With all the current noise about property prices falling, should I wait to buy?

Lately, a lot of buyers that are in search of their home is worried about “making a move” because of all the noise out there about the much exagerrated doom and gloom talks of the real estate market (well, things have been better in some areas than others).  But what a lot of people don’t pay attention to is that if you wait until the end of the recession and try to catch the market at the bottom per se, you are going to find that the Feds are not as willing to keep the rates as low as they are these days.  We need to understand the impact of financing and what that ultimately means with the ticket price of the home.  Here is a little bit of information that may help you understand why it may not pay to wait.

 Assuming you are buying a home with a 20% down and 30 year fixed-rate mortgage…

Today:

Home Price = $218,000, mortgage rate = 5.5%, monthly payment = $994.31

Assuming prices drop 10% sometime and interest rates go up a half point…

Home Price = $197,000, mortgage rate = 6%, monthly payment = $994.94

 Difference???  Not much.

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