Hi, this is Morgan Elise. I get asked a lot, "Is now a good time to buy a house?" The quick answer is yes. But what if you wait? Well, it might cost you. Here's why.
Imagine you want a $500,000 house. You can get a 30-year mortgage at a 7.5% interest rate. You only put down 5%, but that 7.5% interest costs you extra for discount and origination costs. Now, let's make some guesses for the future.
Interest rates drop by 1% in 6 months, another 0.5% in the next 6 months, and another 0.5% over the next year. The final rate becomes around 5.5%.
House values go up by 0.5% in 6 months, 5.3% over the next year, and then 9.5% in two years.
You might think, "Great, lower interest means lower monthly payment!" Yes, but you miss out on other things. In 6 months, your payment might be $300 less, but your overall cost goes up by almost $5,000 because of rising house prices and lost loan payments (amortization).
Wait a full year, and things get worse. You lose over $26,000 in rising house value and another $4,379 in lost loan payments. That adds up to a shocking $30,000 loss.
Waiting can cost you tens of thousands of dollars. You might hope for lower interest rates, but remember:
It's like what Warren Buffett says: "Be greedy when others are scared." Right now, people are nervous, so you can find good deals. When interest rates drop, everyone will start buying, and you won't find any deals.
You might save some money on monthly payments by waiting, but you lose a lot more in the long run. The numbers don't lie. So, is now a good time to buy a house? Absolutely.
So, if you've been on the fence about buying a house, now might be the best time to make your move.
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