Is it a good time to buy?

Last week, Freddie Mac's survey indicated interest rates climbed a bit from the prior week. This week, I regret to say that they're reporting yet another rise for a second consecutive week.
:-(

But, despite those upward movements, mortgage rates are continuing to be extremely affordable and, to echo the words of Freddie Mac's Chief Economist, "...the outlook for the housing sector appears bright."
:-)


I'm often asked by prospective buyers whether or not to wait for prices to come down further before buying. There are several considerations including: your holding period and local market trends. However, one question that I usually like to begin with is, what if interest rates rise?

Consider this: a 1/2-point rise in interest rates, for example, can add as much as 5% to 10% to your monthly payments, depending on the type of loan. Translation: on a $500,000 home, that could mean as much as $120 to $160 a month if you wait for rates to rise. To keep the same monthly payments on an interest-only program after an interest rates bump of 1/2-point means that instead of targeting a $500,000 home you would now have to settle on the equivalent of a home priced at about $45,300 LESS.

Is it a good time to buy today? Rates are still largely under 6%. Absolutely I think it's a great time to buy!

There's a relevant article that came out recently in the Wall Street Journal (November 10th, "Renting vs. Buying..."). Here's the link: (Click here.)