That means a payment of $1,648.76 on $275,000 at 6 percent jumps $89.43 at 6.5 percent. To compensate for the increased interest you’ll be paying, you would have to get the sellers to reduce their price another $10,000, which is unlikely. When you factor in the loss from not having the tax breaks of home ownership and the lost opportunity to build equity , that price drop for the house would need to be considerably greater to have made your wait worthwhile.
And if home prices start to climb, the good deal you’re waiting to get better is gone forever. Typically, it’s better to focus on house prices rather than interest rates when deciding when to buy. But in a market when home prices and interest rates (historically 6 percent or less) are both low, it’s best to find your dream home and make an offer.
The tax breaks, appreciation, and equity gained will more than offset your waiting for an interest rate to drop or home prices to bottom out.
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