The Ole South Blog

Home Purchasing Power Hangs in the Balance

Categories: Interest Rates and Financial Information, New Homes for the First-Time Buyer, Time to Buy | Posted: September 3, 2013

HomeMoneyThe past year has brought incredible opportunities to those wishing to purchase a new home! And those that did purchase are happy that average US Home Prices have increased over 12.1% – from June 2012 to June 2013.

Middle Tennessee is no exception to rising home values.  But those that have not purchased a new home do not need to feel like the train has left the station!

Miss The Train

NOW is still a great time to purchase a new home in Middle Tennessee, but continuing to wait is certain to cost you a bit more.  Let’s do the math!

calculator

Let’s say that you have determined a $1,400 monthly home payment meets your needs.  This figure includes principal, interest, property taxes, insurance, and mortgage insurance premium.

At current interest rates on a FHA Loan, that $1,400 monthly payment will allow you to purchase a $200,000 home in Middle Tennessee.  (If you use the THDA Great Start Program for first time buyers, the State of Tennessee will even pay your required 3.5% down payment!)

This would be the payment scenario of you purchase today.  But, things change.  Costs can increase.  Interest Rates can go up.

HomeAndInterestRate

Let’s assume interest rates go up 1% over the next year.  You still cannot go over $1,400 for a monthly payment.  You are now looking at $185,000 homes instead of $200,000.

Now, let’s assume that home prices continue to rise at the same rate as the past year, 12.1%.  The $200,000 home you can buy now would be approximately $224,000 by waiting, over $160 per month more if interest rates stay the same!

Let’s go one step further and assume both happen – prices rise 12.1% AND interest rates rise by 1%.  The monthly payment on the $200,000 home that meets your needs TODAY could be $1,700 per month if you continue to wait.

BUT DON’T BE SCARED…..

scared-face

There is never a bad time to purchase a new home that you can afford.  However, certain times are better than others.  NOW is one of those times!

time-to-buy

You will find new Ole South homes all over Middle Tennessee in Nashville, Murfreesboro, Smyrna, Spring Hill, Gallatin, and Clarksville.  Visit www.olesouth.com to learn more!

 

 

 

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