A financial analysis of whether to buy a home now or wait, examining how mortgage rates and home price appreciation affect the decision. The speaker walks through scenarios showing what happens to your total cost depending on timing and interest rate changes.
With the recent increase in mortgage rates, there are some buyers wanting to hold off until rates drop back down. Let's play that scenario out. So let's say you have a $300,000 house today and interest rates for conventional loan are five and a quarter. And let's say the person wants to wait until they hit 4% before they buy, and that very well will probably take a year or two. I've done a lot of talks on that as well. Probably a recession on the way is going to be happening in the next year or two. If and when that happens, mortgage rates would drop. However, when we play those numbers out, another year would mean houses will probably be up another 15% in value. So that same $300,000 house today, after gaining another 15% value, would be 345 in another year. So a $345,000 house at a 4% rate. Let's play out that payment. That's only $10 a month difference, not near enough to make it worth waiting a whole year. But the real winner is if you get the $300,000 house today and refinance it in a year at 4%, well, now you're saving over 200 bucks a month.
