As a home buyer, you are probably wondering if this is the right time to buy a home. With interest rates rising, some think housing prices may go down. I personally do not think they will go down much and other experts agree with me, but let's say that home prices do go down by 5% in a year.
When is the right time to buy? Should you buy now, while interest rates are still low compared to what they will be in the coming years? Or do you wait for another year or so hoping housing prices will be a bit lower?
There is a balance between interest rates and housing prices, even if home values fall, the mortgage may still be more 
expensive.
If you buy a home right now for $300,000 at a 5% interest rate, you will be paying $2,145 per month on your mortgage. If you decide to wait a year in hopes that home prices will go down (though most people do not feel like they will go down), and you buy the same property for $285,000 at 6.5%, you will pay $2,315 per month for your mortgage. You will pay an 8% higher monthly payment per month. Over the life of a 30 year loan, you will pay $61,200 more for the house that you waited to buy for $15,0000 less but at a higher interest rate. Over 10 years, you pay $20,400 more in mortgage payments for the loan that you would get 1 year from now.
Economist predict that appreciation for home will slow from 20% right now to more normal rates (3-4% per year) as interest rates go up, but they are not predicting that homes will loose value with the high demand for homes that we have right now. When we look at the data above, it is better to buy now than wait for the potential of a lower priced home.
Call Nathan Walldorf at 423-544-7700 to navigate your next home purchase.