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How Smart Is It to Buy a Home Today?

How Smart Is It to Buy a Home Today?

Little boy walking down a tree lined road carry a suitcase and teddy bear. How smart is it for him to buy home today?

Do you think it is smart to buy a home today? Whether you’re buying your first home or selling your current house, if your needs are changing and you think you need to move, the decision can be complicated. You may have to take personal or professional considerations into account, and only you can judge what impact those factors should have on your desire to move.

However, there’s one category that provides a simple answer. When deciding to buy now or wait until next year, the financial aspect of the purchase is easy to evaluate. You just need to ask yourself two 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?

From a purely financial standpoint, if the answer is ‘yes’ to either question, you should strongly consider buying now. If the answer to both questions is ‘yes,’ you should definitely buy now.

Nobody can guarantee what home values or mortgage rates will be by the end of this year. The experts, however, seem certain the answer to both questions above is a resounding ‘yes.’ Mortgage rates are expected to rise and home values are expected to appreciate rather nicely.

What does this mean to you?

Let’s look at how waiting would impact your financial situation. Here are the assumptions made for this example:

  • The experts are right – mortgage rates will be 3.18% at the end of the year
  • The experts are right – home values will appreciate by 5.9%
  • You want to buy a home valued at $350,000 today
  • You decide on a 10% down payment

Grid shows the difference in home value, mortgage rate, sown payment amount, mortgage amount, mortgage payment, and equity gained of home purchased today versus waiting an year to purchase the same home.

Here’s the financial impact of waiting:

  • You pay an extra $20,650 for the house
  • You need an additional $2,065 for a down payment
  • You pay an extra $116/month in your mortgage payment ($1,392 additional per year)
  • You don’t gain the $20,650 increase in wealth through equity build-up

Bottom Line

There are many things to consider when buying a home. However, from a purely financial aspect, if you find a home that meets your needs, buying now makes much more sense than buying next year. DreamWorks Real Estate, Inc is a boutique style real estate office, we have a team of professionals to help you with all your real estate needs and concerns. We look forward to servicing you and helping you find your dream home. Contact us today to, your dream home awaits.

 

Legal Stuff:
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. DreamWorks Real Estate, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. DreamWorks Real Estate, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.