For whatever reason that you or a family member have delayed buying a home, it may be time to reconsider that decision based on today’s conditions and what we expect to happen in the future.
Rents are continuing to increase to the point that in the markets our company serves, it can be significantly less expensive to own than to rent. Even after you factor home maintenance into the equation, the low interest rates, principal accumulation due to amortization, appreciation and tax savings lower the monthly cost of housing. At today’s low rates, roughly a third of our payment is going straight to principal! For most of us, owning a home is the best thing we can do to grow our net worth.
Low inventories coupled with strong demand are causing prices to rise. Another reason for higher values is that builders, especially in certain price ranges, have not ramped up new home starts to keep up with the demand. Renting is still cheaper than buying at Tahoe, but not in most markets from Reno to Sacramento.
Recently, the Federal Reserve announced that they intend to start raising rates. Most experts agree that higher interest rates are a foregone conclusion; it is just a matter of when it will happen.
If interest rates do rise, a $300,000 home today could cost considerably more one year from now. With a 20% down payment, if prices go up by 3% and the interest rates increase by .5%, the principal and interest payment at 3.625% would be $1,094.52 for 30 years compared to $1,198.05 at 4.125%. The net effect is that waiting a year could cost you both a loss of the appreciation gain and a higher payment for 30 years!
The question is not necessarily “can you afford the additional $103.53 more per month that you’d have to pay for the home during the 30 year term?” More importantly, “How would you feel about having to pay more because you weren’t ready to make a decision and what would you have spent the difference on if you didn’t have to pay a higher payment?”
I would be happy to sit down with you and go over today’s opportunities in detail. For more information, or to refer a family member or friend, please give me a call. You can always count on me to take fabulous care of everyone you refer.