If you’re thinking of buying a home but wondering if waiting a few years will save you in the long run, think again. The longer the wait, the more you’ll pay, especially when mortgage rates and home prices rise. Even the slightest change in the mortgage rate can have a big impact on your buying power no matter your price point. Don’t assume waiting will save you money.
The graphic below explains the difference a mortgage interest rate and home appreciation can make on your overall monthly mortgage payment. Notice the two columns, mortgage interest rate and annual home appreciation projection, and look at the difference in percentage from 2021 to 2023. Annual home appreciation is expected to rise, and so is the stability and financial well-being of homeowners. The most recent Home Price Expectations Survey – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists – forecasts home prices will continue appreciating over the next five years, adding to the record amount of equity homeowners have already gained over the past year.
If for instance you take out a $500,000 home loan in 2021 with an interest rate of 2.8%, your monthly mortgage payment will be $2,054, and your home could potentially appreciate 12.1%. Compare this to waiting to purchase the same home in two years. Taking appreciation into account, the same home in 2023 would now cost $590,000. If interest rates rise even just one percent, this would increase your monthly mortgage payment from $2,054 to $2,750, and you’d be paying $696 more per month.
If purchasing a home makes sense for you right now, we’d love to speak to you about your options.
Contact The Ladd Group: 541.633.4569