By Robin Shapiro
In part 1 of this article, I used 7% as the mortgage rate. As of this writing, mortgage rates have declined to 6.5%. I’ll do the math again: a $600k mortgage at 6.5% would cost $3,792/month. This is $208/month less than the cost of the mortgage at 7%.
I recently spoke with Ken Weiss of Diversified Funding (718-748-5737). He’s a great mortgage broker with over 20 years of experience. Ken emphasized that the current decline in real estate prices is a buying opportunity. He’d rather buy a house now which is $100,000 or more cheaper than it was last year and pay this year’s higher mortgage rate BECAUSE interest rates tend to cycle. He believes that it should be possible to refi to a lower rate down the road and in the meantime, he’d be $100,000 (or more) ahead. Of course, Ken does have an “ax to grind.” He wants people to take mortgages so that he can make a living! Nevertheless, he does make an interesting point.
Keep in mind that Ken’s approach to this year’s market can present a cash flow challenge with higher monthly costs due to the higher mortgage rate. HAVE A GREAT ST. PATRICK’S DAY! Call me. Love, Robin.