I talk often to people who are wondering whether or not they should buy their dream home now or wait for another year or two. The three main reasons I hear for waiting are 1.Saving money for a down payment 2. Waiting until my credit scores are better 3. Wait to see if prices are going to go down.
Here are some answers that might be helpful.
1. Many people believe that a down payment is going to make a lot of difference in their payment. Here is a rough idea of how a monthly payment is affected. For every $1000 that you put down on a home your payment will be effected by between $7 and $10 per month. So...how long will it take you to save $20,000? Let's pretend that you will be able to save $20,000 within a two year period. In Oregon...this is how it will look. Instead of buying today you decide to wait 2 years so you can save $20,000 which according to your figures you will be saving between $150 and $200 per month. BUT...and here is what is interesting. If you wanted to buy a house today for $300,000 but decided to wait for 2 years to save for a down payment that same house two years from now will be between $360,000 and $400,000 based on conservative appreciation in the Oregon market. So now... two years later you take your $20,000 you saved (if you were able to save that much) and plunk it down on that $300,000 home that is now $360,000. Have you done the math yet? You are paying $40,000 more or $300 plus per month more than you would have two years ago AFTER you put your $20,000 down. Think about it.
2. If your mid score is 640 or above you can buy a home for zero down...and you should buy now! Scores do make a difference in your interest rate and consequently your monthly payment. But...while you are working at getting your scores up the price of homes are increasing significantly and you are missing out on all of the interest deductions which means actual money in your pocket of from $200 to $800 per month or more depending on your income tax bracket and price of home you purchase. You are much better off to buy now and get in on the appreciation and interest deduction and refinance down the road.
3. In Oregon prices occasionally adjust and sometimes that means they go down slightly for a brief time. But in the overall market they are consistently going up. And if you wait for your "Big Break" in the housing market you may be waiting 1,4 or 10 years. In fact you will be waiting and you will lose out on all the appreciation value.
Another thing...for the average buyer foreclosures are a waste of time. Most people think they are going to make a killing on foreclosures. Most investors do not make a killing....maybe a profit but not a killing. Lots of competion for foreclosures in the Oregon market. If you are looking for your dream home you are better off buying it now and let it work for you because it will work for you.
"Till next time......stay cool