Consider buying now instead of waiting longer.
Should you save up money or buy a home now? Many people think they should save a lot of money before buying a house so they can put 20% down and avoid paying for PMI. (That stands for “private mortgage insurance,” which you don’t have to pay if you have 20% equity or more in your loan.) However, the following example will show why that’s not the best idea.
Here in the Charlotte area, a typical home sells for around $500,000, meaning you’ll need $100,000 to put down 20%. So let’s say you wait to buy and save $1,000 per month; in 12 months, you’ll have $12,000 in savings. Home prices increase about 1% per month in our area, so that $500,000 will be valued at $560,000 in 12 months. To buy that same home, you’ll now need $112,000 for the 20% down payment, and you’ll lose out on $60,000 in accrued equity from the year you waited.
“The only way you can truly gain equity and wealth in real estate is by purchasing. ”
So I want to emphasize that if you have good credit and enough money to put 5% down, I strongly advise you to buy now. If we fast forward 12 months from now, we don’t know exactly what interest rates will be like, but they will have increased. The only way you can truly gain equity and wealth in real estate is by purchasing.
If any of this is of interest to you or you have questions, please feel free to call or email me. I would love to speak with you.
