Consider Cost, Not Just Price
Buying a Home?
As a seller, you will be most concerned about ‘short term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long term cost’ of the home.
The Mortgage Bankers Association (MBA), the National Association of Realtors (NAR) and Freddie Mac all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 5.3% over the next 12 months.
What Does This Mean as a Buyer?
Here is a simple demonstration of the impact an interest rate increase would have on the mortgage payment of a home selling for approximately $250,000 today if home prices appreciate by the 5.3% predicted by CoreLogic over the next twelve months: