Monday, May 20, 2019 / by Amber Felton
The excitement all started a couple of months ago when you made the decision to buy a house. You were pre-approved with a lender then on your way to meet with your realtor for a buyer consult to find the perfect new home! You saw a few houses you liked, but after weeks of searching you just couldn’t find “the right one.” So now you’ve given up hope, figured it just isn’t meant to be, and you’ve decided to wait a little longer before buying.
You’re thinking maybe 6 months, maybe a year? You think with time, you’ll have a better idea of what you’re looking for and more inventory will be available to choose from this time next year. Or maybe you’ll try to save a little more, thinking the higher down payment will help you with your buying power to afford a home in a slightly more expensive price point.
In the long run, your decision to wait to buy may not produce the results you’re looking for. You’re not considering that inflation, appreciation, and rising rates may actually decrease your buying power.
Let’s say for example, you were looking at homes in the $225,000 price range today. A year from now, those same homes would cost approximately $232,500. So now you’re looking at paying more for similar homes that you were looking at today. The higher price of the home results in a domino effect, ultimately increasing your down payment, mortgage closing fees, and monthly mortgage payment.
But that’s not all…in the meantime rates have increased as well. Rates are currently at an all time low, and while we can’t predict what will happen with future rates, all signs point to increasing rates over the next year. So your awesome rate quote of 4.25% today, is now at 4.625% a year from now. Between the higher purchase price and increasing rate, your monthly payment has now increased by $88/month.
And if you did continue to save over the next year, say an extra $10,000, to go towards the down payment…well, a year from now that would basically keep your payment the same as if you were to buy that same house today!
Ultimately, the decision to buy a home is a personal decision between you and your family to better you for the long term. But if you’re waiting to buy because you feel defeated and you’re just tired of looking right now, my advice would be don’t give up hope! Keep looking…the right home is out there for you, even if it’s not on the market yet. Don’t put your dreams on hold and wait for a year - you could end up missing out on the perfect home as it comes on the market and is quickly sold – and it could ultimately cost you more in the long run!
For more information on how the “cost of waiting” could impact you and your personal scenario, please reach out to Melissa Guzman with BankSouth Mortgage at 912-313-5511 for a free personal analysis!