SF Real Estate By Joske Thompson

 

100,000 Reasons to Buy Now, Even in a Seller’s Market

If you’re considering purchasing a home in the Bay Area, you’re probably hearing plenty about limited inventory, multiple offers, price increases, and other economic news that sounds good for sellers but not so great for buyers.
But we can give you one huge reason to buy now anyway: $100,000 in extra purchasing power.
Our partners at Mortgage Services Professionals point out that today’s historically low interest rates allow you to take a mulligan on any increase in prices — and purchase a home at a higher price while keeping your monthly outlay very similar.
Here’s how that works. Let’s assume you are ready to buy a home and these are your criteria:

• You’re getting a 30-year, fixed-rate mortgage
• You’re planning to put 20 percent down
• You’d like to end up with a monthly mortgage payment of about $3,600

Assuming an interest rate of 4.5 percent, you could purchase a $900,000 home.
But if you wait until rates creep up even 1 percent, the best you’ll be able to do is purchase an $800,000 property.
Take a look at the math:

Interest Rate	Home Price	Down Payment (20%)	Monthly Payment
4.50%	$900,000	$180,000	$3,648.13
5.50%	$800,000	$160,000	$3,633.85

In other words, taking advantage of today’s interest rates will allow you to have an extra $100,000 in purchasing power.
You don’t need to look back at the opportunities of 2011 and feel like you’ve missed the boat. To the contrary, the buyer who acts now can become the captain of his real-estate destiny!