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Recently, a trend has developed which puzzled me a little bit so I decided to do a little simple calculation to see what would make more sense.

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As people might have noticed, the mortgage interest rate has been creeping up quite a bit the past 3 months.? I remember when I almost put down a deposit for a house in March of this year; the interest rate was around 6%.? However, if you want to get a mortgage today, the rate would be more like 6.5%.

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The other trend is the declining housing prices.? There is no doubt that the prices of new and existing homes have been slowly going down these past months.? I regularly check the available houses in my price range around my area and there are just more houses available than say 3 months ago.? The other interesting thing is that many houses that are available from some of the higher priced neighborhoods were just not available to me a few months ago.

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So the big question is this.? Assuming that the mortgage rate goes up, but the price of the house goes down in the future, should you buy now?

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Consider the following chart:

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Yikes, the difference of 1% is $188.19 dollars.

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Now, if the price of the house goes down by $50,000, then you only need to borrow $250,000 instead of $300,000 so look at the following chart.

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With this example, you will see that the monthly payment for $250,000 at 6% is only $1498.88!? In order for the payment to be the same as borrowing $300,000, the interest rate needs to be 6.6835% which is a difference of 1.6835%.

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In the above scenario, it is obviously better to wait for the price of the homes to come down.

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Dearest Fianc?, let?? wait (ahh I keep dreaming).