One of the primary decisions involved in moving is deciding when is the best time to make a move. Because the market is dynamic, it is difficult to project exactly how much prices may go up (or down!).
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Another important thing to consider is the impact that an increasing interest rate will have on your monthly payment, as it plays a more significant factor than does the sales price.
Use the factor chart to determine what the potential cost of a higher interest rate may actually be.
Example: a 30 year loan at 4% interest is $1,500 P & I per month, or a mortgage of $314,465. The same loan at 5% & the same payment reduces the mortgage to $279,329, or a little bit over $35,000 in buying power!
Desired monthly P & I _______ ÷ factor _______=
$ × 1,000 = $ ______________(loan amount)
The Cost of Money
Negotiating often involves a balance between emotion & logic. The heart wants what the heart wants, & buyers often worry about justifying a decision that they want to make. We have found it helpful to analyze counter offers (& even initial purchase offers) in terms of the cost of money… & breaking down costs into a daily amount.
Example: $5,000 counter offer at 4% for 30 years is less than 80¢ a day!
To calculate the monthly cost of money, multiply the amount borrowed (divided by 1,000) by the factor for the interest rate & loan duration.
$ needed _______ ÷ 1,000 = _______ × factor of _______ =
$ _______ month P & I ÷ 30 days = $ per day
Are you thinking about starting the home buying process? Talking to a local lender is a great first step! Contact Ginny Phillips or Jim Baldasare, with Atlantic Bay Mortgage Group, at ginnyphillips@atlanticbay.com and jimbaldasare@atlanticbay.com and they can help get you started.