A while ago, I wrote about how you may miss your opportunity to buy a home at a great price. Well, if you didn't buy then, you may have missed that opportunity.
Although still reasonable compared to historical prices, home prices have crept up in 2013. The number of homes available at a given price is somewhat restrictive, and the median sales price in this area has increased more than ten percent in the last year. So, you can expect to spend around ten percent more this year than last for a similar home. Well, sort of...
The purchase price of the same home today may be about ten percent higher than a year ago, but your mortgage payment will add around thirteen percent to the amount you finance. In real numbers, that means that, if you bought that $200 thousand home you were considering a year ago and financed ninety percent of its price at the approximate average rate of 3.5%, your principal and interest payments would have been around $808. Today, that same home sells for at least $220 thousand, and financing 90% of it at the current average rate of 4.5% (or more) would cost you about $1,004 a month.
So your penalty for not acting a year ago is having to come up with a higher down payment, and pay a couple hundred dollars a month for the next thirty years. That is, if you can qualify for the additional amount. If you have been qualified for a maximum of $808 (the area you shopped a year ago), you are now looking for a home priced around $159 thousand. That would be a home priced around $146 thousand a year ago.
With the assistance of a reputable home finance adviser, you can decide if it's still possible to fire your landlord. While nobody can accurately predict the future, I know of no logical reason to believe that the current trend will reverse. If you are still in a financial position that allows you to buy, congratulations. If you want to put together an action plan, or just discuss possible strategies, call me.
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