Whether you are buying your first home or selling your current home if your needs change and you think you need to relocate, the decision can be complicated. You may need to consider personal or professional considerations, and only you can judge what effect those factors must have on your desire to move.
However, there is one category that gives a simple answer. When you decide to buy now or wait until next year, the financial aspect of the purchase is easily assessable. You only need to ask yourself two questions:
- Do I think home values will be higher after a year?
- Do I think mortgage rates will be higher in a year?
From a purely financial standpoint, if the answer is “yes” to whether question, you should strongly consider buying now. If the answer to both questions is ‘yes’, you should definitely buy now.
No one can guarantee what home values or mortgage rates will be before the end of this year. The experts, however, seem certain that the answer to both of the above questions is a resounding ‘yes’. Mortgage rates are expected to get up and home values are expected thank you a little nice.
What does this mean for you?
Let’s take a look at how expectation would affect your financial situation. Here are the assumptions made for this example:
- Experts are right – mortgage rates will be 3.18% by the end of the year
- 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
- You pay an additional $ 20,650 for the house
- You need an additional $ 2,065 for a down payment
- You pay an additional $ 116 / month in your mortgage payment ($ 1,392 additional per year)
- You don’t earn the $ 20,650 increase in wealth through stock accumulation
There are many things to consider when buying a home. However in terms of a purely financial aspect, if you find a home that meets your needs, buying now makes a lot more sense than buying next year.
Content previously posted in Keep Current Things