Don’t think twice! Are you thinking about buying a home, but keep delaying your decision? You may want to reconsider based on the conditions of today’s market and the potential for the future market.
Today’s rental market has seen an increase to the point where it’s significantly less expensive to own than to rent. The monthly cost of housing can be lower, even after repairs are factored into the comparison, as interest rates are low, principal accumulation due to amortization, as well as appreciation and tax savings from owning your home.
The Federal Reserve recently announced that they intend to start increasing the rates. Experts are agreeing that an increase in interest rates is an inevitable conclusion. With that said, a $300,000 home today could be considerably more a year from now. If you have a down payment of 20%, prices increase by 3%, 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%.
Here’s something to ponder when thinking about postponing a long term decision to buy a home. If you wait too long and the rates go up, can you afford that increased amount in a monthly payment because you weren’t ready to make a decision? Do you want to continue paying rent when you could put that money towards the equity of your own home?