In this article, we talk about some reasons you wouldn’t want to wait to buy, that you may not have thought about. There is no denying that 2020 has left us with a lot of uncertainty (but then again when are things really certain?). However, the real estate market is charging forward and is very strong. Interest rates have dropped to historical lows, and many buyers are taking advantage of these great rates. But what if you are a buyer that wants to wait?
Buyers give many reasons for wanting to wait. Some say they want to see what the market does, others say they are waiting for rates to go even lower. But let us pose a question, what if rates go higher? If rates do continue to drop, then you can always refinance. But what happens when rates go up? What happens if you wait to see what the market does, and prices increase? The answer to these questions ultimately end in this, you likely can’t afford the same house you can afford right now.
The first thing that will impact what you can afford is probably the most obvious. As low interest rates drive buyer interest and more sales, inventory shrinks. The basic laws of Supply and Demand then indicate that the price for the same type of home today, will be less than what it will be even a few months down the road as inventory continues to decline. This means that the beautiful 4 bedroom house that you fell in love with today, could be out of your price range if you wait to buy.
Other things impact home prices as well, including construction costs which have also been going up as of late.
Interest Rate Increases
We have already talked about how great rates are right now, but maybe you are waiting on them to go even lower. Well, they could. But they could also go up, and in a hurry. As a buyer, you will talk with a lender during your pre-approval process who will tell you the maximum you can be approved for. You also probably have a good idea of how much per month you have in your budget to pay for your new home. With that said, a large portion of a new mortgage payment is interest. If interest rates go up, the interest you pay in your monthly payment will also go up. This could really impact your payment significantly!
What is your cost to wait?
The cost of waiting could be, and likely will be a, combination of both increases in the future cost of homes, and increased rates. Now, none of this is to say that waiting in your case is the wrong decision. Home buying and financial decisions are pretty much always different and vary by the individual. That is why contacting your local Real Estate Advisor at Duncan Group Properties, and a trusted local lender to discuss your plans with is so important.
Ready to talk with a trusted local lender? Visit our finance page or contact David Dupont with Anderson Brothers Bank today!