Should You Really Wait to Buy Your Home?
If you have been paying attention to the real estate market at all or have been considering buying, you might already be aware that interest rates have been on a slow rise. While this might appear to be of concern if you are considering buying, you shouldn't let it deter you from buying a home this year!
While the interest rates have gone up slightly since last year, it is still a great time to get into the market. We heard from local Marketplace Lenders and they advised that many financial experts expect that the rates will hit the 5% mark or higher for a majority of the year.
While it is always important to remember these are predictions and the market can change every single day, it is likely the rates will continue to be on the rise according.
So why does this mean you should still buy?
If you refer to the image below, we see a few predictions on monthly payments on a home that is worth $250,000 in this market compared to what it could be in a year with a higher interest rate.
As you can see from the graphic if you were to purchase a home now at $250,000 with 20% and qualify for an interest rate of 4.625% your estimated monthly payment would be $1,028.28.
If you were to wait a year, it is expected that the interest rates could be around 5.4%. If that were true, and home prices were to have a 3% increase in value, you would potentially be looking at buying the same house for $7,500 more and have an estimated monthly payment of $1,156.75. This is a $128.47 monthly increase.
On the other hand, if you waited a year and home values decreased by 3%, you could theoretically purchase the same home for $242,500. However, because of the higher interest rate, you would be paying $1,089.37 which is still an $61.09 monthly increase. Over the course of a year that's an additional $733.08 out of your pocket.
This essentially means that if you have an ideal monthly payment, your purchasing power may decrease in the next year with potentially raising rates.
What if I'm Still REALLY Not Ready to Buy?
We do understand that not everyone is in a place to be able to purchase right now, and that is perfectly fine! As always, we recommend that if you are thinking of buying now, or sometime in the near future that you take the time to meet with a lender.
They can help review what you should expect when you do go to purchase a home in more detail, and if you are really not ready to buy, what you can do to help you get ready in the next year. This means reviewing any debts, your budget, and the amount of liquid assets you have for down payment and closing costs to not only give you advice, but to help give an estimate of what you can qualify for and your monthly payments.
Are you interested in seeing what's on the market or reaching out to a lender for help? Visit our website to see our vendors and to learn more about how our team can help you with your real estate goals at RJandCoHomes.com.