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HOW TO MOVE UP IN A DOWN MARKET

“Waiting to see” may cost more than you think

Many customers have been on hold, delaying plans to move until they see more signs of an economic recovery. Don’t let anxiety get in the way of your opportunity of a lifetime. Here’s a look at the kind of numbers experienced agents are crunching for their customers these days.

Move up now—and save: Today’s low home prices add up to big gains if you’re a move-up buyer. Say you’re selling your $300,000 house for 10 percent less—$30,000—than you might have a year ago, but you’re upgrading to a house worth $400,000, the price of which is also 10 percent, or $40,000, lower. Even though you’re getting a lower return on your house for sale, you’re actually seeing a net gain of $10,000.

Finance now—and save again: Favorable interest rates present another big opportunity. If you bought a home 10 years ago that’s now worth $300,000 and have a $200,000 mortgage at the then-average rate of 7.55 percent over 30 years, you’ve got a monthly payment of $1,405. But say you sell that home today at a discount of 10 percent (for $270,000) and purchase a home worth $400,000, also at a 10 percent discount (for $360,000). If your new loan is for $290,000 at 5.125 percent, your new payment will be $1,579. You’ve increased the likely long-term value of your real estate by roughly a third while increasing your monthly payment by just $174, although you’re taking on the obligation of a new 30-year mortgage.

Don’t do anything—and lose out altogether: If you wait for your sale price to rise, interest rates may go up too. If interest rates increase to 6.5 percent, for example, that same $290,000 mortgage will cost you $1,833 a month. At 7 percent it rises to $1,929. At 7.5 percent it becomes $2,028.

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