I meet with lots of buyers every week and many are ready to jump in right away. But some think they might wait for home prices to “come back down”. I’m of the opinion that nay philosophy is the right one, so long as it’s based in sound reasoning and facts. Wouldn’t it be great to get that same home for less $? But could there be a Hidden Cost of Waiting To Buy?
While we don’t what the price of homes is going to do in the future, we must assume that rates will go up. It’s really the only way they can go. Here’s a Forbes article on it.
How about some examples?
- Let’s say that you wanted to by a home for 682,500, with a new loan amount of 562k.
- –At a high rate today of 4% that would cost you 2683/mo.
- –If rates went up just 1%, at 5% that loan would cost 3016/mo
- That’s a cost difference of $333/mo!
You might say, well the price of homes will go down too. Ok, what if they drop a lot?
- What if your new loan is only 512k ($50k less)?
- –At 5% that payment is 2748/mo
- –That’s still higher than what you would have paid with a lower rate and a higher purchase price!
I found this math to be telling. What it tells me is that it’s important to do the numbers. Play them out fully with a professional that can help you analyze your predictions and see if your “gut feeling” is accurate. To have a predictive mortgage plan put in place for you, simply click here and shoot mean email. Or you can click my name below to learn more about me first.