3 Good Reasons to Buy a Home Today

11-22-2024

With interest rates remaining elevated it’s reasonable for most people to pause and consider whether now is a good time to buy a home. We respect that purchasing your home requires a thoughtful approach, and as a savvy home buyer, you’ll want to evaluate the various reason why buying a home today is a good decision.

With that in mind, here are three good financial reasons to consider before making a purchase today.

  1. Purchasing a home allows you to build equity (wealth) through home price appreciation.

Example:  $1,000,000 Purchase price today, with home price appreciation at 4.65% annually could potentially result in home value of $1,046,455 in 1 years’ time.

$46,455 earned on investment of $200,000 is a return of 23.2% Return On Investment (ROI) over a 1-year period.

  1. It’s unlikely that home prices will move lower, so what is the cost of waiting a year and hoping for a lower interest rate. Will it “feel” better, will your payment be more affordable and will it be financially better for you?

Purchasing Today

$1,000,000 Purchase Price; 20% Down Payment; 30 Year Loan, $800,000 Loan Amount

P&I Payment at 7.000%               $5,322.42

Purchase a Year From Now

$1,046,455 Purchase Price; 20% Down Payment; 30 Year Loan, $837,164 Loan Amount

P&I Payment at 6.000%               $5,019.22  

                By purchasing today, you could potentially benefit from appreciation of $46,455, less the cumulative monthly payment savings of $3,216

Net benefit to purchasing today is $39,239 

  1. If you think inflation may remain at current levels or potentially move higher, obtaining a loan and paying based on today’s money is a great way to hedge against inflation.

Example:  If inflation rises, everything else might become more expensive but your mortgage payment remains constant, essentially making your mortgage payment cheaper in real terms over time, especially when compared to rising rent costs, and other living expenses.

If you’d like to develop your personal mortgage strategy I’d be delighted to assist you. Please contact me, Kelly Jeffers Senior Loan Officer at CMG Home Loans, kjeffers@cmghomeloans.com, 425.922.3032, NMLS ID# 62741.

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