Why Waiting Before You Buy a Home Could be a Costly Mistake

Moshe Farber
02, Feb 2022

Buying a house is an emotional experience that comes with a handful of financial decisions that significantly impact your life. Many homebuyers wonder when is the perfect time to buy a house. If you are contemplating when you should purchase a home for your family, the answer is: the sooner the better. Yes, you read that right. Now is the ideal time to purchase your dream home, and the current financial market agrees with our suggestion. 

But isn’t it better to wait for the prices to fall? Will the interest rates be lower in the coming years? What if the mortgage rates are lower next year?

The list of questions never ends, and neither does the confusion you will encounter before making the right decision. If you’re still in doubt, read on. This blog post will help you understand why waiting before you buy a home could be a costly mistake. 

What Does 2022 Have in Store for Homebuyers?

2021 witnessed an incredible increase in housing demands. As a matter of fact, the increase rate was the highest of the decade. The rise in demand is also reflected in the growing real estate prices. Industry forecasters have estimated a dramatic increase in 2022. The National Association of Realtors and the Mortgage Bankers Association have also hinted towards an escalation in housing prices. 

The Difference Between 2021 and 2022

Home prices are expected to increase dramatically over the next year. Let us imagine that we have a house valued at $250,000 in the current real estate market. While buying the property, the buyer will be required to make a down payment. It is advised to make a sizable down payment as it helps you reduce monthly mortgage payments and manage your mortgage efficiently. However, let’s consider the buyer makes a down payment of 10%, i.e., $25,000. 

The mortgage amount will be the down payment amount subtracted from the total cost of the house. So, in this case, it will be $225,000. The buyer will apply for a mortgage of $225,000

Now on applying with an estimated 8% increase despite the pandemic, the same house will be valued at $270,000. If the buyer decides to make a down payment of 10%, they will end up paying $27,000. The mortgage amount will result to be $243,000 just a year later. 

The buyer will buy the same house at an increased cost simply on account of the additional time they take to buy it. In this example, the rising home prices caused the prospective buyer to spend an additional $20,000 and apply for an extra amount of $18,000 for a mortgage. The increase is simply due to the buyer’s additional waiting period to make the decision. 

How is 2022 for Mortgage Interest Rates? 

The first quarter of 2022 is estimated to experience an increase of 3.5% to 3.9%. Industry experts Fannie Mae and Freddie Mac suggest that the mortgage interest rates will align with the housing rates as both go up simultaneously. The addition of home costs and mortgage rates will add to the buyer’s burden solely due to their delay in buying a house. The current mortgage rates are low throughout most banks and institutions, and depending on your credit score and market report, you can even qualify for better plans that will benefit you in the long run. 

What Does the Market Offer Homeowners?

While we assess the growing prices of mortgages and housing, we cannot overlook the market opportunities for current homeowners. Homeowners who have an outstanding mortgage can opt for refinancing as an intelligent way of saving money and reorganizing their finances. 

As a borrower, you can save a significant amount over the term of your loan as you unlock lower interest rates with refinancing. You can even acquire a lower monthly mortgage payment and save on the interest that can help you pay other high-interest debts. Refinancing can even enhance your savings portfolio and give you better financial backing for future expenses. 

Another notable benefit of refinancing is the reduction of the loan term. Now is the time to get hold of lower mortgage rates that can allow you to turn your 30 years loan into a 20 years loan without a hefty change in your monthly payments. Moreover, you will save on interest as you pay off your loan sooner than its complete term. 

If you are a borrower with an ARM, or adjustable-rate mortgage, you can replace it with a new fixed-rate mortgage. As your interest rate adjustment period approaches, you can refinance your loan for lower fixed rates. The borrower can also do a cash-out refinance to access their equity. The amount obtained can be used to finance home improvements and repairs. Renewing your mortgage will not cost you additional money, but with intelligent decision-making and market awareness, you can save a considerable amount. 

As prospective homebuyers add more days to their home buying calendar, they step towards a higher price tag on their dream home. This increase will result from the additional costs and interest rates that are estimated to go up in the coming future. The buyer will pay more in mortgage payments each month, which will account for a higher amount over the loan’s lifespan. 

As you weigh the financial benefits of quick home-buying decisions, you will understand how beneficial it is to take a fast-paced approach towards your new home. However, going fast doesn’t mean becoming reckless. Therefore, it is vital to be mindful of your decisions and reach out to market experts for guidance. Discuss your financial goals, sketch your budget and wait no more to hold the keys to your dream home. 

Are you considering buying a home? Reach out to an Astar loan officer today! Email info@astarteam.com or call 888-ASTAR-11 (888-278-2711) to start the loan application process. 

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