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Didn’t Get the Tax Credit? – Buyers Now Save More

Timing is a factor in so many things in life.  And, there can be influences that cause us to adjust our timing when we have control.  The home buyer tax credit is one of those influences.  A great many people were sitting in the wings, watching the real estate markets, and hoping to buy when the downside risk for prices was over.  Whether or not there's a chance of calling a bottom, there were still a lot of people waiting ... until the tax credits.  April, the last month to get a purchase contract finalized and qualify for the credits, saw a big jump in both new and existing home sales. If a buyer needed the credit to gather enough for down payment and closing costs, then they are probably quite happy they cut a deal before the end of April.  But, if the use of the cash was more discretionary, those buyers will spend a lot more over the length of their mortgage than buyers who waited and are looking at very much lower interest rates. Just looking at a $200,000 mortgage, and an interest rate 3/8ths of a point lower now than in April, the difference in the payments on a 30 year mortgage would be substantial.  Waiting would lower the payment by about $45/month, and save more than $16,000 over the life of the loan.  And, some borrowers may be able to save more than just 3/8ths of a point in interest, with rates trending downward. So, don't lament that you missed the tax credit.  Look on the bright side and those lower payments you'll have for years into the future.

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