Spring has finally arrived, and with it, your thoughts may return to what you have put on hold for the season…buying a home. However, with such a decision, you need to know what to expect if you are thinking of buying a home in the year ahead. Here is what is predicted:
Mortgage rates will rise, but will still be historically lower than in previous years. This is good news. Even though housing prices may seem elevated, buyers will still be able to make their home buying dollar go further, with a lower mortgage rate. It is always best to take advantage of lower mortgage rates, while they are available – as they won’t last forever. As the table below indicates, with just an increase in 1 point in your mortgage rate, your mortgage payment goes up approximately $204.
Don’t forget, that is $204 per month for say…the next 30 years (the average term of a mortgage) – which equates to over $73,000!
|Mortgage Rate||Mortgage Amount||Mortgage Payment (not including taxes, insurance, PMI, etc)|
Make sure you have a detailed budget. With increased costs in home purchase prices, as well as mortgage rates slowly increasing – everything else increases as well. You may have already saved for your down payment, but in actuality, you need to save more when purchasing a home. When estimating the true budget of what it takes to purchase a home, be sure to include the following:
- The home price (monthly payment, plus interest, taxes, insurance)
- Down payment
- Home Inspection and appraisal
- Closing costs
- Ongoing costs
- Home furnishings
- Repairs and renovations
- HOA Fees (if moving into a neighborhood with a Homeowners Association)
Adequately preparing for these additional expenses will save you from being surprised in the long run.
It will still be a brisk home buying market especially if December 2021 was any indication. With homes still in short supply and in high demand, there is no indication that home buying will slow any time soon. So, if you have been putting off jumping into the home buying market until things “slow down” – you have two options. Either continue to wait for an unknown period of time or take advantage of low mortgage rates and jump in!
Rental rates are increasing. According to Rent.com, the national average rental price for a one-bedroom jumped 21.3% and more than 16.7% for a two-bedroom in October year over year. For those waiting for home prices to drop, remember paying into your own investment (your home) is always better than paying someone else’s mortgage (your landlord’s). You could be building equity instead of giving your investment dollars away.
New home prices are increasing. The Covid -19 pandemic has certainly taken a toll on the new homes market. In the previous years, the lumber supply shortages and increased building materials costs continued to affect the production of new homes. In April 2020, the median new home price was $310,100. The median price of a new house was $407,700 in October, up 17.5% from a year ago, according to the Federal Reserve Bank of St. Louis. A giant increase of approximately $100,000 in a short amount of time.
The Ask Cathy Group of Keller Williams is incredibly experienced in this market. We have navigated these strange home-buying waters, and come out on top on behalf of our clients’ time and time again. Please let us know how we can help you achieve your real estate goals for 2022 by visiting our website, or one of the links below!
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