Last year I met a lot of people who were debating whether or not 2014 was the right time to buy a home for their family. Some of these buyers decided to put off the purchase of a new home until 2015. Wouldn’t it be interesting to see whether their decision to wait made sense?
The calculations below are from an article from the Keeping Current Matters and help us find out waiting to buy was the right decision in 2014.
The 30 year fixed rate on January 2, 2014 was 4.53% as reported by Freddie Mac. Looking at the chart below, your monthly mortgage payment with principal and interest for a $250,000 home would have been $1,271.17.
Even though interest rates have dropped below 4% and ended 2014 at 3.87%, home prices appreciated by 4.8 percent over the same time according to the Home Price Expectation Survey.
So that same home appreciated by $12,000 and now costs $262,000. The most recent report by Freddie Mac reports the average 30-year fixed rate is currently 3.73%.
Many may say, “See waiting a year made total sense, I’m saving $60 a month.” And they’d be right, over the course of the year they saved $729.36.
But what they haven’t realized, is that as the price of the home they purchased went up by $12,000, even if they just put a down payment of 5%, they had to come up with an additional $600 at the start of the process. So really they’ve only saved $129.36 in a year.
Is a savings of $11 a month really worth holding off on pursuing a home to call your own after you weigh all the benefits that come along with that?
1. Saving money by building equity
2. Having a safe, comfortable environment that fits your family’s needs
3. The ability to make your home your own
4. Tax benefits
5. The ability to borrow money against equity in the future
6. And so many more…
The experts are predicting that homes will appreciate by another 4% and interest rates will increase by a full percentage point by the end of 2015. If you are in a position to be able to buy a home now before these predictions become reality, give us a call at (949) 395-0960 and let’s start the process!
About Jaleesa Peluso
Jaleesa Peluso specializes in Orange County homes and real estate investments. For more information about buying or selling a home in Orange County, give us a call at (949) 395-0960!