Today's topic is about the difference between an Orlando homebuyer deciding to purchase a home now as opposed to waiting until next year. Interest rates and property values are two factors to consider when comparing buying a home during any temporal scale. The interest rates have gone up a bit since last year, increasing to the low 5s. It has been announced that the rates should be staying steady at least for the next month but are expected to increase next year. The prices of homes are up as well -- not quite as much as last year, with next year's appreciation expected to be around 6%.
So, what does all of this mean for the Florida buyer looking to purchase a home? What would be the difference in waiting until next year?
While it may be easy to assume that history will repeat itself and the market will crash once more, think again. A buyer's market is not expected for another five years, so our advice is do not wait!
Let's take a look at a buyer that is considering purchasing a $350,000 home with a downpayment of $50,000 and the amount financed being $300,000. The interest rates for this example are 4.83% today, and the following year's rate is 5.83%. When comparing these rates, the difference between waiting a year and purchasing now does not seem that much, especially looking at the difference from a monthly payment perspective of only $187.
Now, if the buyer were to look at the annual difference, that would work out to be $2,244.00. That number seems to be a bit more, but is that really enough to decide to purchase now instead of waiting until next year? To get a full understanding of the cost of waiting a year, the buyer needs to consider how much they would be paying over the life of the loan.
By waiting until next year and paying the higher interest rate, the buyer would end up paying $67,160 more then if purchased today. The buyer also has to take into consideration the appreciation of the property at about 6%, making the cost of purchase that same property $371,000. Adding the appreciation difference to the difference in the interest rate, waiting until next year to purchase the home could end up costing the buyer around $88,000.
Now is the time to buy a home and save money! Find a central Florida property that matches your needs now before interest rates and property values rise. Make sure you are working with a real estate agent who knows the area and can help you find the dream home you are looking for.