Are you waiting for the value of your current home to increase before buying a bigger, or even your dream home?
Here are some facts to consider before you make perhaps one of the most common mistakes move-up buyers make:
According to Infosparks, the medium price in San Diego county reached $497,500 in December 2016, up 7.7% countywide from one year ago. (1)
Let’s say that your current property has a fair market value of $500,000, with $150,000 after sale equity. Today, you qualify for a new loan of $550,000 at an interest rate of 4.25%. Furthermore, you intend to put your proceeds from the sale towards your new home for a total purchase price of $700,000. Your monthly P&I for your new loan would be $2,891.00
Now let’s say you wait you wait a year, and appreciation slows to 5% for the year. According to the Kiplinger Report, “interest rates are still likely to head higher over the course of 2017” The article goes on to say that by the end of 2017 “expect the average 30-year fixed-rate mortgage to rise to 4.6%” (2)
So what does this look like for you next year?
The property you want to sell is now worth $525,000. After additional cost of sale you now have $160,000 to put towards your new home, which also increased by 5% to $735,000 for a new loan of $575,000@ the projected interest rate of 4.6% your new payment would be $3,133. This does not even account for higher taxes and insurance you would have and it’s $312.00 per month, or $3,744 per year! Oh, and it the lender says you can still only qualify for the $2,891 payment, your loan amount will will be reduced to $524,000.
So bottom line… Waiting will cost more! Call us at (858) 455-9300 to talk about your situation and what is best. Everyone is different.