In real estate, timing is everything. From mortgage rates, to the current real estate market conditions, the real estate market is always changing from day to day. If you’re trying to coordinate the “perfect” timing of your next home purchase, you’re certain to get frustrated, because market fluctuations happen on the regular.
In addition, many home buyers enter the process with the notion that they could always “wait it out” when it comes to shifts in the market. However, the reality is, markets generally tend to appreciate over time, meaning property values are more likely to rise, partly with inflation, but also partly with the health of the economy.
But what exactly is the cost of waiting? In some cases, it is the difference of $30,000 or more over the lifetime of the loan. That’s the equivalent of a brand-new car. If wasting money frustrates you, then here’s what you need to know about the cost of waiting to buy your next home.
Consider the sample data above for a $300,000 home purchase. The data comes from our data partner MBS Highway and looks at mortgage rate and home value projections over the next few years. To sum it up, basically as property values increase, the cost of waiting increases.
Keep in mind that many aspects of a home purchase are related to the property value. If the property value goes up, then your down payment, loan amount, mortgage insurance, monthly payment, etc., all go up as well. Here’s the cost analysis for that $300,000 home purchase.
Waiting just six months and you open yourself up to losing $7,811 dollars on your home purchase. Any longer and that number goes up and up, reaching nearly $40,000 after three years of waiting. The truth is, home ownership is an investment in the future and statistically speaking, property values in the U.S. have continued to rise over the years.
If you’re on the fence about purchasing, it is critical to keep in mind the cost of waiting. If you have the ability and funds to make a purchase today and you’ve found a house that you love, the safe bet is to make the purchase sooner rather than later. Otherwise, you run the risk of losing out on thousands of dollars.