Posted by: Bill Cady | December 15, 2014

Are you planning to buy a home in Idaho sometime in the next two years?

I attended the Idaho real estate housing summit sponsored by our Ada County Association of REALTORS® .  Our Keynote speaker was Lawrence Yun: Lawrence Yun is Chief Economist and Senior Vice President of Research at the National Association of REALTORS®.  Part of his presentation focused on the next two years and what he saw as future interest rates. In the year 2015 we will see interest rates rise 5%, and in 2016 rates will go over 6%.

Now the question is: do you really want to wait two years to purchase your home?

If you want your payment to be under $1200 per month today you can purchase a home around $200,000. Two years from now with interest rates near 6% to keep your payment around $1200 per month, the home’s value would be $175,000 or less.

If you purchase a home in today’s market with interest rates at 4.5% on a 30 year fixed rate mortgage the principal and interest payment on a $200,000 home would be approximately 1010.00 plus taxes and insurance of somewhere around $150.00 that would make your current payment approximately $1160.00 dollars per month.

Now if you wait two more years and plan to purchase the same $200,000 home but interest rates have increased to say 6%, the principal and interest payment would now be $1194.00 plus taxes and insurance let’s use $150.00 again your payment on that same $200.000 home would be $1344.00 dollars per month.

The difference in the life of the loans $200,000 now at 4.5% or wait two years and 6% interest rate $ 66,240   184.00 x 12 x 30yrs = 66,240

Buy now ? Buy Later?

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