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Waiting To Buy? Why Buying Now Will Actually Save You Money

If you have yet to take the big step of purchasing a home even though you have the financial means to do so, you might want to look into what it is essentially costing you in the long run. Purchasing a home a year or two down the road might be in your game plan but there are a couple of important factors that might make you want to consider buying sooner rather than later.

First, interest rates are once again on the rise. While they were at historical lows not too long ago they have started to steadily climb. If you wait a year or two to purchase your home, it’s highly likely the interest rate will be much higher than today. For example, if you obtain a home loan for $200,000 today at 4.125% interest your mortgage payment will be $969, not including homeowner’s insurance and property taxes. If you wait a year or two and interest rates increase by one single percent to 5.125 your new monthly payment is $1089, again not including homeowner’s insurance and property taxes.

Another thing to keep in mind is that home prices are also rising; the housing market has started to recover in the past few years and what was once a buyer’s market is now turning into a seller’s market. So, again, if you wait that extra year, what was once a $200,000 loan may now need to be a $225,000 loan with a 5.125% interest rate. This makes your new payment $1225, still not including homeowner’s insurance and property taxes. If you were to buy this year, that’s a savings of $256. Annually it adds up to a little more than $3000 and over the course of a 30-year loan, over $92,000.

While you may think that, in the long run, it won’t hurt to wait a bit longer, when you look at the previous example and consider that both interest rates and home prices are increasing, it’s obvious that the best financial decision is to purchase sooner rather than later. $92,000; doesn’t that sound like a nice amount of money you’d want to save?