Holding out to try and find the lowest price is not always the best strategy...

Are your feet stuck in the sand when it comes to investing? Not sure what to do with your money in today’s economic climate? Here’s an interesting perspective on today’s financial opportunities from researchers and experts at the University of Alabama at Birmingham (UAB).

Experts at the university say interest rates are so low that if you invested $1000 in a two-month CD from the bank, it will only earn you 83 cents more than if you stuffed the money under your mattress (or didn't invest it at all). So with the cost of gas to get you to the bank, you are in the hole.

So, what should you do with your money? Andreas Rauterkus, Ph.D., assistant professor of finance with the UAB School of Business, says buy a house. “First-time home-buyer rates are around 3.8 percent for a 30-year mortgage, so if you can afford a $1,000 mortgage payment monthly for 30 years then you can buy a $250,000 home right now,” says Rauterkus. “It won’t get you much in New York City, but you can get quite a house for that in ... affordable areas across the country.”

Lary Cowart, Ph.D., assistant professor of real estate and finance at the UAB School of Business, advised if you qualify for a home loan, don’t wait for the house of your dreams to drop further in price. He, and many other industry analysts, caution that once the housing prices hit bottom, interest rates will rise. And, each time the interest rates rise, you lose money.

Here’s his analysis: “Holding out to try and find the lowest price is not a good strategy because if the house were to go down 10 percent but the interest rate goes up 1 percent you are not gaining anything,” said Cowart. “If rates go up 1 percent, say from 4 to 5 percent, that is a 25 percent increase in the interest rate; so the mortgage payment goes up by more than 10 percent and the amount of house that can be purchased goes down by more than 10 percent. People fail to realize that and it is another little thing that will cost

Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.