Waiting for a new "Stimulus Plan"

By
Real Estate Agent with Shaffer Realty

Rolling the Dice with Interest RatesI have recently talked with a few buyers and they stated that they think there will be a new "Stimulus Plan" coming out soon that will have another home buyers tax credit. Well I said "It is like rolling the dice, do you want to take a chance on interest rates going back up above 5%"? You can wait and get your $8000 tax credit now, or whatever it may end up being -OR- You can get a 30 year loan at an interest rate of approximately 4.5%.

On a $225,000 loan at 4.5% your monthly payment will be $1140 principal and interest. If rates go up, you get the same loan at 5.5% and your principal and interest payment will be $1277. At 4.5% you will be saving $137 per month.

If you keep the home for 10 years that will be a savings of $16,440!! Lets say you stay in the home for the whole 30 years. That 1% difference in your interest rate will save you about $59,000.

Well lets say you will only stay in your home for 5 years max. You can get a 5/1 ARM for a interest rate of 3.34% with a monthly payment of $990. That is a $287 savings per month over the 5.5% rate. Over 5 years that would be a savings of $17,220.

In my opinion we already have a "Stimulus Plan" in place. It is called LOW INTEREST RATES!

Posted by

John Wojtasiak

Real Estate Agent

Shaffer Realty

757-328-3289

To sell or buy Real Estate in Virginia Beach, Chesapeake, Norfolk or anywhere in Hampton Roads Virginia email me at john@jkcrealtygroup.com.com or search for homes at http://www.jkcrealtygroup.com

 

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Rainmaker
164,538
Christine Hart Howlett
Painesville and Eastern Lake County - Painesville, OH
Keller Williams Greater Cleveland NE

John, very well said.  I would love to know what we as real estate agents have to do to get potential buyers off the fence.  When put in actual black and white numbers, as you have done, it might help in getting the point across.

Sep 03, 2010 07:29 PM #1
Rainmaker
997,080
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

John, you make a pretty good case for purchasing right away rather than waiting.  If I might make a suggestion, your post is somewhat difficult to read... being all one big paragraph. 

May I suggest breaking it up into perhaps four or five smaller paragraphs.  Easier to read, and it also makes the math and examples easier to understand.  Just a suggestion.

Sep 03, 2010 07:41 PM #2
Rainmaker
997,080
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Mike:  It would appear to me that the main problem here is one of simply not knowing if there will be or will not be another Federal Tax Incentive program.  I think the tax credit program worked well for those folks who could not have purchased without it.  For the others... it was just icing on the cake. 

I am much more IN favor of the program for those who could not purchase without it.  The main focus was simply stimulating the buying market... to light a little fire under the economy, and in the process, get some creation of some new jobs... which, then again, also helps the real estate market.

By the way... thanks for taking my suggestion in breaking up your original post into smaller paragraphs.  I think it helps to understand it immensely, and... it also LOOKS much better, as well.  Thanks for listening to my idea.

Sep 04, 2010 01:19 AM #4
Rainmaker
57,082
John Wojtasiak
Shaffer Realty - Chesapeake, VA

Mike: I agree, they do need to announce no new home buyer tax credits. 

Karen: Thanks for your suggestion! Much easier to read and it looks better. Thanks again.

Sep 04, 2010 07:52 AM #5
Rainmaker
997,080
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Mike, you are very welcome.  Examples of interest rate scenarios, and the payments they bring, as even more valuable to potential buyers than simply throwing a "rate percentage" at them.  They want to know how much they will write out the check for... and your example, presented the way it is above, spells that out to them very plainly.  Thanks a bunch.

Sep 06, 2010 01:01 AM #6
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Rainmaker
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John Wojtasiak

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