The two most often quoted constants in life are death and taxes. Two more things potential homeowners can anticipate in the near future are increases in housing prices and mortgage rates.
Interest rates on home loans have been kept artificially low for several years by the Federal Reserve in an effort to strengthen the economy. Policy is shifting to allow rates to seek their own natural level and that will surely result in higher mortgage costs. Rates on 30 year fixed mortgages are up over 1% from January 2013.
Foreclosure activity has declined, new home starts are up and prices have been increasing in the greater Wilmington area for fourteen months. Most experts agree the cost of housing is going higher. As an example of the impact on a monthly payment, if the sale price $250,000 goes up by 2% and the mortgage rate by 1% while a buyer is “sitting on the fence” making a decision, the payment increases more than $165.00 per month for the term of the mortgage. Even if you can afford the higher payments, what else might you do with that extra $165.00 a month? Invest for retirement? Buy a new sofa? Work on paying off the principal early? Save for a vacation?
Click here to calculate the cost of waiting to buy a home at your price point.
