The Real(estate) cost of waiting.



Generally speaking, waiting is a good thing.  We teach children to wait and look both ways before crossing the street.  We urge people to wait and “not rush in to something” when giving business or relational advice.  And we applaud those that have waited and persevered through adversity.  In a lot of things, patience pays off.  In 2009, in the mortgage and real estate world, waiting could be a very costly mistake.  

1.  First time home buyers waiting

If you are first time homebuyer, waiting until anytime after November 30th, 2009 to close on your first home will cause you to miss out on the $8,000 first-time homebuyer’s tax credit.  For more information, visit the IRS website here.  

2.  Waiting to purchase your next home (bigger, better, more expensive)

If you are ready and able to “move up” by purchasing a larger, more expensive home, waiting could be more than just an $8,000 mistake.  Even if your current home value is lower than you might hope, for most people who are moving up in price, the gains far outweigh the losses.  Here are some numbers to help:

Last year, at this time, the 30 year fixed rate was approximately = 6.375%

Last week, the 30 year fixed rate was approximately = 5.0%.

On a $350,000 mortgage, the difference in interest rates translates to a difference of $305 per month ($36,660 over a 10 year period).  This savings could allow you to lower your target monthly payment, or allow you to purchase $30,000 to $45,000 MORE house than you could have purchased for the same monthly payment a year ago.  And if you estimate that property values are down 10-20%, combining the additional purchase power with a decrease in home values, means your purchase power is UP $50,000 to $100,000 compared to one year ago.

3.  Waiting to refinance (or at least look in to refinancing your mortgage)

Assuming that your current mortgage is a $300,000 mortgage at 6.25%, and assuming that you started “thinking” about refinance in January of this year, not only are you at risk of missing out on the best mortgage rates in history, but over the past six months (by waiting) you have lost $1,230 in lost savings ($205 per month in savings x 6 months = $1,230).

If you are one of the many still waiting and would like to review your current mortgage, please let me know.  We can review your current mortgage and get you set up with a free refinance monitoring tool.  You can also visit and use the PROMO code = themortgageblog to access the site and service for free, courtesy of Dunwoody Mortgage.

4.  Waiting to refinance your ARM (adjustable rate mortgage).

For most people with A-credit and adjustable rate mortgages, if your rate is set to adjust this year, there is a very good chance that your interest rate and your monthly payment will go DOWN.  Because your rate is likely based on the LIBOR index and because the LIBOR index is based on the Federal Funding rate, waiting, and deciding not to refinance, could be a big mistake.  My advice for most clients, is that if you are going to be in your house for at least 2 more years, you are probably going to wish you had taken advantage of today’s historically low, fixed-forever mortgage rates.

So, remember.  Waiting to cross the street – good.  Waiting to buy your first house, or your next (bigger, better) house, or waiting to look in to refinancing your current mortgage – not good.

Waiting and not calling or emailing me when you need some mortgage advice . . . really, really, not good.  : )


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