Are you waiting until next year to buy? Whether you are trying to save more money or holding out for the perfect home, you may want to reconsider the wisdom of waiting until next year to buy. National home prices have increased by 6.7% year-over-year. Over that same time period, interest rates have remained historically low which has allowed many buyers to enter the market. Spoiler alert – that is starting to change!
As a seller, you will likely be most concerned about ‘short-term price’ – where home values are headed over the next six months. As a buyer, however, you must not be concerned about price, but instead about the ‘long-term cost’ of the home.
The Mortgage Bankers Association (MBA), Freddie Mac, and Fannie Mae all project that mortgage interest rates will increase by this time next year. According to CoreLogic’s most recent Home Price Index Report, home prices will appreciate by 5.2% over the next 12 months.
What Does This Mean as a Buyer?
If home prices appreciate by 5.2% over the next twelve months as predicted by CoreLogic, here is a simple demonstration of the impact that an increase in interest rate would have on the mortgage payment of a home selling for approximately $250,000 today:
If buying a home is in your plan for this year, doing it sooner rather than later could save you thousands of dollars over the terms of your loan. Waiting until next year to buy may not be in your best interest.