If you’ve been thinking about buying a home, one of the questions you are likely asking yourself is this: “Is now the right time, or should I wait?” You might be wondering if the market is too hot to get the house you want right now, or maybe you’ve thought it would be better to save for a more significant downpayment. Your instinct tells you to hold off and wait.
But, based on recent Freddie Mac home price and mortgage rate projections, however, waiting to buy a home could cost you more than time.
There are three critical ideas to consider before deciding whether to buy now or delay your home purchase for a year or more.
1. Whether home values will be higher
2. Whether mortgage rates will be higher
3. Whether the amount of money you can save while you wait will make a difference in what you can buy.
Let’s dive into each one of these factors so you can make the best decision.
Say you need to take out a $500,000 loan to buy a new home today. With home prices on the rise, that same home could require a $560,000 loan by next year and an almost $600,000 loan the year after that (according to Freddie Mac projections).
When you add in their projections that mortgage rates will only rise from their current historic lows, you can start to get the picture of how waiting will cost you.
Here’s what it could look like:
Source: Freddie Mac, Keeping Current Matters
To boil all that down, your monthly mortgage payment, if you make a home purchase today, will likely be lower than if you wait a couple of years to buy the same house.
Remember, when you’re thinking about home prices, these are huge numbers, so even a slight change in your mortgage rate could add up to thousands and even tens of thousands of dollars down the line.
Let’s now explore the idea of waiting to save more money for a downpayment.
Get this—for every $10,000 you save, that only saves you around $50 per month on your mortgage payments. So, unless you can save quite a lot while you wait to buy a home, the extra savings isn’t going to make a huge difference.
Of course, there are other factors to consider. Your location, income, and credit score will all have an impact, so there is no one cookie-cutter decision that works for everyone. If you need time to get to a higher income level or credit score before purchasing a home, waiting could be proper for you.
The general idea to keep in mind is that waiting isn’t always the correct answer financially for everyone, even if the market cools and even if you could save more by waiting.
Ultimately, the best time to buy a home is when the timing makes sense for your life. Like investing in the stock market, you don’t try to time everything precisely because it’s a long-term investment. But, it doesn’t always make financial sense to wait for things to “calm down.”
If you are trying to decide when is the right time, I’d love to help you with that decision. And, no, my answer is not always to buy now. Also, my answer isn’t always the same for every client. My recommendations to each client differ based on that particular client’s financial situation and life plans.
My job isn’t just to help you buy or sell a home.
My goal is to help you make good real estate decisions, so I want to hear from you as you think through things, not just when it’s time to start packing. Reach out to me when you start wondering and daydreaming. I’ll give you all the information I have, listen to what you want to accomplish, and help you develop a plan that we’ll execute together when you decide the time is right.
Let’s chat. Email at Tehane@HonoluluLIFEstyleGroup.com I can’t wait to hear from you!
I'm Tehane, a local realtor helping locals buy, sell, and stay local. in Honolulu Schedule a conversation, and let's talk about your current situation and where you want to be.. Then, let's create a plan to get you there. Every journey begins with the first step!
BHGRE Advantage Realty
4211 Waialae Avenue, Box 9050
Honolulu, HI. 96816