Why Waiting For The Bottom of The Housing Market Will Cost You Money

Some people believe buying a house when it is at the bottom of the market is the best option, however that is indeed false. When home prices are low like they are now in most American cities, it is tempting to see how low they can go. What you have to realize is when buying a home you have to balance a low price bottom of the market with a low interest rate. Rates are at historic lows, which means they will rise soon enough.

So if interest rates are on the rise, but the market is still sinking, waiting another six months for it to sink even lower could cost you in the long run.

For example, if you buy a house for $450,000 and put down 20%, you will have a mortgage totaling $360,000. If your low interest rate is at 5%, your monthly mortgage payment plus principal would be $1,932.56. However, if you wait six more months an hope to get the house $10,000 cheaper at $440,000, thus with a mortgage of $352,000. By this time, the interest rate might have risen to 6%, now your monthly payment is $2,110.41. Costing you an extra $72,000 over the life of the loan.

In a buyers market there are more opportunities for negotiation. Taking the plunge and making an offer is an important step. If you come across a house you absolutely love, put your bid in and be willing to negotiate. Once a home is priced to what the current market will bear, buyers will make an offer and the house will sell no matter which way the market is headed. My point is don't let the house you love wait another six months for the market to sink. Another buyer might step in to make the offer.

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