Some might say, sure you’re just another real estate agent to looking to help generate business. Therefore, I’ll just let the fundamentals talk.  

I have been talking to a few buyers, whom I been working with over the last month and to say they’re a little gun-shy is an understatement. It’s understandable though, when all you here is real estate values are declining. No one wants to buy a house that will be valued for even less, a year after buying their home. However, interest rates are still very good, but have crept up on inflation fears and my take is, rates  will continue to rise on that pressure, regardless what you hear about fed rates.  

Mortgage rates are basically adjusting with long term treasury notes. Those who read my February 11 post on refinancing were put ahead of the curve. Since that post, mortgage rates climbed a hefty .41 basis points. Anyhow, what you need to understand as a buyer is that buying a home for the most part is long term.  

Fundamentally, from a cost basis standpoint, it is better to hold a better interest rate on your mortgage long term than wait for prices to potentially drop and secure a higher interest loan at a better initial price. When home values recover, and they will, more of your monthly payment will be working on the principal of your mortgage than interest payments. Here is a little insight; a 395,000 home at 6.25% with a fixed rate 30 year mortgage will have a total cost of $480,549.86, if the same home was purchased at $350,000 with an interest rate of 7.5 in the same a fixed rate 30 year mortgage, the total cost climbs to $531,010.28. Well, their goes that great price. If you’re waiting in your $1100 dollar a month apartment, you might as well through that on top of your cost basis as well.  

The mortgage rate that we are currently enjoyed is short term, and from my perspective, there are just too many inflationary pressures to see rates stay at this level for any prolonged period of time. In fact, they have already begun their climb on those pressures. Therefore, is it a good time to buy a home, you bet. Not because I said so, the fundamentals did.

Anthony Licciardello