Some experts are advising that first time and move-up buyers wait until they save up 20% before they move forward with their decision to purchase a home. One of the main reasons they suggest waiting is that a buyer mustpurchase private mortgageinsurance if they have less than the 20%. That increases the monthly payment the buyer will be responsible for.
In a recent article,Freddie Macexplained what this would mean for a $200,000 house:
However, we must look at other aspects of the purchase to see if it truly makes sense to wait.
Are you actually saving money by waiting?
CoreLogichas recently projected that home values will increase by 4.3% over the next 12 months. Let’s compare the extra cost of PMI against the projected appreciation:
If you decide to wait until you have saved up a 20% down payment, the money you would have saved by avoiding the PMI payment could be surpassed by the additional price you eventually pay for the home. Prices areexpected to increaseby more than 3% each of the next five years.
Saving will also be more difficult if you are renting, as rents are also projected to increase over the next several years.ZillowChief Economist Dr. Svenja Gudell explained in a recent report:
"Our research found that unaffordable rents are making it hard for people to save for a down payment ... There are good reasons to rent temporarily – when you move to a new city, for example – but from an affordability perspective, rents are crazy right now. If you can possibly come up with a down payment, then it's a good time to buy a home and start putting your money toward a mortgage."
Laura Kusisto of theWall Street Journalrecentlyagreedwith Dr. Gudell:
“For some renters there may be a way out: Buy a house. Mortgages remain very affordable.”
Mortgage rates are expected to rise…
Freddie Macis projecting that mortgage interest rates willincreaseby almost a full percentage point over the next 12 months. That will also impact your mortgage payment if you wait.
Sit with a real estate or mortgage professional to truly understand whether you should buy now or wait until you save the 20%.
Author:Matt Watson Phone: 214-417-9171 Dated: August 26th 2015 Views: 1,845 About Matt: ...
View our latest blog posts in your RSS reader. Click here to access.
You're excited about your next big move: You want to buy, build or sell a home in central Dallas, the urban heart of high-style Texas living. But you don't want to fight with paperwork or negotiate details. You just want a real estate agent who can.
I'm Matt Watson. I've worked with young professionals looking for upscale, uptown residences as well as empty-nesters looking to scale down and kick back. I've sold condos, townhouses, lofts, high-rises and homes (historic and otherwise) all over Dallas. And I know how to make your real estate purchase or sale easy and hassle-free.
If you're buying a home, I will:
Help you find a residence that matches your lifestyle.
Give you instant access to the Dallas Multiple Listing Service.
Help you find financing that works.
If you're building a home, I will:
Help you locate the right building site.
Help you select the home style, size and amenities that fit your neighborhood.
Help you select a qualified builder and coordinate construction.
If you're selling a home, I will:
Price your property based on market conditions and your personal goals.
Help you enhance your home's market appeal.
Market your property to the right buyer, not just any buyer.
And whether you're buying a home or selling a home, I will:
Always be your advocate and work in your best interest.
Always give you the facts you need to make the right decisions.
Always negotiate the details and handle the paperwork.
It's that simple. Welcome to the Matt Watson way of doing business.
The #1 Reason to Put Your House on The Market TODAY!The National
"Matt Watson was referred to us by a friend who had recently purchased a home with Matt’s help and guidance. She was delighted with Matt’s results in finding her the perfect home and she felt he would do the same for us. Matt was perfect for us as well. Matt took the time to get to know us personally so he could better gauge the best homes to show us. He payed very close attention to what we liked and didn’t like in properties and neighborhoods we were shown. Matt is extremely organized and doesn’t like to waste clients’ time so he was careful to show us only properties in our price-range and with the amenities and floor-plans likely to work best for us. The end result was Matt very creatively helped us to purchase two condominiums which we were able to join together to create one larger unit. It is the perfect home for us and we could not have done it without Matt. In addition to finding great properties, Matt was very skillful at negotiating prices and timing. We were delighted with outcomes in all of these areas. We are currently debating whether to invest in a couple of rental properties and we would once again ask Matt to guide and assist us."