# Why Waiting to Buy a Home Could Cost You a Small Fortune

By
Real Estate Agent with Smart Way America Realty AB067859

Many people are sitting on the fence trying to decide if now’s the time to buy 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 determine if they should buy now or wait another year, they both need to ask two simple questions:

1. Do I think home values will be higher a year from now?
2. Do I think mortgage rates will be higher a year from now?

Let’s shed some light on the answers to these questions.

#### Where will home prices be a year from now?

If you average the most recent projections from the major industry forecasters, the expectation is home prices will increase by 7.7%. Let’s take a house that’s valued today at \$325,000 as an example.

If the buyer makes a 10% down payment (\$32,500), they’ll 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’d then have to borrow \$315,022.

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.

#### Where will mortgage rates be a year from now?

Today, mortgage rates are hovering around 3%. However, most experts believe they’ll rise as the economy continues to recover. Any increase in the mortgage rate will also increase a purchaser’s cost. Here are the forecasts for the first quarter of 2022 from four major entities:

The projections average out to 3.6% among these four forecasts, a jump up from where they are today.

#### What does it mean to you if home values and mortgage rates increase?

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.

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.

The difference in the monthly mortgage payment would be \$199. That’s \$2,388 more per year and \$71,640 over the life of the loan.

Add to that the approximately \$25,000 a house with a similar value would build in home equity this 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’s a small fortune.

### Bottom Line

When asking if they should buy a home, many potential buyers think of the nonfinancial benefits of owning a home. When asking when to buy, the financial benefits make it clear that doing so now is much more advantageous than waiting until next year.

What best fits your real estate goals right now - buy, sell, perhaps both? With years of area knowledge and repeat clients from trusted service and personalized guidance each step of the way, we find the solution(s) customized to your needs - growing family space, single or multi-generational residence, remote workplace, relocation, retirement, vacation or investment. Your Home Sweet Home is waiting.

Contact Kris Collis now, your Trusted Pro in the Poconos for professional results you expect.

Courtesy:  KCM

Posted by

Your Trusted Pro in the Poconos, Professional Results You Expect

Kris Collis, Associate Broker

Smart Way America Realty

East Stroudsburg, PA 18301

Client Endorsements

570-801-5525

buysellpocono@gmail.com

## Comments (3) Subscribe to Comments

Karen Climer
Demetree School of Real Estate - Orlando, FL
Teaching people to pass the real estate exam

Great article.  Sometimes it's better to buy now with a lower down payment, then to save for a larger down payment but pay more because the price of the house is up.

May 06, 2021 05:13 AM
Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Well done, great post and make it a great Thursday.  Bill Salvatore

May 06, 2021 05:24 AM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

When people are ready to buy that is when they should buy.  I have seen too many instances of people being in worse positions because they tried to time the market to be perfect.

May 06, 2021 05:46 AM