3 Reasons Waiting Could Cost You BIG

Posted by Help Now on Thursday, February 7th, 2013 at 6:31am.

Waiting?

Everyone asks me “When is the best time to buy a home?” The answer: Before April 1st!

Waiting until after April 1st will cost you money. Big money! In fact, waiting until after April 1st could cost you at least 6% of your home purchase. That means you’ll be paying a lot more for your house!

Here are 3 reasons why you should buy before April 1st.

1.) Supply and Demand! The last time we saw our current levels of supply and demand was 2005. Do you remember what happened last time? Prices skyrocketed. Here is our situation: the supply of homes is less than 50% what it was a year and a half ago. If you've been looking at the homes for sale you've noticed that many are short sales that already have multiple offers. This means you will compete with other buyers to get your home. This demand will cause prices to increase 10% this year. Demand always goes up in the spring. The price war is coming!

See Current Market Here

2.) Interest rates. They are going up, and every little bit makes a big difference. For every .25% interest rates go up, you lose 3% of your purchasing power. This is because your monthly payment goes up, so you can’t afford as much house. This is already happening now! A couple of months ago interest rates were lower. You could have purchased a house 3% more expensive than if you bought a home today and you’d have the same monthly payment.

Interest Rates

3.) FHA is changing their rules. If you buy a home with an FHA loan after April 1st, you will be stuck paying the mortgage insurance premium for the rest of the loan’s life. This will make your monthly payment higher, and it adds up to a HUGE cost over the life of the loan. The only way to get rid of extra monthly fee is to refinance. However, if you refinance in a few years the interest rates will likely be higher, so it will not have any affect on your payment.

One thing is for sure: the bottom of the market is past us. Those who want to make money have a very short time period to get going on it. No there is not another wave of foreclosures in Utah. Home prices might be back to 2006 levels in just 2 years.Think of it this way: it will have taken 8 years to get back to where we were (from 2007 to 2015). We used to see home prices double every 11 years. So, getting back to those levels in 8 years was actually very slow.

Because demand is so high, and supply so low, it is very difficult to pounce on the good deals before everyone else. We can increase your odds of getting the house you want. Call us and ask about our new system which alerts you of homes before they hit the market or within minutes of being listed. You will beat everyone to the home of your dreams and lower your chances of competing. We are the only brokerage that has this special service.

Call us at 801-966-4000 or fill out this form.

So how do you get 6% loss if you wait until April 1st? Interest rates go up .25% = 3% loss. This is likely due to loan applications increasing. If we hit 10-12% appreciation this year you can expect to pay 3% more for your home by April. That accounts for the 6% loss. Remember this doesn't even take into consideration the extra $50K you could pay out over the life of the loan if you get an FHA loan.

About the Author:

Utah Dave - Neighborhood ExpertUtah Dave - Daybreak Neighboorhood Expert and Local Resident

My friends nicknamed me Utah Dave in high school because they said it didn't matter where we went in Utah, I would know how to get there and who we needed to talk to. The name sticks today as UtahDave has formed into a professional real estate network of Neighborhood Experts all across the state. I live in Daybreak with my wife and 4 amazing children. I enjoy dancing (which is how I met my wife Dawn) as well as traveling, coaching, and learning.

Leave a Comment

Format example: you@domain.com
Format example: yourwebsitename.com