What Higher Interest Rates Mean For You
There has been a lot said about rates being low and increasing at the end of the 1st quarter of 2010 when the Fed stops buying mortgage bonds or at the end of 2010 around election time. No matter when they go up all I know is they are low now. If you are thinking of buying anytime soon I would do it now. I am not saying this because this is how I make a living but I am saying this because it is true with rates low and the tax credit.
If you are unsure then holding off is fine and the incentives are worth being stuck in something that you don’t want. But, if you do know that you want to buy now is a good time to start.
Money magazine had an interesting example of the difference interest rates can make. They showed with a rate of 5.15% the median price would be $174,900 and with rates at 6% the median price the buyer could afford is $159,250. I always use the example that if you have a loan for $100,000 at 5% vs. a loan at $90,000 (10% less) at 6%, your payment is lower on the higher loan amount.