Many buyers are waiting for lower home prices before purchasing.  This may not be the correct approach.  Interest rates will most likely be going up in the future and just increased over the last few days.  Let us look at some examples of the total cost of purchasing a home over a 30 year fixed rate term.

Example 1: Buying now:

Purchase price of home is $100,000

Loan amount of $96,500 (less 3.5%)

Current interest rate is roughly 4.3%

Total cost over life of loan $171,918.61

Example 2: Buying in future if prices decline and interest rates rise 1%:

Purchase price of home is $95,000

Loan amount of $91,675 (less 3.5%)

Higher interest rate of 5.3%

Total cost over life of loan  $183,265.01

Example 2: Buying in future if prices decline and interest rates rise 2%:

Purchase price of home is $95,000

Loan amount of $91,675 (less 3.5%)

Higher interest rate of 6.3%

Total cost over life of loan $204,281.93

As you can see, if interest rates increase, you will be paying more over the life of the loan for the home at a lower price.  No one can predict the future of home prices or interest rates, but buying now may be the correct decision.