Many times, it’s been said that more and more money has been lost due to indecisions than was ever lost due to making the wrong decision. In many cases, the larger the decision, more than likely procrastination is going to come into play and allow the act of doing nothing to simply cost something.
When you purchase a home, it’s one of the biggest decisions one will ever make. However, there are steps (just like with any big and decisive purchase) which involve careful consideration and planning … therefore leading to that prudent decision. Considering that our market today includes a global pandemic, financial volatility and rapidly rising home prices, it’s very understandable that many people are in a “wait and see” stage when it comes to purchasing a home.
But, there’s a cost to that “wait and see” stage. You see, the recent Home Price Expectation Survey 2021 Quarter Two esti mates that appreciation rates are going to average just under 5% annual for the next 5 years. That research is expecting prices to increase to 8% within the next one year!
If you rent, or even if you’re putting off moving to a larger home, that decision could keep you from taking advantage of and enjoying the benefit of that appreciation. If your down paying is in the bank, your expected earning will be less than 2%. In a home, that means that the owner has the benefit of leverage when a mortgage is used to finance the home.
What about buyers? If you’re purchasing, you can borrow a large portion of the purchase price at around 3% interest, however the entire value of the home is appreciated at a higher rate. This in turn allows the profit to build equity for the homeowner.
Here’s another major component you may want to think of. The amortizing mortgage is being reduced with every single payment which is made. In other words, as the home goes up in value because of the appreciation, the unpaid balance goes down since the principal reduction is creating equity from two different directions.
So in theory … let’s crunch some numbers. If you waited one year to buy a $350,000 home today, the price could easily be $378,000. A 5% down payment on this home at today’s price is $17,500. If you could earn 2% on a certificate of deposit, it would be worth $17,850 in one year. If it used as a down payment on a $350,000 home that appreciates at 8%, the equity in one year would be $52,442. Use the Your Best Investment calculator to make your own projection.
Your monthly payment could easily be $200 more just by waiting for a year before making your decision! How crazy is that? Mortgage experts anticipate rates to rise by 0.75% in the next year which means that you’ll pay more interest on a larger mortgage by waiting. Depending on how long you are planning to stay in the home, your overall cost could potentially skyrocket!
If you have some specific concerns that is keeping you from deciding today, let’s get together on the phone, an online meeting or somewhere face-to-face so that you can get the facts about what it takes to buy a home now.
I can provide Insider Information on Fairfax VA homes for sale. Get you a FREE Market Snapshot Report of Your Northern Virginia Home’s Value, or Search All Northern Virginia Homes For Sale. Put that data you need at the tips of your fingers!