As a buyer in today’s market, you need to be very concerned about the “long-term cost” of the home. With home prices expected to appreciate on average by 4.8% over the next 12 months and interest rates predicted to be in the 5.25% and 5.5% range in the next 12 months, waiting to buy a home no longer makes financial sense.
Here is a simple demonstration of the financial impact that an increase in interest rate and appreciation would have on the mortgage payment of a home selling for $250,000 today if you were to wait a year:
As you can see, the difference in the monthly payment between buying the home today versus buying it at the end of next year is calculated to be $143.24 which is $1,718.8 annually. Over a 30 year period, the total long-term cost of buying the home a year from now instead of today would be an additional $51,566.
So if buying a home is in your plan for this coming year, doing it sooner rather than later could save you thousands of dollars over the term of your loan. If you would like to talk more about your ability to buy a home now instead of a year from now at a higher long-term cost to you, feel free to reach out to me.