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As mortgage rates continue to rise, if you are thinking that a move might be in your future, now is definitely the best time to make an offer on a new home.  Rates are still below 5%, but it is expected that in 2014, they could rise to 6%.  On a $417,000 30-year mortgage, the payment could be as much as $327 more each month and over the life of a 30 year loan, you will pay in excess of $117,000 more in interest.  By sitting and waiting rather than acting now, you are costing yourself money – a lot of money.  If your affordability is capped by income or debt load, you may also be costing yourself the home you want to buy.  As interest rates increase, you will be able to buy less home.  At the $417,000 mortgage level, a 1.25% increase in interest rates will decrease ability to buy by $50,000.  So if you qualified for a $417,000 loan this year (and no more), you may only qualify for a $365,000 loan when rates hit 6%.

Hedging your bets and thinking rates will drop a bit?  There is absolutely no reason to do this.  Many lenders offer no-cost refinances.  If rates drop, you can refinance to a lower rate with no cost to you.  You can have your cake and eat it too – if you buy now you can hedge your bets against the likely rate increase, but if they happen to drop, you can take advantage of a no-cost refinance to capture the lower rate!

The fall market is also an outstanding time for buying a home.  Competition is lower than it will be in the spring and you will have an increased likelihood of achieving a better price on a home.  It is also generally less expensive to hire movers in the fall and winter months.

Sellers, you may be tempted to wait for the spring “crush” to list your home.  With the expected increase in interest rates, this plan may backfire as buyers may become even more hesitant as rates increase.  If you know you want to sell, we definitely have movement in our market – now is the best time to list!