Blog: Will it Pay to Play the Waiting Game?

With many experts saying that home prices have reached their lowest and there is nowhere to go but up, will it pay for you to wait to buy a new home? Let's look at the past and see what history tells us.

If you would have bought a $299,000 home at this time last year, with the interest rates at 4.58 percent, you would have had a P&I (principle and interest) payment of $1571.25. That same house, in July of this year, 1516.77. So, a little better, but not a huge savings overall.

But will it pay to continue to wait? 

Probably not. If you look at the forecasts for housing mortgage rates the experts say they are soon expected to start to rise. Forecasts are saying that the 30 year fixed rate mortgage could be up to six percent by 2013. So what does this do to your $299,000 home purchase? With a six percent interest rate your monthly payments would go from $1516 to $1792! While six percent is, historically, still a very low interest rate, compared to the eight or nine percent rates of the 90s and the 15-16 percent rates in the 80's, that's a big increase in your monthly payment.

And what if you have a house to sell? Wouldn't you want to wait for house prices to go up some so you can get more for your current home? This will only work if you are downsizing, but as you saw in my last blog, getting a bigger place is one of the main reasons people are buying. So you wait for your $200,000 townhouse to go up 10 percent before you buy, and you sell it for $220,000. But at the same time the $299,000 single family house that you want to buy has also gone up 10 percent. So now it will now cost you $328,900. So while you are getting $22,000 more for your townhouse, you are paying almost $29,000 more for your new single family home.

You could buy a lot of paint and furniture with $7000.

Now is a good time to buy a home.