Don't Gamble with Your Money: Waiting for Mortgage Rates to Drop Could Cost You More than You are Willing to Lose!!

*Tens of Thousands at Stake - The Financial Reality of Delaying Your Home Purchase*

In the ever-evolving world of real estate, the decision to wait for mortgage rates to drop may seem like a prudent move. However, as we delve into the financial intricacies, it becomes evident that this waiting game could cost you a significant chunk of change – potentially up to $36,000 or more. 

In this blog post, we'll break down the numbers using real-life examples from New Braunfels, TX, and Columbus, OH, showcasing the tangible impact of delaying your home purchase.

New Braunfels, TX: A Tale of Appreciation and Missed Opportunities

In January 2023, the median home price in New Braunfels, TX, stood at $319,113. Fast forward a year, and it soared to $351,000 in January 2024. Following this trend, the projected sale price for the same home in January 2025 is estimated at $389,844. Let's crunch the numbers:

**January 2024 Purchase:**

- Home Price: $351,000

- 3% Down Payment: $10,530

- Loan Amount: $340,470

- Interest Rate 6.94%:

- Monthly Principal & Interest: $2,251

*According Freddie Mac, the average interest rate for a Conventional conventional mortgage was 6.94% on February 29th, 2024

**January 2025 Purchase:**

- Projected Home Price: $389,844

- 3% Down Payment: $11,695

- Loan Amount: $378,148

- It would require a 5.93% interest rate to achieve the same monthly payment at the higher price point.

By waiting, you might secure a slightly lower interest rate of 5.9% in January 2025, saving a mere $9 per month. However, by waiting to purchase you missed out on the appreciation to the value of the home, losing out on gains of $38,844.

The reality is that you could purchase now to realize the $38,844 gains of home ownership through the natural appreciation of the market, and if rates do drop to the 5.9% a year later, the spending approximately $5,000 in costs to refinance in to the lower rate of 5.9%, then you would still experience net gains of more than $30,000 and the 5.9% interest rate would cause the monthly payment to drop more than $275 per month. Buying now rather than later ensures the best of price and interest rates. Especially, if rates don’t fall in 12 months, but instead remain the same or move higher.

Columbus, OH: Missing Out on the Rising Tide

In January 2023, Columbus, OH, had a median home price of $251,869, climbing to $270,000 in January 2024. Extrapolating this trend, the projected sale price for the same home in January 2025 is estimated at $286,020. Now, let's examine the financial impact:

**January 2024 Purchase:**

- Home Price: $270,000

- 3% Down Payment: $8,100

- Loan Amount: $261,900

- Interest Rate 6.94%: 

- Monthly Principal & Interest: $1,732

*According Freddie Mac, the average interest rate for a Conventional conventional mortgage was 6.94% on February 29th, 2024

**January 2025 Purchase:**

- Projected Home Price: $286,020

- 3% Down Payment: $8,580

- Loan Amount: $277,439

- It would require a 6.38% interest rate to achieve the same monthly payment at the higher price point.

Rates have been projected to move lower by January 2025 which could save you $87 per month comparing today’s market conditions with the 5.9% on the future home price, however, you will have missed out on the $16,020 gained merely by owning the home for those 12 months when you chose to wait. Again, the financial hit is clear – by waiting, you’ll lose, it’s just a matter of how much.

The reality is that you could purchase now to realize the $16,020 gains of home ownership through the natural appreciation of the market, and if rates do drop to the 5.9% a year later, you could spend approximately $5,000 in costs to refinance in to the lower rate of 5.9%, then you would still experience net gains of more than $10,000 and the 5.9% interest rate would cause the monthly payment to drop more than $149 per month. Once again, buying now rather than later ensures the best of price and interest rates. Especially, if rates don’t fall in 12 months, but instead remain the same or move higher.

The Reality of Waiting: It's Just a Matter of How Much You Lose

In both examples, the allure of a potentially lower interest rate by waiting is overshadowed by the substantial appreciation gains missed during the delay. The gamble of predicting future interest rates is a risky one, especially when compared to the more predictable upward trajectory of home prices.

Historically, owning a home has been one of the greatest financial tools to create wealth. The best time to own a home was 20+ years ago. The next best time is today. Waiting might seem like a logical move, but as you can see, the numbers tell a different story. By waiting, you risk losing out on thousands, if not tens of thousands of dollars. Don't let the promise of a slightly lower rate blind you to the financial gains slipping away with each passing day. It's time to make a sound financial decision and seize the opportunities now, rather than gamble on an uncertain future.