When it comes time to look for a new home the first thing you do is figure out a budget so you know what price range to search in. However, it’s important that you not only look at a home’s price but also consider the long-term cost of the house.
That’s right, there can be a significant difference between the price of a home and the cost of it after all is said and done.
The Difference Between Cost and Price
The price of a home is what the home is listed for. There are a lot more factors that go into the ‘cost’ of that home however. Most importantly the interest rate you secure on your mortgage loan and the home’s appreciation over time. The rate at which these two factors change over time is commonly referred to as “The Cost of Waiting”.
The longer you wait to buy, the more likely you are to pay more in interest rates and appreciation costs. Plus the sooner your buy that home the sooner the appreciation starts to stack up in your favor…
2015 Market Outlook
Freddie Mac recently released its U.S. Economic and Housing Market Outlook for January. According to the report home price appreciation is expected to increase to a 3.5% rate annualized for 2015, a 0.5 percentage point increase over last month. These are not the large price jumps and gains of the past, simply the normal (and inevitable) appreciation of real estate over time.
According to the same report, rates are expected to rise and be at 4.8% by next year. Currently mortgage rates are at 3.76% according to our mortgage watch and the experts predict the rise in rates will come in July or September. Our agents agree and expect to see mortgage rates rise this year among other 2015 prediction and trends.
Let’s look at the comparison
Here’s a simple cost comparison of the impact of these projected changes. This is based off of a 30-year mortgage loan today vs. in the projected market in November, 2015.
|Date||Mortgage||Interest Rate||Monthly Payment|
Each month that’s a difference of $179.67. Over the entire life of your loan that’s a difference of $64,681.20. So, what are you waiting for?
Reach out the a First Team agent today and to get your home search started. Or reach out to us and we’ll get the first step started for you too.