Should You Defer Your Home Buying Dream?

When you put off your home buying decision to wait for “prices to go down” in a rising interest rate environment, it can cost you your dream.
Can you afford to wait?
The payment you could afford several months ago may qualify you for much less house now. Here’s why...
In May 2008, a person could buy a house for $920,000 with a fixed rate of 6.25% and a monthly payment of $4433 with $200,000 down.
Today, only 2 months later that same payment of $4433 would qualify them for a purchase price of only $880,000 with the same $200,000 down because interest rates have continued to rise. This is the math:
May 2008: Purchase Price: $920,000, Interest Rate: 6.25%, Loan Amount: $720,000 Payment:$4433.
July 2008: Purchase Price:$880,000, Interest Rate: 6.75% Loan amount:$680,000,
Payment:$4410.
If you notice, both these scenerios use the conforming/jumbo loan amounts, presently capped at $729,000. For higher loan amounts....true jumbo loans...the current interest rate is now 8 percent!