In turbulent economic times, the media can’t wait to report what interest rates are doing.  There is a fixation on what rates are doing.

When should you buy a home based upon interest rates and WHEN IS THE RIGHT TIME?  Let’s look at what an interest rate move of 1/4 percent really does to a $200,000 mortgage.  Say a 30-year interest rate at 6.00 percent “jumps” to a 6-1/4 percent rate.  Should you sit on the sidelines, thinking such a move is suddenly unaffordable?  No!  The payment on a $200,000 loan only “jumps” by about $32 a month.

Right now, buyers should have more urgency than ever.  Home prices have declined enough to make buying more affordable than it’s been in recent memory.  Interest rates (whether at 6 percent or 6-1/4 percent) are historically low.  It’s time to act.

Rates are important, but they are not the only consideration in the home buying decision.  Interest rates over the past few years have been in a very tight range, with few major swings.  Just remember what interest rates represent, your monthly payment, and pay less attention to the headlines.

By David Reed