Here's Why You Should Buy a Home ASAP
Are you one of those people sitting on the fence trying to decide if now’s the time to buy a home?
You might be a renter with a strong desire to become a homeowner, but unsure whether buying right now makes sense.
Or perhaps you're a homeowner who's realizing that your current home no longer fits your changing needs.
To determine if you should buy now or wait until 2022, you need to ask yourself two simple questions:
Do I think home values will be higher a year from now?
Do I think mortgage rates will be higher a year from now?
Now, let me shed some light on the answers to these questions. Here's why you should buy a home ASAP:
Home prices will increase by 7.7% in 2022
Yes, that's the average of the most recent projections from the major industry forecasters.
Let’s take a house that’s valued today at $325,000 as an example:
- If you make a 10% down payment ($32,500), you'll end up borrowing $292,500 for your mortgage.
- Applying the projected rate of home price appreciation, that same house will cost $350,025 next year.
- With a 10% down payment ($35,003), you'd then have to borrow $315,022.
As a result of rising home prices alone, you'll have to put down an additional $2,503 and borrow an additional $22,523 just for waiting a year to make your move.
Mortgage rates will move from 3% to 3.9% in 2022
Today, mortgage rates are hovering around 3%. However, most experts believe they’ll rise as the economy continues to recover.
Any increase in the mortgage rate will also increase your purchaser’s cost. Here are the forecasts for the first quarter of 2022 from four major entities:
- Freddie Mac – 3.5%
- Fannie Mae – 3.5%
- National Association of Realtors – 3.5%
- Mortgage Bankers Association – 3.9%
The projections average out to 3.6% among these four forecasts, a jump up from where they are today.
What does it mean to you if home values and mortgage rates increase?
You'll pay a lot more in mortgage payments each month if both of these variables increase.
Assuming you purchase a $325,000 home in 2021 with a 30-year fixed-rate loan at 3% after making a 10% down payment, your monthly principal and interest payment would be $1,233.
That same home in 2022 could be $350,025, and the mortgage rate could be 3.6%. That monthly principal and interest payment, after putting down 10%, totals $1,432.
The difference in the monthly mortgage payment would be $199. That’s $2,388 more per year and $71,640 over the life of the loan just for waiting until 2022 to buy!
A house with a similar value would build approximately $25,000 in home equity this year as a result of home price appreciation, and the total net worth increase you could gain by buying in 2021 is nearly $100,000.
Would you miss the opportunity to make that amount of money?
Bottom line is, the financial benefits make it clear that buying a home in 2021 is much more advantageous than waiting until 2022.
Need help navigating the process and calculating payments? Call me! I'll be happy to solve any questions you have.
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