When is the Right Time to Buy Your First Home?
By Jeff Cook | February 13th, 2017
One of the most popular questions when referring to cost of living is trying to figure out which is cheaper, renting or buying? At times, renting may be cheaper but that money is not being invested into a permanent home. Homeownership may be costly at times with taxes and insurance, plus any maintenance. However, owning is an investment and you can cash in on home equity whenever you sell. That’s something you can’t look forward to when renting, unless you prefer to be a nomad. But if you are really interested in owning your own home one day, let’s talk.
So you want to buy a home but you might be pushing off the idea till next year. A lot can happen in a year though! We’ve mentioned a few times recently that the interest rates are rising. They’ve already gone up by 1%. And a 1% increase in an interest rate can mean a 10% decrease of your borrowing power. Let’s say you were already pre-approved to buy a $200,000 home. Well after that 1% increase back in December, you can now only borrow $180,000. If you don’t have that extra $20,000 saved up for a down payment, you’ll have to adjust your home search, not to mention that the price of homes continue to rise also.
Let’s look at the projected interest rates from Freddie Mac. Right now the average is 4.01% but it is projected to rise to 4.80% next year. That might not seem like much, however, CoreLogic (a data analysis company) is predicting a 5.3% increase in home prices. So a home worth $250,000 could cost you $263,250 next year. That’s a big jump. That will bring your mortgage payment from $1,195 per month to $1,382 per month, before adding in escrow! That may only be a $187 difference but that could be the very thing holding you back from a new car payment, or even new furniture for your first home. If you look at it over one year, that adds up to $2,244. Imagine what you could have put all that money towards. Credit cards, student loans, the ideas are endless. Over the length of your original thirty-year note, that could be a difference of $67,032. That could’ve been savings to send your future children to college or put away for retirement. Don’t get caught up in the cost of waiting to buy!
You might have a million excuses as to why you don’t think you could buy a home. Low credit, low income, too many student loans. There are many programs out there to help you become a homeowner. Don’t let fear get in the way. Call today and let us help you go over your options.
Interested in your home value? Visit: www.843value.com
Interested in buying a home? Visit: www.JeffCookRealEstate.com
Interested in renting a home? Visit: www.RentHolyCity.com
Interested in selling for quick cash? Visit: www.TitanHomeBuyers.com
Jeff Cook Real Estate