Sept. 17, 2010

Why Buy Now? Interest Rates Matter, Too!

With speculation that Portland real estate prices may continue to fall, why is now the time to buy?

The sale price of a home is not the only driving force in your decision to purchase a home.  Interest rates and closing costs are a big part of the process.  Here are two scenarios which illustrate my point.

Example #1 :

  • Buyer A is looking at Portland homes priced at $312,500.  He wants the absolute lowest price on real estate so he waits until he thinks the prices are at the absolute bottom.   Let's say next summer prices are down 10% from where they are today and he buys for $281,250.  He just saved $31,250.   But the mortgage rates go up to 6% on 30-year fixed loans. He puts down 20%, borrows $225,000 and his monthly payment (not including MIP, taxes or insurance) is $1349.

Example #2:

  • Buyer B is also looking at Portland homes priced at $312,500. She finds a home she really likes and wants to purchase today.  She puts down 20% and obtains a loan for $250,000 at 4.25%.  Her monthly payment is only $1229, and she was able to move into her new home now.  She was able to save over $43,000 over the life of the 30-year loan.  That more than makes up for the price drop but, most importantly, she was living in her new home for a year, while enjoying the tax advantages and building equity.

Looking back to see if we have missed the best time to buy, think of this; if you were to buy Portland real estate back in March or April (when the tax credit was still in effect) of this year, you would have been paying approximately 6% for your loan. The figures would still be relatively the same as above.
Very low interest rates and low real estate prices will always beat out average interest rates and very low home prices, which is why now is the time to buy!

Thanks to Ginny Schider at the Real Estate Loan Company for helping me with these figures.

Click here for more information on Portland Real Estate!

Rich PeraltaRich Peralta is a real estate professional in the Portland Metro Area.

He can be reached at 503.961.2181 or by e-mail at rich.peralta@exprealty.com
Originally published on Lake Oswego Real Estate.

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