With Interest Rates and Home Prices on the rise, do you know the true Cost of Waiting?

Many people wonder if we’re in for another housing bubble or crash. Certain areas of the country, such as California, due to high taxes and cost of living, people are having financial issues. Some are relocating to place like Arizona, Texas and southern states where taxes are lower, jobs and businesses are growing and in some cases can’t find enough workers. These areas have strong economies and housing markets and will for years to come.

There may be a slight slow down due to higher costs and rates, but most people in the U.S. also have good equity in their homes and we’re seeing balanced market’s as in Phoenix now, of 4 – 6 months supply of housing. All of this along with heavy regulation even now after the crash of 2008, should keep the housing market in areas that chose to grow in this way to continue to thrive.

All of this said, now is a good time to buy in markets such as Phoenix due to a balance market. Our Realtors at the Mincolla Group can negotiate even better deals when things are not so heavily in the sellers favor due to the lower inventory we saw over the last few years. The thing that is still important to keep in mind though, is that it’s better to buy now than to wait and pay more as prices and rates overall continue to rise. Rates recently hit a 10 month low, but it will not last for long. Buy now or pay more later. Here’s an example with current averages and U.S. trends.

Let’s say you’re 30 and your dream house costs $250,000 today, at 4.12% your monthly Mortgage Payment with Interest would be $1,210.90.

But you’re busy, you like your apartment, moving is such a hassle…You decide to wait till the end of next year to buy and all of a sudden, you’re 31, that same house is$270,000, at 5.3%. Your new payment per month is $1,499.32.

The difference in payment is $288.42 PER MONTH!

That’s basically like taking a $10 bill and tossing it out the window EVERY DAY!

Or you could look at it this way:

• That’s your morning coffee everyday on the way to work (average $2) with $11 left for lunch!
• There goes Friday Sushi Night! ($72 x 4)
• Stressed Out? How about 3 deep tissue massages with tip!
• Need a new car? You could get a brand new $20,000 car for $288.00 per month.

Let’s look at that number annually! Over the course of your new mortgage at 5.3%, your annual additional cost would be $3,461.04!

Had your eye on a vacation in the Caribbean? How about a 2-week trip through Europe? Or maybe your new house could really use a deck for entertaining.  We could come up with 100’s of ways to spend $3,461, and we’re sure you could too!

Over the course of your 30 year loan, now at age 61, hopefully you are ready to retire soon, you would have spent an additional $103,831, all because when you were 30 you thought moving in 2014 was such a hassle or loved your apartment too much to leave yet.

Or maybe there wasn’t an agent out there who educated you on the true cost of waiting a year. Maybe they thought you wouldn’t be ready, but if they showed you that you could save $103,831, you’d at least listen to what they had to say.

They say hindsight is 20/20, we’d like to think that 30 years from now when you are 60, looking back, you would say to buy now…

~Morgan Tranquist as our guest blogger. Morgan is the Director of Content Development for The KCM Crew 

~Christopher Mincolla, Owner of the Mincolla Group Real Estate Professionals