I was talking to friend today and he was not sure if now was the time to buy. He was certain prices were going to fall. Now he may be correct, but we wanted to see if his waiting would really save him money.
We did a hypothetical exercise; we compared 2 scenarios.
· 1st - Buying today at today’s current market price and interest rate
· 2nd - a future date where the speculative market prices had dipped an additional 10% and the interest rates had moved back up to the 6% range.
Guess what we found out? In this example his waiting would have cost him! I included the numbers below.
1st Purchase Price $540,000.00 2nd Purchase Price $600,000.00
Down Payment 20.00% Down Payment20.00%
Min Investment$120,000 Min Investment$108,000
Loan amount$480,000 Loan amount$432,000
Annual interest rate4.75% Annual interest rate6.00%
Loan period in years30 Loan period in years30
Monthly P&I payment $2,503.91 Monthly P&I payment $2,590.06
Number of payments360 Number of payments360
Total interest $421,406.60 Total interest $500,420.98
Total cost of waiting $79,014.38
This information was provided by Lani Furrows with BofA - 619.316.3106. Thank you.
Posted by Garrett Lund on
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