With only 55 days left to take advantage of the tax credits, here’s something very important to think about…
If interest rates increase by one-half point from the current rate, as has been predicted by many economists, a buyer with a loan amount of $200,000 will lose approximately $11,000 in purchasing power. Furthermore, if a buyer does not act prior to the expiration of the tax credit, that’s an additional loss of purchasing power ($8,000 for first time buyers; $6,500 for repeat buyers). In other words, if a first time buyer takes advantage of CURRENT interest rates AND the $8,000 tax credit, their purchasing power is a whopping $19,000 more than if they bought after interest rates rise and the tax credit expires ($11,000+$8,000=$19,000). That is a significant amount of money!
The interest rate differential can be applied to all buyers in all price ranges, anywhere in Sherwood or the surrounding areas because with every increase in interest rates, a buyer’s purchasing power declines. As mentioned before, economists are predicting a rise in interest rates in the year ahead and the tax credit expires on April 30, so this is truly a moment in time.
The moral of the story is that as long as you buy a home by the April 30 deadline, your purchasing power is at an all time premium. This is a historic opportunity; don’t wait on the fence till the last minute, or worse… find yourself wishing you’d made your move.
Our Sherwood area real estate team is here to help – call on us!
Source: Words of Wisdom from Lennox – John L. Scott Real Estate
