Just because interest rates have risen to what are more typical rates, doesn’t mean that you should give up on buying a home. In fact, this fall might just be the right time for you to make that purchase. These past few months of bidding wars and buyers willing to pay well above market and appraised value have been a whirlwind and very unusual. Being in the real estate business for a few decades now, it is certainly not something that happens on a regular basis. Just because some of these buyers were able to lock in low interest rates doesn’t necessarily mean they ended up saving all that much money, especially if they paid above market or opted to remove a home inspection contingency only to find that the home has several issues that will require a large capital expense to repair.

Consider this:

In both cases presented, the payments were based upon 30-year mortgages with a 20% down payment.

Scenario 1 – You purchased a home for $350,000. At the time, this price was above market due to the buying frenzy. You secure a 3.5% interest rate, resulting in a monthly principal and interest payment of approximately $1,260.

Scenario 2 – You purchased the same home today for $300,000, a value more in line with historical market prices for this property. You secure a 6% interest rate, resulting in a monthly principal and interest payment of approximately $1,440.

Yes, Scenario 2 is roughly $180 more per month, but when you consider that you aren’t starting with a loan based on a home above market value, you aren’t starting with negative equity, which makes it hard to recoup your money unless you plan on staying in the home throughout the life of the loan. In 2020, the National Associate of Realtors stated that the average American stays in their home about 13 years. This is less than half the life of the loan! In addition, the real estate market has historically shown ups and downs in interest rates giving you a chance to refinance when interest rates go down.

This fall might just be the right time for you. Give Stutesman Action Realty a call today to see the many homes available, 833.286.8400.

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