• English
  • Español
AGENTS: Did you know you can share a personalized version of this post? Learn more!
, , , , , ,

How Smart Is It to Buy a Home Today?

How Smart Is It to Buy a Home Today?

Whether you’re buying your first home or selling your current house, if your needs are changing and you think you need to move, the decision can be complicated. You may have to take personal or professional considerations into account, and only you can judge what impact those factors should have on your desire to move.

However, there’s one category that provides a simple answer. When deciding to buy now or wait until next year, the financial aspect of the purchase is easy to evaluate. You just need to ask yourself two questions:

  1. Do I think home values will be higher a year from now?
  2. Do I think mortgage rates will be higher a year from now?

From a purely financial standpoint, if the answer is ‘yes’ to either question, you should strongly consider buying now. If the answer to both questions is ‘yes,’ you should definitely buy now.

Nobody can guarantee what home values or mortgage rates will be by the end of this year. The experts, however, seem certain the answer to both questions above is a resounding ‘yes.’ Mortgage rates are expected to rise and home values are expected to appreciate rather nicely.

What does this mean to you?

Let’s look at how waiting would impact your financial situation. Here are the assumptions made for this example:

  • The experts are right – mortgage rates will be 3.18% at the end of the year
  • The experts are right – home values will appreciate by 5.9%
  • You want to buy a home valued at $350,000 today
  • You decide on a 10% down payment

How Smart Is It to Buy a Home Today? | Keeping Current MattersHere’s the financial impact of waiting:

  • You pay an extra $20,650 for the house
  • You need an additional $2,065 for a down payment
  • You pay an extra $116/month in your mortgage payment ($1,392 additional per year)
  • You don’t gain the $20,650 increase in wealth through equity build-up

Bottom Line

There are many things to consider when buying a home. However, from a purely financial aspect, if you find a home that meets your needs, buying now makes much more sense than buying next year.

Members: Sign in now to set up your Personalized Posts & start sharing today!

Not a Member Yet? Click Here to learn more about KCM’s newest feature, Personalized Posts.

4 replies
  1. Fernando Schneider
    Fernando Schneider says:

    I wonder how this equity gain was calculated. 1) that should only 12 months right? 2) only principal, not interest. Please explain the calculation.

    • KCM Crew
      KCM Crew says:

      Hi Fernando, thanks for your question! The equity gain in the example was simply calculated by applying the projected rate of home price appreciation (5.9%) to the purchase price ($350,000).

  2. Alice Carroll
    Alice Carroll says:

    Thanks for the estimate that around $350,000 should be the average price to look for in homes nowadays. I’m interested to buy a home this year so my partner and I are thinking about browsing for listings soon. Maybe it would be helpful to find a good broker to help us out in finding the right one for us.

  3. Eli Richardson
    Eli Richardson says:

    It’s great that you talked about house buying and its financial benefits. Recently, my sister mentioned she’s thinking about owning a house. She’s not familiar with how the housing market works, so I think this article could help her. Thanks for the advice on what to consider if purchasing a home.


Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *