I know the interest rates are going up...and I've been at my condo for a year. I'm thinking that I should sell my place next year (put it on the market in Feb. 07) and get into something bigger that I'll stay at for a while. Its amazing waht 1 percent can do to a monthly payment. 30yr fixed is at 6% now...it will probably be in the high 6s or low 7s next year...so I want get something bigger and still have a decent mortgage.

 

Well, interest rates are cyclical. Just a few weeks ago interest rates were around 6.25% and that was with a point. Now you can get between 6% and 6.125% with zero points (according to Bankrate).

Personally I would never, ever move b/c of interest rates. I'd stay where I was, save money, then decide what I want to do when I really needed a bigger place. But I would never let interest rates alone dictate when I wanted to move. If you need a bigger place (getting married, kids, etc) next year, then that's different... otherwise I'd stay put until a life change necessitated a bigger place and put away as much money as possible. What's the point of moving, having the same or a larger mortgage, for a little more space? Unless you're getting a bigger place for less money (meaning less mortgage on more house), it's not really worth it.

Also, be sure you are in your place at least 2 years so you can avoid capital gains taxes. If you've been in for a year at this point I'm assuming you moved in April 2005 sometime... so be sure to not close on the sale until after your 2 year anniversary b/c it would only end up taking even more money out of your pocket.

 

Bean mentioned it but www.bankrate.com will survey several "experts" in the field about where they think interest rates are headed. I will say though, when I was following these very closely a year or two ago, their success rate was as high as a blind man peeing in the dark...

Another thought is this- Although things have changed with the real estate market going up and up, could you wait and still get into something that you can afford now? I say this b/c my wife and I "reached" a bit for a house two years ago but we would never be able to afford this house now. We made the move two years ago, knowing that we'd likely not be able to afford this size house again. It was a decision that has paid off very handsomely as we bought our house for 345K in October 2003 and it was just assessed for 550K. Short of winning the lottery, we would not be buying a house of that price today. Most markets are slowing now, but is appreciation in your area increasing faster than your salary? If so, perhaps you should make the move. Just something else for you to chew on....Good luck!