You Want To Buy A Home, But Maybe You Should Wait?


It’s the new year and we all sit down and re-evaluate things in our lives. We look back at last year and assess, what went well, what didn’t and what needs work. We are always on the look out on how we can save money. When we fill out that check to pay the rent, it really hurts doesn’t it? While you fill it out the check with tears in your eyes you are wondering if your landlord actually pays that much on his or her mortgage. It dawns on you that actually no, he doesn’t because you are paying it for your landlord! A crazy idea forms in your mind and you wonder if it just might be possible for you to buy your own house and pay your own mortgage? Crazy, right? But maybe not…… what if it would be possible? But then you think, nah, I better wait one more year and save money for a downpayment. That is the best thing to do, right?! 

Maybe it isn’t though…

I have talked to many people and sometimes they would like to buy a house but then they think they should wait. I would like to share some facts about this with you and then you can make up your own mind, fair enough?

Lets start by looking at the percent difference between buying  and rent home. Today you will have to calculate on average 29.2% of your income to pay for rent, but only 15.8% of your income if you buy. That is a 13.4% difference and that is huge! These are of course national averages and vary depending on where you life. Here in the Twin Cities the average rent for a 3 bedroom apartment is about $1500 and often you still don’t have even your own washmachine. Could you own a house for about $1200 (a pretty nice one at that)


Okay, so you might think, nice but I still want to wait and save money….. okay, fair enough, here is a quick view of what the difference in interest rate looks like. 
You can see in the graphic below that the monthly mortgage amount stays pretty much the same, however the amount you have available to buy the house changes drastically!  I guarantee that you will like the house for $200k better than the one for $100k   (which honestly is really hard to even find here in the Twin Cities)
To break this further down, here is an example of what the difference is when the interest rates are going up. Though they have been fairly stable but we have seen a small up tick this year.
Taking the slide above as an example, waiting one year to buy a home could cost you about $ 1814.40 more per year, if that is multiplied by 30 years  it could cost you as much as $54,432 more! 
Now that was pretty depressing news. Lets look at this from another side. Say you bought a home two years ago, then your house would have earned you money on average 6% here in Minnesota. Take a look….
Of course the value of your home will not increase by 6% each year, but it will level out to normal increases which are projected to be about 3% for the year. That means that if you buy a house for $200,000 today it will have a projected value of $206,000 in just one year.
You can potentially grow your wealth just by being a home owner vs a renter.
I have one last thought for you. If you can make about $6000 this year and pay less than you pay in rent now, why do you want to wait? 
Obviously these are examples and I’d be happy to sit down with you and calculate your personal numbers, give me a call, text or email we talk about it and then you go home and think about your options. If you want to move forward, super! I’d be right there cheering for you and working hard for you. If you still decide nah, not now – that’s fine too. At least we got to meet and you have all the info you needed to make that decision. 

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