Wait to Buy or Buy and Wait?

Hi, Scott. I have a client, Scott, and they are looking in Carmel Valley. Their maximum price
is 2 million. And I talked to him, and he said, you know what, Shirin, I don’t want to buy now. I want to wait until next year when interest rates dropped. And how do you respond to that? Do you think he should wait until next year?

It’s one of those things were, again, we’re running into this a lot, of course, with rising interest rates. So, a lot of what we’re doing is just trying to educate buyers. So, really, it’s making sure that people understand that if you buy now and you do go through hand you get that higher interest rate, yes, you will have a higher payment. But really, it’s looking at the goals down the line. So, this is an investment. It’s something that we want people to go through and look at where rates could be potentially, and we can’t predict that, but where they could be in twelve months or 24 months.

This was a great example of a client that rates are in the sevens. And where would that put us, though, in a year, if they dropped down in the sixes, and what we really looked at was on a $2million purchase, they would lose out on about $100,000 in potential equity, which that would be with about 5% equity gain. And then on top of that, it’d be about $20,000 more to put down in a year from now by waiting for that interest rate.

Then along with that, the payment difference in a year from now. Again, if they would go through and refinance, they’re only saving about $500 per month, which I know that’s not a small sum of money, but at the same time, when you lose out on $100,000 in potential equity, you’re now putting $20,000 more down. And then on top of that, of course, you’re getting a slightly higher payment now, which you can drop later when you refinance. Those are the things that we’re really trying to go through and help educate clients. Got it.

Basically, look at the bigger picture. It’s not just about the $500 more that you pay per month, but you actually have to spend $20,000 more next year by buying the same house or similar, and you’re going to lose that $100,000 of equity you could have got over that one year.

So definitely sit down with your local real estate agent and your preferred lender and see what your options are. If you have any questions about this, feel free to reach out. Thank you so much for watching and look forward to hearing from you soon. Thank you.

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Shirin Rezania Ramos | 858.345.0685 | www.shirinramos.com | Compass, DRE 0203379

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