We’ve all heard the stories of the great deals buyers are getting in the housing market: houses that were formerly out of reach are now selling at a price “normal” folks can afford. And housing prices have definitely come down—31% since 2006, according to a recent article in Bloomberg Businessweek. With mortgage rates continuing at or near historic lows, as economist Dean Baker says, “It’s hard to see the possibility of losing on a home purchase right now.”¹

Is it wise to play the waiting game?
The decline in housing costs has led many would-be home buyers to hesitate, assuming prices will continue to fall. And they may, though potential borrowers should weigh the possible drop in prices against an almost certain rise in mortgage rates. Add to that the nationwide increase in rental rates, and the waiting game starts to look risky.

Here’s where mortgage math comes in: if a buyer were to purchase a $300,000 home with a 4% mortgage, assuming she put 20% down, her monthly mortgage payment would be $1,145. That same home at $289,000 with a 4.5% mortgage rate—a mere half-point increase—will cost her $1,171 a month. Over the life of her loan, that “cheaper” purchase price will likely end up costing her money. The lesson? For those with good credit ratings and money available for a down payment, right now may be the best time we’ll see for a long time to buy a home.

If you’ve done your mortgage math and decided now is the right time for you, or if you could use a little expert assistance in making that determination, Salal CU has the best resource to help: our Senior Residential Mortgage Loan Officer, Jeff Van Nostran, is here to work with you. You can contact him at jeffv@salalcu.org or at 206.852.8412 to make a one-on-one appointment or just ask questions. Don’t wait until it’s too late!

^1″Epic Home Deals Await the Creditworthy.” Kathleen M. Howley, Bloomberg Businessweek, October 17-October 23, 2011.

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