Issue 2 April 2008

Brevard County Market Watch

by Sandy Shores Melbourne FL Realtor

Issue 2 April 2008 - Back to the same old question: Should I buy now or wait? Ask 20 people…you’ll get 20 different answers. We know that millions of dollars have been lost in the economy in all sectors. Interest rates change almost daily. These rate fluctuations can affect how much you can borrow and how much your monthly mortgage payments on a home will be. Many economic and political factors affect rates, and sometimes the experts don’t know why rates perform as they do. Sometimes rates can rise even when the Federal Reserve cuts short term bank rates. The Fed cut the Fed funds rates by ¾ of a percentage point in March 2008. This cut the fed funds rate to 2.25% - the lowest since 2004. This is the 6th rate cut since September 2007. Normally, banks in turn would cut the rates at which they lend money to homebuyers and companies for personal and commercial use. But, in the past few months banks have made 3 changes to their usual practice: 1) They have not been passing all of their interest rates savings to customers. 2) They have restricted lending only to the most creditworthy, documented applicants. 3) They have cut the total amount they’re willing to lend. Banks are taking these seemingly ridiculous steps in an attempt to somehow reverse the effects of the massive losses withstood for lending to customers with lousy credit in the past 5 years. But, will mortgage rates and credit card rates still go down? No one knows for sure, we’ll have to wait and see. So, back to the same old question everyone is still asking, Is it time to buy? Well let’s look at this eye opening example. These are your options… Let’s review this scenario…

Interest rates will rise as the economy recovers, so is it best to buy today or wait?

Buy Today

Cost in 12 or more months

Typical Home Price
$225,000
$202,500
if prices drop an
additional 10%
Terms
20% down
30 year mortgage
20% down
30 year mortgage

Interest Rate
5.75%
*Current rate after recent declines
6.50%
** When recession ends, rates incease
Monthly payment
$1,050.43 P & I
$ 1,023.95 P & I
Rent Payment
$ 0
$12,000
($1,000 x 12 months)
Interest paid over 7 years
$ 69,626.00
$ 71,279.00
Interest paid over 10 years
$ 96,384.00
$ 98,955.00

 

If you waited to wait a year to buy,

how much would you have saved? You decide.

*Today’s interest rate courtesy of Heather McCaslin at Gulfstream Financial Services in Melbourne as of 3-26-08 rates may have re-adjusted by the time you read this

**No one knows for sure where prices are going to go, nor where rates will be in 12 or more months, nor when the recession will end

Issue 2 April 2008

Sandy Shores Melbourne Realtor M & M Real Estate, Inc.

Residential & Investment Brevard County

Florida Space Coast

 

return to top