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THE PITFALL OF THE PRICING GAME

A lot of people seem to think waiting for home pricing to bottom out is the way to buy. But what happens to those low prices if interest rates change? Here's what you should consider.

Which do you think matters more when waiting for the right time to buy a home? Is it securing a low purchase price, or locking in a great financing rate?

Most buyers become focused on purchase price when they’re considering whether or not to buy. The question you often hear is the same: “Has the market bottomed out yet?” The idea of getting “the best deal” on a home is paramount to these price shoppers, and indeed for cash buyers, this may be the primary concern.

While negotiating a great price is an important part of the equation, the value of securing great financing terms cannot be overstated. The inherent risk in waiting for the market to hit bottom is that you’ll also miss out on the best interest rates available.

Imagine, for example, you’re waiting for homes to drop an additional X% in value. While you’re waiting, mortgage rates rise Y%. Sure, you might secure the home at a better purchase price, but what you’ll pay over the life of the loan will be significantly higher than buying when the market was more expensive (but rates were lower).

Perhaps the most punishing part of missing great financing is the net impact on your monthly payment. Even a 1% increase in your mortgage rate can end up costing as much as a brutal 10% increase in your monthly payment.

Buying a home is not like buying a nice coffee table. Price is not the sole concern. Given the complexities of price, property taxes, financing terms, and the larger tax implications of home ownership, it truly pays to consult with an agent who can help you weigh the pros and cons and help you make the right move.

I’m always happy to work with you to navigate the market, negotiate price, and put you in touch with mortgage professionals who will help you get the best rate possible. Contact me today and I can help you explore your options: valeriemcconville@realtyexecutives.com

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