The Cost of Waiting to Buy a Home in the Denver Metro Area

So, the stock market is going down, bitcoin went down, but you know what’s not going down? Rates! Interest rates are going up! If you’re concerned about buying a home with these rising interest rates, keep reading, because we want to talk about what that looks like.

As we just mentioned, interest rates are going up, but your asset – maybe the money you wanted to use for your down payment – has gone down.

So, what are we hearing as a result? We’re hearing a lot of “I think I’m going to wait because my money for down payment was in the stock market” or “I have less money now, and interest rates are going up,” and “I think home prices are going to come down, so I’ll just wait.” If this sounds like you, then let’s play out some of these scenarios.

Lower Home Prices May Not Mean Lower Monthly Payments

Let’s assume that home prices come down, which they’re not predicted to do any time soon. In fact, they’re predicted to go up by at least 6 percent this next year, but let’s just say they come down a little bit.

If home prices come down, but interest rates continue to climb, you have not gained anything or really saved yourself money. The problem is, you’ve not only not gained any equity, but you could be paying more per month when that interest rate goes up. If that interest rate goes up half of a percent, one percent – that’s a big deal for mortgage payments. Plus, even if home prices do decline a little, that decline won’t really upset your monthly payments.

So, if you’re waiting for those home prices to come down, it could be a big gamble to take and that timing may not work out as planned. Plus, we always say…when’s the best time to buy a house? When you’re ready to buy a house!

Rent Prices Will Almost Always Go Up

If interest rate numbers are keeping you from purchasing your home, just remember that you don’t buy an interest rate, you buy a payment. Don’t get hung up on the scary numbers, because we don’t want to assume that those numbers are bad for your financial situation. Instead, let’s look at the numbers in more detail instead of an arbitrary “pie in the sky” number.

For example, if you currently rent your home, know that rent is basically having a 100 percent interest rate. You’re literally putting money in your landlord’s pocket! At least when you purchase a home, you get to build equity as your home appreciates in value. As you pay down a mortgage, your home value goes up, which creates equity, which, in turn, creates money for you that you don’t create when you’re renting.

So, while, yes, rates have gone up a little bit – home values are also predicted to go up. Plus, if you look at rates historically, we are still in all-time lows as far as interest rates go. In short, waiting is probably not the smartest thing to do in an upward rate environment, especially when home prices are also predicted to go up. Just know rates going up is not going to be your friend.

Is Now the Right Time to Buy for Me?

We suggest you get in touch with us, look at your finances, let’s get a strategy going, let’s look at the numbers, let’s see what your payment’s going to look like, and get you into a home faster. Maybe you’ll put less down and have a little bit of a PMI payment, but you’d still be outpacing inflation and getting out of paying rent (which will go up every year or whenever that lease comes due). This may not be the case for you, but we have to look at the numbers to make sure.

Give us a call, we’d love to be your advisor and help you figure out if it’s the right time to buy or if it’s not, that’s okay too. But let’s get you ready so that when you want to buy, you are ready to go.