Q: I want to buy a three-bedroom house in Morrell Park to be close to my parents. The problem, is I am only approved for $120,000 and most of the homes I like cost more. Should I wait and see if the market gets better, or should I just look elsewhere?
A: The average price in Morrell Park today is $186,000. It will be extremely difficult to find a home in Morrell Park for $120,000, especially since the lowest price for a home right now is just under $150,000. Just so you know, only four homes have sold in the past year for less than $150,000.
Waiting? I don’t think it’s prudent. I honestly can’t say there will be a better time than now to buy. Prices have come down in the past four years, and I don’t know where they’ll go yet, but it is mostly a great time to buy now, because of the low interest rates.
You can afford more now at a lower interest rate than when interest rates go up. Buying a home for $120,000 with an FHA loan at a 5 percent interest rate translates into about $900 per month in Northeast Philadelphia, if you are not putting much down. If the interest rate goes up just one percent, your monthly payment jumps to about $980, which may take you from being qualified for $120,000 down to $108,000.
If you want to stay close to your parents, you can definitely find a three-bedroom in Holmesburg or Mayfair in your price range. There are 54 in your price range in the 19136, but none in the 19114 zip code.
Stacey McCarthy is a real estate agent with the McCarthy Group of Keller Williams. Her Real NEastate column appears every Wednesday on NEastPhilly.com. See others here. Read other NEast Philly columns here.