your home is paid again.
Not really as cool as it seems.
Oh my god, enough with the lies!! You will not be paying a higher payment!!!
If you have a 350K mortgage and buy it at 5.5%, you're payment is $1987.26
If that same house loses 10%, and the interest rate goes up to around 6.3%, you have the same payment. Your belief is based on the fallacy that the prices will stay up while interest rates rise. Who is going to buy?
And of course, if you had money saved for a down payment, that money now pays down more initial principal, so your payment will actually be less. It'd be more likely that the rate would have to go up to 6.5% to offset the drop.
And the contention is, that if interest rates go much higher than that, prices will go down more than 10% because of sheer affordability issues. Someone either can or can't afford $2,000 a month. Your contention is, "well, if that payment goes up to $2,500, those people will end up paying more."
No, they won't pay more!!! They can't. You either can or can't get a mortgage that costs you $2,500. The bank can't make up loans anymore to shove you into that overpriced house. The bubble is over. You can't WISH house prices to go up. They can't go up until someone can afford them. Considering the economic situation, people are not able to afford them. People can't just go out, pick a house, and have the bank create a financial instrument to get them in the house. That's what was going on prior to the bubble burst, and it's what your entire theory is based on..that people are forced to buy houses for whatever people are selling them for. This is completely false post bubble. They buy houses they can afford. If they can't afford, they simply don't buy. When the average buyer can't afford the average house, prices come down or your house doesn't sell.
They'll buy someplace else or rent if they stay here.
Do you really think that if interest rates go up to 8% people who could afford 2K a month mortgages will now pay 3k a month? Or that if they leave, a new crop of upper middle class will move her to pay $3K a month? You have to be kidding.
A year at most. Its all about timing at this point. Wait to long and you could find yourself priced out of the market due to high interest rates.
Wrong - with higher rates come lower prices.
Quote:
Originally Posted by propain
If you buy in 20K cheaper and have to Refi in 2-3 years and pay 15K to get it done all the while paying 2-3% more interest id say you pretty much broke even.
Who says re-fi in 2-3 years? In the meantime, the higher interest is deducted from your tax liability. In 2-3 years you break even, do it after 5 years and you've done extremely well for yourself like most people (including me) who bought in the early 2000's and refi'd with lower rates. It was a windfall for me.
If interest rates go up 1.5 points, you will see more than a 15% drop. You are going to see a 10% drop even without any interest rate hikes.
Your own post states that it's better to buy with a 1.5% rate increase after a 15% drop. Do you even read your own posts?
If interest rates go up to 8%, you are going to lose a boatload on your house, buddy.
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6.5% would be a low increase.
