Bringing the future to the present

During the usual morning read today, I came across an article that used the phrase, "Bring the future to the present". The article talked about the dream of homeownership. It pointed out that dreaming about owning your home someday in the future will continue to be just a dream if you don't do anything about fixing your finances. For example, spending money on all the "bling" (jewelry) instead of putting that money away in a savings or CD account. Money spent on unnecessary expenses such as eating out all the time, Starbucks coffee everyday, clothes/shoes-buying sprees, can be better put to use by depositing into a money market fund. Better yet, use that money towards paying off the balance to your high interest credit card debts. Fix your finances, clean up your credit and you are on your way to taking the first step in homeownership because lenders will like you better when you're financially responsible. This "brings the future to the present".

The article made me think about the American dream of homeownership and the current market we are faced with. With interest rates predicted to climb, I crunched the numbers to point out how the rise in rates, at the very basic form, can affect a homebuyer who is waiting for that "perfect" time:

Sales Price: $600,000
10% down payment
6.25% interest rate
Monthly Principal & Interest: $3,324.87

Sales Price: $580,000 ($20,000 Less)
10% down payment
7.25% interest rate (1% increase)
Monthly Principal Interest: $3,424.87 ($100 increase)

Buyers should weigh the decision of waiting vs. potentially paying more per month for 5 years! One big difference…with today’s prices, will they qualify for the increased monthly payment if they wait? They could be doomed to a life sentence of renting, which is deadly to their future wealth and security. Fence straddling can cost buyers a lot of money.

The west still remains strong in comparison to the rest of the nation. There are great opportunities for buyers right now. Sellers are getting more realistic, abundance of inventory and lower interest rates make this the perfect time to purchase. Many buyers are concerned about sales prices still correcting down a bit. What should concern them more is if they don’t buy now, interest rates could go up by ¾ %. It's predicted that interest rates will go up to 7%! Have you ever compared the impact on monthly payments? Buyers should care about "how much will this home will cost me per month for the next 5 years"?

When is the ideal time to buy? The answer is now, while interest rates are still relatively low. Home prices have come down a bit so you can still get more house for your money.