The Cost of Waiting

The Cost of Waiting

There are countless reasons people want to time their home purchase to the perfect moment.

“What if home prices crash? Will I have made a bad decision to buy now?”

“Home prices and interest rates have increased so much.  I’ll wait until the costs go down before I buy.”

“I want to wait until I have 20% down.”

These are all valid considerations to think about when buying a home; your home value will change over time, and it’s smart to want to get a good deal, buying when prices are low and selling when prices are high.

However, there’s one thing many forget to think about when trying to time their home purchase.  It’s called the cost of waiting.

If you decide to wait to purchase a property, there’s a high likelihood that the property will increase in value over that time period.  That’s free appreciation–free money–that you’d be missing out on.

Secondly, you’ll miss out on building up your home’s equity.  Instead of paying 6 more months of rent, you’ll have 6 months of principal payments that you’ve contributed toward the equity in your home. 

Thirdly, when interest rates go down, competition (and sales prices) will go way up!  The higher purchase price could very likely cost you more over time than the same house would at a lower purchase price but higher interest rate.  Plus, you can refinance out of a high interest rate–that’s a temporary monthly cost increase.  You can’t “go back” and pay less for your house once home prices go down.

The most important thing to know is that buying a home should be based on your personal finances and life situation – whatever the market and interest rates are doing.  Want to talk about what the right time is for you?  Give us a call!