Many people are sitting on the fence trying to decide if now\u2019s the time to\u00a0buy a home. Some are renters who have a strong desire to become homeowners but are unsure if buying right now makes sense. Others may be homeowners who are realizing that their current home no longer fits their changing needs.<\/p>\n\n\n\n
To determine if they should buy now or wait another year, they both need to ask two simple questions:<\/p>\n\n\n\n
Let\u2019s shed some light on the answers to these questions.<\/p>\n\n\n\n
If you average the most recent\u00a0projections\u00a0from the major industry forecasters, the expectation is home prices will increase by 7.7%. Let\u2019s take a house that\u2019s valued today at $325,000 as an example.<\/p>\n\n\n\n
If the buyer makes a 10% down payment ($32,500), they\u2019ll end up borrowing $292,500 for their mortgage. Applying the projected rate of home price appreciation, that same house will cost $350,025 next year. With a 10% down payment ($35,003), they\u2019d then have to borrow $315,022.<\/p>\n\n\n\n
Therefore, as a result of rising home prices alone, a prospective buyer will have to put down an additional $2,503 and borrow an additional $22,523 just for waiting a year to make their move.<\/p>\n\n\n\n
Today,\u00a0mortgage rates\u00a0are hovering around 3%. However, most experts believe they\u2019ll\u00a0rise\u00a0as the economy continues to recover. Any increase in the mortgage rate will also increase a purchaser\u2019s cost. Here are the forecasts for the first quarter of 2022 from four major entities:<\/p>\n\n\n\n
The projections average out to 3.6% among these four forecasts, a jump up from where they are today.<\/p>\n\n\n\n
A buyer will pay a lot more in mortgage payments each month if both of these variables increase. Assuming a buyer purchases a $325,000 home this year with a 30-year fixed-rate loan at 3% after making a 10% down payment, their monthly principal and interest payment would be $1,233.<\/p>\n\n\n\n
That same home one year from now could be $350,025, and the mortgage rate could be 3.6% (based on the industry forecasts mentioned above). That monthly principal and interest payment, after putting down 10%, totals $1,432.<\/p>\n\n\n\n
The difference in the monthly mortgage payment would be $199. That\u2019s $2,388 more per year and $71,640 over the life of the loan.<\/em><\/strong><\/p>\n\n\n\n Add to that the approximately $25,000 a house with a similar value would build in home\u00a0equity\u00a0this year as a result of home price appreciation, and the total net worth increase a purchaser could gain by buying this year is nearly $100,000. That\u2019s a small fortune.<\/p>\n\n\n\n When asking\u00a0if\u00a0<\/em>they should buy a home, many potential buyers think of the\u00a0non-financial benefits\u00a0of owning a home. When asking\u00a0when<\/em>\u00a0to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.<\/p>\n","protected":false},"excerpt":{"rendered":" Many people are sitting on the fence trying to decide if now\u2019s the time to\u00a0buy a home. Some are renters who have a strong desire to become homeowners but are unsure if buying right now makes sense. Others may be homeowners who are realizing that their current home no longer fits their changing needs. To […]<\/p>\n","protected":false},"author":2,"featured_media":1758,"comment_status":"closed","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,18,20],"tags":[10,35,31,34,36],"class_list":["post-1757","post","type-post","status-publish","format-standard","hentry","category-buyers","category-financial","category-interest-rates","tag-buyers","tag-home-buying","tag-home-prices","tag-homebuyers","tag-mortgage-rates"],"_links":{"self":[{"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/posts\/1757","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/comments?post=1757"}],"version-history":[{"count":1,"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/posts\/1757\/revisions"}],"predecessor-version":[{"id":1759,"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/posts\/1757\/revisions\/1759"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/media\/1758"}],"wp:attachment":[{"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/media?parent=1757"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/categories?post=1757"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonkellergroup.com\/wp-json\/wp\/v2\/tags?post=1757"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Bottom Line<\/strong><\/h3>\n\n\n\n