So, you are thinking of waiting a year to buy a new home. Buying a home is one of the biggest decisions you will make in your life. Most people want to get started well in advance no matter if they are buying their first home or selling their current home to downsize or upgrade. Two of the most important factors in purchasing a new home are pricing and mortgage rates.
Within the last year, national home prices have increased by 5.4%. During the same 12 months, interest rates remained near historic lows. This has allowed many buyers entering the market to lock in low rates.
Sellers are more concerned with short-term price. This means getting an idea of where home values are headed over the next six months while they try to sell their homes (if you are thinking of Selling, get an instant home value estimate here).
As a buyer, once you have an idea of your price range, you should be more seriously concerned about the long term cost of the home. That’s where mortgage rates come in.
The biggest names in the mortgage field are Freddie Mac, Fannie Mae and the Mortgage Bankers Association (MBA). They have predicted that mortgage interest rates will significantly increase by this time next year. CoreLogic put out a Home Price Insights report that shows home prices appreciating by 4.8% over the next year.
What Does This Mean as a Buyer?
Since home prices are predicted to appreciate by 4.8% over the next twelve months, have a look at how that would impact interest rates. Here is a simple demonstration of the impact that an increase in interest rates would have on the mortgage payment of a home selling for approximately $250,000 today:
The Bottom Line
If you are planning to buy a home this year, doing it sooner rather than later could save you thousands of dollars over the term of your loan.