Comparing the cost of buying this spring vs now
Say you were looking to buy a nicer-than-average house this year in northeast Seattle (NWMLS area 705) and almost pulled the trigger in May/June but held off and are considering buying now; how much have you been affected by interest rates? This was the question a group of my agent friends was wondering and at least, I, found the answer rather surprising!
For starters, that $1.4m house is likely now worth $1.2m as citywide prices are down over 10% for single-family homes (note that we dropped the price of this hypothetical house further than 10% as we felt a $1.4m house in the spring is likely down more than average). But what about interest rates? They’ve gone from the 3% to 6-7%+.
So where does that leave us? We had Danny Meier over at Academy Mortgage run the numbers. He thinks it is a no-brainer to pay 1.5% in points to buy this week’s rates down, so to be fair, the rate in June was also bought down with 1.5% in points. And the answer is that your mortgage payment is going to be $427 more a month. But you saved $40,000 in downpayment and $2,545 in closing costs.
The next question is, how much further do prices have to drop for the mortgage payment to be the same? The answer to that for this house, $1.1m.