Across the country, news stories continue to scare buyers into thinking that the market may continue to fall – and that prices will drop even more.
The truth is, whether home prices rise or fall in the near future is irrelevant, because a home is for the long term. It’s a place to live and build a future. What matters is that right now, you can own the home you want for a fixed monthly payment that will fit comfortably within your budget – and will become even more comfortable as your income rises over time.
If you want the independence and pride of home ownership, waiting to see if prices go even lower could prove to be an expensive mistake. Interest rates could rise at any time, eliminating any savings from a lower price. In fact, in order to offset a 1% increase in interest rates, your mortgage loan balance would have to drop by 11%.
A $150,000 mortgage loan at 4% carries a monthly payment of $716.12.
A $133,400 mortgage loan at 5% also carries a monthly payment of $716.12
Staying with the $150,000 mortgage loan balance, an increase from 4% to 5% would raise your monthly payment to $805.23 – that’s $89.11 per month, or $1,069.32 per year.
Waiting could mean purchasing a less desirable home, or paying considerably more per month.
Security and pride of ownership:
When you own a home you have a safe port to come home to each day. It’s yours, and as long as you continue to make your payments, no one can tell you to leave or tell you how to live within your walls.
You can make improvements knowing that you and your loved ones will be the beneficiaries of your efforts.
The drawbacks of renting:
• Tenants have to follow rules set down by landlords: No pets, no basketball hoop on the garage, no cars left in the driveway, no noise, no hanging pictures on the wall, no repainting rooms… and on and on.
• You have no security and thus no “home” to call your own – because you could be required to move at the end of your lease.
• Your landlord could sell the property or be foreclosed upon – and you would have to move.
• As a tenant, you’re building equity for the landlord, not for yourself.
• But worst of all, monthly rents can and will increase – probably every time you renew your lease.
Thus, anyone who has good credit, a little cash for a down payment, and plans to remain in the community should be looking for a home right now. It’s the only sensible thing to do.
