As you are aware, property values in Utah have dropped drastically in the past few years, offering an unbelievable discount for prospective buyers in the market today. This coupled with historically low interest rates, which could potentially save you thousands of dollars over the life of your loan, make it an amazing time to buy real estate!
To any “fence sitters” out there, waiting for home prices to drop even lower before entering the market, we wish you to consider the following two scenarios. Values could continue to decline, but interest rates could also rise! Now where is that crystal ball when we need it??
Scenario 1 (Current Market)
An amazing Real Estate agent finds the perfect home for Mrs. “Ima” Buyer. “Ima” offers to purchase the home for $250,000. Mrs. “Ima” Buyer also has an outstanding Mortgage Officer who was able to get her an unbelievable 30 year Fixed Mortgage Rate at 4.25%!!!
“Ima’s” P/I monthly payment = $1,230
Interest Paid for the life of the loan in scenario 1= $192,746
Scenario 2 (Future date)
Mr. “Ben Sittin on the Fence for a While Now…” has been looking at houses for months, running his poor buyer’s agent ragged. He has gone from home to home looking for just the right deal. After several months have passed (and a few buyers agents later) home prices had dropped another 10%! “Ben Sittin on the Fence” decides to get down off the fence and puts an offer on a home at $225,000 “Ben” is thrilled when his agent informs him that his offer was accepted. He had looked at this very home several months earlier, and it was listed for $250,000; thanks to his patience, he was getting the home 10% below original asking price. In the midst of all the excitement, he calls his mortgage officer and says, “We need to get moving on my loan. I have an excepted offer to purchase a property for $225,000, and I want to close right away!” To his surprise his mortgage officer informs him that interest rates have risen to 6.5% for a 30 Year Fixed mortgage. What does this mean for “Ben?”
“Bens” P/I monthly payment $1422.00
Interest Paid for the life of the loan in scenario 2 = $286,978
“Ben Sittin on the Fence “ now goes by “Shoulda Ben” buying real estate. He may have gotten a lower sales price than “Ima”, but he missed out on the historically low interest rates, which translates into his monthly mortgage payment being $192.00 more a month than “Ima’s”, and he will end up paying $94,232 more in interest over the life of his loan.
It’s time to hop off that fence, and prevent yourself from becoming another “Shoulda.” We work with some of the top Mortgage and Real Estate professionals in the industry and would be happy to get you moving in the right direction.