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Did It Make Sense to Wait?

Did It Make Sense to Wait?

There are many people out there who debated purchasing a home over the course of the last year, but ultimately did not. Whatever their reasons were for delaying, let’s look at whether the decision to wait to buy made sense.

What happened in 2014?

The 30 year fixed rate on January 2, 2014 was 4.53% as reported by Freddie Mac. Looking at the chart below, your monthly mortgage payment with principal and interest for a $250,000 home would have been $1,271.17.

Even though interest rates have dropped below 4% and ended 2014 at 3.87%, home prices appreciated by 4.8 percent over the same time according to the Home Price Expectation Survey.

So that same home appreciated by $12,000 and now costs $262,000. The most recent report by Freddie Mac reports the average 30-year fixed rate is currently 3.73%.

Did It Make Sense to Wait? | Keeping Current Matters

Many may say, “See waiting a year made total sense, I’m saving $60 a month.” And they’d be right, over the course of the year they saved $729.36.

But what they haven’t realized, is that as the price of the home they purchased went up by $12,000, even if they just put a down payment of 5%, they had to come up with an additional $600 at the start of the process. So really they’ve only saved $129.36 in a year.

Is a savings of $11 a month really worth holding off on pursuing a home to call your own after you weigh all the benefits that come along with that?

  • Building equity you can borrow against in the future
  • Having a safe, comfortable environment that fits your family’s needs
  • Having control over your space
  • Tax benefits
  • And so many more…

Bottom Line

The experts are predicting that homes will appreciate by another 4% and interest rates will increase by a full percentage point by the end of 2015. If you are in a position to be able to buy a home now before these predictions become reality, contact a local real estate professional and start the process.


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1 reply
  1. Mr. Krispy
    Mr. Krispy says:

    And all the “experts” told us that interest rates would go up last year too, so how much credibility should we give them this time? As long as the Fed continues to monetize the debt, interest rates will probably not change much. Also as Realtors we recognize that buying or selling a home should be based upon so much more than what this post states. If a person’s job is not stable then in spite of all these apparent benefits, it may be a very poor idea to buy now. How about if you don’t know whether you will be transferred within 2 years? Medical issues? Right now can only afford to purchase in an area with a poor school district reputation? I agree that over the long run it is far better to own your home versus rent, but there are so many other things to consider besides the immediate cost effectiveness of purchasing a home. Discussing the larger picture is something each Realtor should be doing. Gotta run, my mother-in-law just called and said she’s moving in with us…..the home I just purchased last month isn’t going to be big enough so house hunting we go…..there’s something else I hadn’t plugged into the equation…

    Reply

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