Buying a Home - Magazine - Page 12
Alternative 2: I'll wait it out.
Others may consider waiting for another year in hopes that purchasing a home will be
less expensive by then. Let’s look at that possibility. A lower monthly payment will
require one of those two elements to decrease over the next year. However, experts
are forecasting the exact opposite:
•
Freddie Mac projects mortgage rates will be at 3.8% by the end of 2022.
•
The Home Price Expectation Survey (HPES), a survey of over 100 economists,
investment strategists, and housing market analysts, calls for home prices
to increase by 5.12% in 2022.
Based on these projections, let’s see the possible impact on a monthly
mortgage payment:
Home
Purchase
Date
Cost of
Home*
10% Down
Payment
Mortgage
Amount
Mortgage
Rate**
Monthly
Payment***
Today
$350,000
$35,000
$315,000
2.86%
$1,304
Next Year
$367,920
$36,792
$331,128
3.8%
$1,543
Difference
$17,920
$1,792
$16,128
0.94%
$239
*Increase in value based on 5.12% price growth as forecast by the Home Price Expectation Survey
**Freddie Mac’s current rate and forecast for Q4 2022
***Principal and interest only
By waiting until next year, you’ll potentially pay more for the home, need a larger down
payment, pay a higher mortgage rate, and pay an additional $239 a month ($2,868 a
year) over the life of the loan.
Bottom Line
While you may have missed the absolute best time to buy a home, waiting any longer
may not make sense. Mark Fleming, Chief Economist at First American, says it best:
“Affordability is likely to worsen before it improves, so try to buy it now, if you can
find it.”
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