Waiting For Rates To Go Down: What is the cost?

Home buyers waiting for rates to go down, are losing every dollar they gain in a lower rate, and then some, to rising home prices.

Example:

October 20, 2022

Median Pending Home Price:      $375,000

20% Down Payment:                   $75,000

Loan Amount:                              $300,000

Interest Rate:                                7.08%

Monthly P&I Payment:                 $2,012.05

Total Paid Over Life of Loan:         $724,338

October 20, 2023

Median Pending Home Price:      $395,000 (a 5.3% increase)

20% Down Payment:                   $79,000

Loan Amount:                              $316,000

Interest Rate:                                8.257%

Monthly P&I Payment:                 $2,375.56

Total Paid Over Life of Loan:         $855,201.6

In this example, this prospective buyer that has tried to save $375 per month has actually cost themselves $130,863.60 over the life of the loan.

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