Philadelphia Investment Update #3
My agent called a few days ago and told me that my house is ready for settlement at any date now. The seller has found a new house so I can do the closing at the end of this month. However, the interest rate has been creeping up lately. I was quoted a 30-year fixed mortgage loan for 6.0% yesterday, compared to 5.75% two weeks ago. The difference in interest payments over 30 years is $7,000 between 5.75% and 6.0%
I'm hesitant to take the risk though. What if the interest rates continue to go up, to 6.25%? Then I will pay more interest plus losing a potential month's of rent. I'm leaning towards earning one month's of rent plus playing it safe on the interest rate.
posted by Sean @ 9/20/2005 10:41:00 AM
2 Comments:
In Australia, most people have variable rate loans, or at least only fixed for 2-5 years. Having a loan at a fixed rate for 30 years seems kind of odd, but I guess it has its advantages in terms of knowing payments, etc.!
Anyway -- you make the most money when you buy, and cash *now* is much more important than cash over 30 years (especially with the small amounts you are talking about). Go for buying ASAP, IMHO.
$7,000 over 30 years doesn't seem like that much, especially if you can get cashflow NOW. Heck, if you invest your rent money you'd probably grow it to $7k in 30 years.
Of course, I know very little about housing so who knows.
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