Homeownership Costs on the Rise – Be Wise

If you have followed the news lately, you may have heard that mortgage rates are on the rise. In fact, Since November of 2010, rates have gone up nearly 1%. An increase like this seems to affect your monthly payment on the surface, but it actually has a much deeper impact. Check this out:

Compare a $300,000 mortgage’s long-term cost over the last 3 months:

• November 11 : $528,649 to carry the loan to term
• February 10 : $585,172 to carry the loan to term

That’s a $56,500 difference in cost — a 10.6% increase over the long-term life of a loan.

The lesson to take from this is buy when the cost is right. You make your money going into a transaction. If you purchased a home in November, then you have come out ahead of those folks buying today even if they get a better price for the same house.

Don’t sit on the fence and wait for home prices to dip lower or wait for a reduction in price of a house that has been on the market for 120 days. Buy now! Knowing that waiting will only cause your interest payments to be higher and that cost will be much more than the potential price reduction.