The Cost of Waiting For a Better Deal on Your Home could be great with housing prices still floating around the same as they were a decade ago, the economy is looking up and we are at close to all time lows for interest rates. The national average has home prices going up for five years in a row. Prices are definitely continuing to go up as the amount of homes for sale decreases. No matter where you live, rent on average is much higher than a mortgage payment would be.
Lets take a quick look at this and break it down for you using the city of Goodyear’s real estate sales from July 2014 and July 2015. The average purchase price in July 2014 was $ 236,000 and in July 2015 it was $ 251,000, which is an approximate 6 percent increase in the purchase price. The approximate mortgage on this would be around $ 1,600 a month or $ 19,200 a year. The tax deduction on the mortgage will be around $ 8,000 for the year leaving you with $ 11,200 invested in the home for the year. (Breakdown: $19,200 annual mortgage payment minus $8,000 tax deduction).
The Cost of Waiting For a Better Deal on Your Home
In purchasing a home you have $ 11,200 invested. In renting you have $ 16,800 for the year. In essence, you are losing $ 5,600 a year by renting in this scenario and this does not even include the equity you would be accumulating in purchasing your home.
If you decide that you’re going to wait for a better deal lets look at what your investment would look like. The home price will in all likelihood rise around 5%, which is around $ 15,000. This increases the amount of money you will need to close on the home as well as the additional amount you are going to pay for the next 15 to 30 years depending on your mortgage. Also, you will have spent $ 16,800 in rent for the year that went nowhere. This results in a $ 31,800 net loss for your investment by waiting just one year, you can multiply your loss by double this amount if your thinking about waiting a couple of years.
As you can see there is a huge upside to purchasing now versus The Cost of Waiting For a Better Deal on Your Home as the prices increase. There is also a huge downside to renting, as it is not an investment. In renting, you are paying the landlords mortgage and giving him equity ultimately investing in him. Why not invest in yourself and your future instead?
Ewen Real Estate will be happy to assist you in getting on the right track to invest in yourself. Please give us a call today for your FREE consultation.