The idea of "saving my money until home prices come down" has probably become a contradiction in terms -- at least for the foreseeable future. Yes, housing is cyclical but it usually does not go backward for very long, if at all. The additional money you save now probably will not offset the potential appreciation or the fatter monthly payment that could result if interest rates rise.
For example, if a $500,000 home appreciated 5 percent in the next year, could you sock away an extra $25,000 in after-tax savings to counter that gain? This also does not take into account additional tax savings from the mortgage-interest deduction. Or, if the market remains flat and mortgage interest rates rise, will you still even be able to qualify for the home of your choice?
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