Uncertainty as to whether prices will continue to fall has to be one of the most common causes of buyer procrastination. Paying too much wouldn’t be a smart thing but price isn’t the only factor to consider. Interest rates have as much effect on housing costs as price.

A small increase in mortgage interest rates can offset a significant drop in home prices. If the price of the home were to come down by 5% but the interest rates were to go up by .5%, the payments might be close to the same.

In the example below, if the price of $175,000 home went down 5% but the interest rate went from 4.75% to 5.25%, the payments would actually be $4.98 more at the cheaper price. If while the buyer was waiting for the home to decrease 5% and the interest rate increased by 1%, the payments would actually go up by $55.30.

Then, of course, there is always the possiblility that the price of the home doesn’t go down but the rate does go up by 1%. The payments would be $104.58 more per month, each and every month for as long as you have the mortgage on the home.

As a Residential Finance Consultant, I can provide solid information that will help you make better buying decisions. A home is a place to feel safe and secure, to raise your family, share with your friends and an investment. It’s an investment in your marriage, your family and your future. You owe it to yourself to check out the real numbers in your market because every market is different.