What’s the Price of Your Money? By Denise Lones | The Zebra Blog

What’s the Price of Your Money? By Denise Lones

Buyers today are definitely playing the game. They’re perched high on the real estate fence, waiting and watching for prices to fall. But these people are missing a critical factor that may cost them even more money: interest rates.

When a buyer sits on the fence waiting for prices to come down, they may end up with a big surprise if interest rates rise even a quarter of a percent.

Let’s look at an example. A home you absolutely love is priced at $550,000 but you’re waiting for it to drop to $525,000. You’re looking for a 30-year fixed rate loan and you’re planning to put 20% down. If interest rates go up a quarter of a percent, that house is actually going to cost you more money—an extra $25,000. Which brings the price back up to $550,000 again. So much for saving money.

This is why it’s important to stop looking only at prices of houses and ask yourself, “What’s the price of my money?”

The only way to answer this question is to take a good hard look at interest rates. Why? Because they’re starting to trend up again.

Don’t be afraid of the math. When buying a home, it’s important to “crunch the numbers”—numbers that can be deceiving at first glance.

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