Should you keep saving to purchase a home, or should you buy a home now?
This is a great question, and it all comes down to how much you are saving and whether your savings are outpacing the rate at which the market is appreciating. For example, if you’re saving $1,000 a month and the market is appreciating at $500 a month, it makes sense to save your money to buy a house.
Unfortunately, our market is growing at a faster rate than most people are able to save right now.
In our last video, we mentioned that appreciation is going to be anywhere from 6% to 8% in 2018, so keep that in mind.
If we’re at a pace of 6% appreciation and you’re not able to keep up with your savings, it’s probably wise to buy a home sooner rather than later. That way, you’ll end up ahead.
You should also keep an eye on interest rates. We’re in an environment where they have been talking about raising interest rates for a long time, and they are starting to do that now. As rates go up, a buyer’s purchasing power is going to be greatly limited.
For every 1% increase in interest rates, your mortgage payment goes up about $200. Interest rates are the single greatest factor that can influence a monthly payment.
The good news is that there are some really favorable loan programs right now with low down payments or no down payment at all. In a market that’s appreciating like ours, it’s a good idea to take advantage of some of these programs to buy a home. There are also some grant programs that provide money for down payments. So, there are some favorable options out there if you don’t quite have the money you think you need.
If you have any questions, please don’t hesitate to reach out to us. We are well-versed in what’s going on in the market, and we’d love to help you.