Buying Now VS Waiting ~ pro’s and con’s
The chart below may look foreign to you. PLEASE contact me if you don’t understand–you need to fully understand this graph. I will be glad to explain in person, by phone, by email. Below is based on $180,000 loan amount –
- If you bought today with a rate of 5% your payment would be $966 before taxes and insurance
- If house values went down 10% and rates go back up to 6% (the average for 30 year fixed loans) the payment would be $971 before taxes and insurance.
- If house values didn’t appreciate over next 12 months and rates go back up to 6%, the payment would be $1,079 before taxes and insurance.
- If house does appreciate (which it will, appears market is stabilizing, especially in price range below 400k) and values go up 5% and rates go back up to 6% which is 30 yr fix average the payment would be $1,079 before taxes and insurance.
Bottom line…Historically low rates, Home prices at 2004/2005 levels, now is the time to buy.
Other items to consider:
- $8,000 tax credit if you’re in contract by April 30th and closed by June 30th. You can amend your 2009 tax return and get an $8,000 check back.
- Standard interest write off – Check with your CPA for exact amount. It’s based on your income / estimated interest paid on the $180k loan amount you should receive $2,000 to $3,000 back at end of year.
- If you’re a 1st time buyer you qualify for an additional tax credit “MCC program“, this is offered through WSHFC – again, based on your income / sale price this will be $2,000 to $2,500
- Down payment assistance available up to $10,000
- No house payment for 30 to 59 days
Once you take into account the tax savings $4,000 to $5,500, your actual payment once you receive the refund is $333 to $458 less per month. Granted you don’t receive this until the beginning of next year, unless you amend your W4 withholding you can start receiving right away.
| Interest Rate Vs. Price Changes | ||||||
| Original Loan | $ 180,000.00 | |||||
| Price Change |
0% |
-5% |
-10% |
-15% |
-20% |
|
| Loan Amount | $ 180,000.00 | $ 171,000.00 | $ 162,000.00 | $ 153,000.00 | $ 144,000.00 | |
| Interest Rate | Monthly Payment | |||||
|
4.000% |
$859.35 |
$816.38 |
$773.41 |
$730.45 |
$687.48 |
|
|
4.500% |
$912.03 |
$866.43 |
$820.83 |
$775.23 |
$729.63 |
|
|
5.000% |
$966.28 |
$917.96 |
$869.65 |
$821.34 |
$773.02 |
|
|
5.500% |
$1,022.02 |
$970.92 |
$919.82 |
$868.72 |
$817.62 |
|
|
6.000% |
$1,079.19 |
$1,025.23 |
$971.27 |
$917.31 |
$863.35 |
|
|
6.500% |
$1,137.72 |
$1,080.84 |
$1,023.95 |
$967.06 |
$910.18 |
|
|
7.000% |
$1,197.54 |
$1,137.67 |
$1,077.79 |
$1,017.91 |
$958.04 |
|
|
7.500% |
$1,258.59 |
$1,195.66 |
$1,132.73 |
$1,069.80 |
$1,006.87 |
|
|
8.000% |
$1,320.78 |
$1,254.74 |
$1,188.70 |
$1,122.66 |
$1,056.62 |
|
( *this is for illustrations purposes only, rates and payments subject to change…had to put the disclaimer in there;)
Kudos to K. Carlson of ARG for the compilation