It Doesn’t Pay to Wait To Buy A Home

It Doesn’t Pay to Wait To Buy A Home// <!—->// //

There will always be those who try to “time the market,” but there’s one factor you can’t know — when buying a home will become more expensive.

Certainly you can tell from recent trends whether or not prices and mortgage interest rates are in your favor. Monthly prices have risen year-over-year for three years. Mortgage interest rates are slowly rising, but remain at extremely attractive levels.

It Doesn’t Pay to Wait To Buy A Home// <!—->// //

You could wait for prices to fall, but there are two problems with that idea. First, it would take an economic recession to lower prices, which could take months or years. With the exception of the Great Recession, you won’t know if you’re in or out of a recession until the talking heads online inform you.

Second, mortgage interest rates have been kept artificially low for five years. That’s a very long time. With steady gains in employment, it’s not likely they will go any lower. In fact, higher interest rates could wipe out any gains you could save by waiting to buy.

Here’s a real life example:

If you buy a home and get a $200,000 30-year, fixed-rate mortgage at 4.5 percent, your monthly payment will be $1,013.37 and you’ll pay $164,813.42 in interest over the life of the loan.

The same home at 5.0 percent interest costs $1,073.64, a difference of $60.27 more per month and $186,511.57 in interest over the life of the loan. The difference in interest payments alone is $21,698.15.

If your home dropped 5% in value and you were able to buy it at $190,000 and 4.5% interest, your payment would be $962.70, a difference of $50.67 per month, with $156,572.75 in interest over the life of the loan. You’d save $50.67 more per month than if you’d paid $200,000.

At 5.0 percent, your $190,000 home costs $1019.96, or $53.68 more per month than if you’d gotten the loan at 4.5 percent. Your interest payments would total $177,185.99 over the life of the loan. The difference in payments is $20,613.24.

Currently, mortgages for borrowers with good credit are around 4.00 percent. If you had purchased your $190,000 home a year and a half ago when prices were lower and interest rates were at 4.00% interest, it would cost you $907.09 per month and a total of $13,6552.06 in interest.

The question is — did you?

There’s never a perfect time to buy a home and you shouldn’t buy a home just for financial reasons. Buy your home to raise your family, be close to friends and relatives and to be free from a landlord where you get nothing back but cancelled checks at the end of the lease.

Don’t put your dreams off to gamble with the market. Think of getting the home you want at a reasonable price and payment as the best way to beat the market.

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About thenoelteam

As a Broker with RE/MAX Alliance, I work energetically for my clients whether they are a buyer or seller. I help you achieve your goal of owning a home or getting the best price for your home in the shortest time possible. After graduating from UCLA with a degree in communications and finance, I was licensed in 1977 and since then I have sold over 3600 properties amounting to over $1 billion in sales. I currently rank in the top 10 in home sales for Colorado. I offer the same quality of service and superior communication to all clients, ranging from starter homes to multi-million dollar estates, commercial and income properties, relocations and foreclosures My goal is to provide you with the best representation possible whether you are buying or selling. Over the years, one of the things that I've discovered is that there is a difference in the way individual Realtors do business. For me, I have always felt that honesty and personal integrity are the foundations upon which a successful business and career are built and sustained. I have an extensive background and knowledge base in real estate, including financing, which has enabled me to provide outstanding, quality advice and service not found with many agents today. My commitment to communication creates a positive relationship between my client and myself that results in a successful property sale or purchase. My passion for real estate, commitment to my clients and personal integrity has helped me to achieve success placing me in the top 1% of all brokers in nationwide. In my career, I have earned a number of awards and received considerable recognition for my success but the most significant recognition comes from the fact that over 75% of my business comes from past clients. My success is a true measure of my client satisfaction.
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