If owning a home has always been in your plans but it’s something you’re not quite ready to do, have you ever really thought about the true cost of waiting to purchase a home? Now that the real estate market is recovering, interest rates are going up and so are home prices; this isn’t the best news for buyers and many young people that have decided to put off purchasing a home for a few years don’t really understand the important financial impact it could have on their lives. Let’s break it down.
If you decided to purchase a home today that cost $300,000 and you obtained a mortgage with a 4.25% interest rate, your monthly mortgage payment would be $1475.82. If, for whatever reason, you decided to wait a year or two and home prices and interest rates continue to climb, as many real estate experts predict, that same home could potentially be priced at $330,000. Let’s say you try to purchase the home and your interest rate is 5.25% (really, 1% can’t have that much of an impact, right?). Your new mortgage payment would be $1822.27, a difference of $346.45 per month from the previous number if you were to purchase sooner rather than later. That’s $4157.40 a year and $124,722 over 30 years. Now have we gotten your attention on the importance of this matter? That’s a whole lot of money you could potentially use for other things, whether it be something small over time like getting a daily coffee or something on a larger scale such as a dream vacation, many potential homebuyers don’t realize how quickly all of this can add up.
Whether you’re ready to purchase a home right now or not, it’s best to reach out to a real estate agent and determine just how much the market is expected to change in your area over the course of the next year. If you could save yourself over $100,000 before you even retire, wouldn’t you say it’s worth it?