Word on the street is that now may not be the best time to buy a home.  If the predictions are correct, a drop in housing values of 15% to 25% may be on the horizon.  Source:  CNN/Money

Depending on your particular situation, it may be cheaper to buy now instead of renting.  If your rental payment is more than your monthly payment, it usually makes sense to take the plunge and buy.  With interest rates, mortgage interest deduction, itemized deductions (for property taxes, etc.), you may end up paying substantially less to own a home instead of continuing to rent.

In the event that housing values fall another 25%, you may still be ahead by buying when interest rates are still historically low.  For example, if the house value decreased $50,000 (from $200,000 to $150,000) but the interest rate rose 2% (from 5% to 7%), the monthly mortgage payment would $1074 ($200K @ 5%, 30 yrs) vs $998 ($150K @7%, 30 yrs), a difference of $76/month that is easily offset by the tax benefits; especially to the person that previously had no tax deductions!

If housing values fail to drop the “predicted” 25% and interests rates rise, then the savings are negligible and you may miss out on the historic-lifetime-home-affordable-opportunity of your life!

The best solution is to examine your particular situation and determine if now is your time to become a buyer.

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