Editorial

Front Page - Friday, April 23, 2010

Real Estate Facts

When less costs more

Elwynn Schwartz

“Timing the market” in real estate doesn't work the way it does with stocks. Homes are bought and sold more out of necessity than to make an easy buck.
However, some indicators give a clue when it's a good time to buy. Like now!
Despite the fact that rates are low and prices may still drop, now is the time to move if you have good credit and funds for downpayment. It would be a mistake to “wait and see” if rates or prices fall any more. Why?
Rates are low now because of federal bailouts, but continued low rates can fuel inflation. Fear of inflation causes “the Fed” to raise those rates. Waiting for a lower price on a home while interest rates rise could make the home more expensive.
Example: purchasing a home now for $177,000 at 5 percent could make the total cost around $370,000 by the end of the loan term. But what if you wait for prices to fall more, and next year you get that home for $160,000. You saved $17,000 – right? Wrong!
If rates rise 2 percent during that time, you could pay over $400,000 over the life of the loan – $30,000 more than if you bought now! If the math is still fuzzy to you, talk to an agent and crunch the numbers. You'll be glad you did.
Elwynn Schwartz is the owner of Chattanooga Real Estate Consultants and may be reached at 423-894-3050.

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