It's not news to anyone that the real estate market in the United States is in limbo.
Homeowners, including the 27% who owe more than their home is worth, are reluctant to put their homes on the market when prices are so low.
Buyers, meanwhile, keep thinking they need to wait a little while longer before purchasing a home because they want to wait till prices have fallen as far as they are going to fall. That way they'll get the best deal possible and their investment can start appreciating right away.
The wild card in this game of teeter-totter is current mortgage rates. They have been inching upwards of late, and though they dipped in late February to 5%, average current mortgage rates are still nearly a point higher than they were in November.
That means that although home prices might still continue to drop, monthly mortgage payments are starting to climb with interest rates. Buyers who sit around watching only housing prices may miss the window of opportunity for getting the lowest possible monthly payment on a new home.
Low rates a thing of the past?
According to the Associated Press, the era of super-low mortgage rates may have passed. Analysts expect current mortgage rates and refinance rates will continue to climb through the year to about 5.5%.
Here's an example from the San Jose Mercury News of how that will affect monthly payments: A house purchased in November 2010 for $300,000 with a 30-year fixed-rate mortgage of 4.1% with a 20% down payment would carry a monthly mortgage payment of $1,159. That same house, purchased a couple of months later at a price 1.8% lower but at an interest rate of 4.7% would cost 1,222 a month--an increase of $63 a month.
Of course, buying a home is more than just about numbers. It's an investment--probably the biggest one any of us will ever make--but it's also your HOME. So if you're shopping for a place to park the money in your savings account or checking account, it may not be wise to pass up the home of your dreams. If it's the place you've been looking for and you can picture yourself living there for the next five to seven years--at least until this housing market starts to turn around--now may be the best time to buy.
The original article can be found at Money-Rates.com:"Rising interest rates could offset sinking home values"