Is Now the Right Time to Buy?

You probably won't be surprised to hear that I believe the answer to that question is "yes." Following is the argument put forth by Senior Loan Officer, David Todd, of Northwest Mortgage Alliance.

Real Estate Professionals today are often asked: "Should I buy now or
will the prices keep dropping?" While none of us has the magic answer, part of
this question can be addressed in terms of Interest Rate.

On May 2nd, 2008 you could get a 30 Year Fixed Rate at 5.5%. On July 2nd , 2008 the
30 Year Fixed Rate was 6.375%.
How does this rate increase translate for a homebuyer? Take a look at the examples below:

Example 1:
May 2nd , 2008 offer accepted at $400,000
Rate locked at 5.5%
200/o down payment
Loan amount of $320,000
Principle and interest payment:
$1,816.92

Example 2:
July 2nd , 2008 offer accepted at $385,000
Rate locked at 6.5%
20% down payment
Loan amount of $308,000
Principle and interest payment:
$1,946.77

By waiting for a lower price, the borrower’s monthly payments increased by $129.84 per month, $1,558.19 per year or $46,745.82 over the life of the loan.

There is a strong consensus among economists that rates will continue to rise. The best time to buy varies from buyer to buyer. However, if a consumer is trying to time the market, rising rates make the argument clear. Going by the numbers, now IS the time to buy.