So just how important is the interest rate when purchasing a new home? Let me put it to you this way, a $200,000 loan amortized over 30 years at 5% interest results in a monthly payment of $1,073.64.
Now reduce that loan to $195,000, but adjust the rate up to 5.25%, and that puts your monthly payment at $1,076.80.
That means a .25% change in interest rates is equivilent to a 2.5% change in home prices. I still see people on the sidelines waiting for the market to “bottom out” (that is a topic for another day) – they would be better off trying to make sure they get the best possible interest rate and then buy while prices are still at 5 year lows!