It’s Not The Price. Really.

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Too many buyers are sitting on the sidelines waiting this season out. Some have job issues and are waiting to be more settled. This is understandable. Others are thinking about waiting for the prices to come down. But here’s the double edged sword: If interest rates head up, ( a real possibility with all the new money the government is printing.) your cost of ownership may rise.

For example you want to buy a $500k condo with 20% down. Your mortgage is $400k. At 6% for 30 years it’s $2400/month. The buyer waits until prices come down. The $500k condo drops 5% to $475k. The mortgage is $380k with 20% down. In the meantime rates bump up to 7%. Now your monthly payment is $2527. Yes. If you sell in the first 16 years, you will get a better deal with the lower price. But your cash flow will suffer by over $1500 per year every year. In these times, cash flow is very important to a lot of people.

No biggy right. Except if interest rates pop to 8% instead of 7%, you payment is $2789 or $389 more a month. For $389 more a month at 6% you could get nearly $65,000 more house. So you saved $25k to lose $65k. Yikes.

Hoboken Real Estate$400K Mortgage, 30 Year
Monthly Payment
6% $2400
7% $2660Information deemed reliable but not guaranteed

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