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If you are waiting for home prices to drop, please look at the other side of the equation "Rising Interest Rates".

Many homebuyers are holding off on purchasing in anticipation of lower sales prices.  Unfortunately, the cost of rising mortgage rates can  offset the benefit of lower home prices.

Around the end of October 2010 rates for a 30 year fixed were around 4.25%.  Principal and Interest for $100,000 loan amount would have been $491.94 per month. 

If you wait for the home price to drop 10% to $90,000, and rates have increased by 1.00% to 5.25% the Principal and Interest payment is $496.98.

Where is the savings? The gamble becomes extremely risky, if the drop in home prices is not enough to offset the increase in interest rates. 

We know that rates have been on the rise.  What we do not know is at what level rates will stop climbing.  Economic Forecasters now predict rates to remain somewhere between 5% to 6% for 2011.

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