I was asked by a reader why I felt so strongly about now being the right time to buy a home in Tallahasse. My response is a bit long-winded, but simple to understand.
Unless you are one of the fortunate few who can buy a home in Tallahassee without borrowing money, the cost of the money that you borrow is one of the greatest costs that you pay. In order to see this better, I created a simple scenario. Let’s assume that you want to buy a home in Tallahassefor $250,000. Let’s say you sell your previous home and use the proceeds of $50,000 as your down payment, thus financing $200,000 in the new home. Your monthly payment (principal and interest), would be $1,136.
So why is now such an important time to buy? Because rates are going to go back up. In the early 1980s, we saw rates at 20%! So what does this mean to a family wanting to buy a home in Tallahasse? Let’s take a look at the purchasing power of that $1,136 per month at different rates. Today, it buys a house of $250,000. When rates go up to 9%, that same payment will only buy a $176,400 house!
So, even if you think home values might come down (even as much as 20%), your monthly cost of ownership is cheaper now than it would be. I do not believe that properties in this price range will come down 20%, but even if it were true, and you plan on living in the home for more than five years, you will save money by buying now.
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Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.