Why Waiting A Year to Buy A Home Could Cost You More
If you are a renter looking to purchase a home or a current homeowner waiting to buy until 2022, ask yourself these two questions:
1. What will home prices be like in 2022?
2. What will the mortgage rates be in 2022?
What will home prices be like in 2022?
Three major housing industry institutions project continued home price appreciation for 2022. Here are their projections:
- Freddie Mac: 5.3%
- Fannie Mae: 5.1%
- Mortgage Bankers Association: 8.4%
What will the mortgage rates be in 2022?
Today, the 30-year fixed mortgage rate is levitating near historic lows. However, it is believed that rates will rise as the economy continues to recover. Here are the forecasts for the fourth quarter of 2022 by the same three major institutions mentioned above:
- Freddie Mac: 3.8%
- Fannie Mae: 3.2%
- Mortgage Bankers Association: 4.2%
If you include all three forecasts, that averages out to 3.7% and it’s nearly a full percentage point higher than today’s rates. Any increase in mortgage rates will increase your monthly mortgage and the cost of your home.
For example, say you pay $350,000 for a home with a 30-year fixed-rate mortgage at 2.86% after making a 10% down payment. Your mortgage payment would be $1899 per month. If the projections for house prices and mortgage rates are correct and you wait a year, that same home price could be $371,945 by the end of 2022 along with the 10% down payment and the mortgage rate could be 3.7%, your house payment c would increase to $2,166!
The difference would be $267 more a month. That’s $3,204 more per year and $96,120 over the life of the loan.
And let's not forget the equity you'll gain if you consider that purchasing now. The equity you'll build up over the next calendar year, approximately $22,000 for a house with a similar value, then the total net worth increase you could gain from buying this year is over $118,000.
There are many advantages of purchasing a home sooner than later. Let us advise you on your decision to buy. Contact The Aaronson Group today at 949-388-5194 or email info@previewochomes.com.
