The smart money is buying right now.
Look at reports like this – they show that the market above $4mm continues to be as strong as ever. Within the 5 strongest years on record, in fact!
However, many people are scared, because of high mortgage rates. And what might be pushing them higher. I’ve posted on some of the issues pushing rates higher already for first-time buyers and buyers under $1mm.
What if I told you that you could end up with a monthly cost that was exactly the same as a year ago? And it doesn’t require the housing market to drop 20%?
Here’s the mortgage math for you. I’ll take a lower-priced example, but this works no matter what you buy- and the higher the price point, the more likely you can get a lower mortgage rate even today.
1st Half of 2022:
This would have been your purchase at the beginning of 2022:
- Purchase price $1.25mm
- 20% downpayment of $250,000
- Mortgage rate of 4%
- Monthly mortgage cost: $4774
2nd half of 2022:
If you bought the same apartment in the last six months- OR NOW- chances are that prices have dropped between 8-10%. So let’s adjust based on lower rates and HIGHER mortgage rates
- Purchase price $1.125mm (10% lower)
- 20% downpayment of $225,000 ($25,000 lower)
- Mortgage rate of 6.5% (much higher)
- Monthly mortgage costs of $5688/month ($914/month HIGHER)
Not a great outcome, right? WRONG.
Let me tell you how it can work for you.
Start Shopping
You forgot about the $25,000 you saved on the downpayment.
You have more than 27 months to shop around for a lower rate, to wait for the rates to dip below 6.5%. It is HIGHLY likely this is going to happen either in 3 months, 6months, or 12 months. But if you think about what you saved on the lower purchase price, $25,000, you can take your extra monthly cost on the current mortgage ($914/month) out of that savings. That gives you over two years to find a lower rate.
What Happens When You Lock in at 5%, or Lower?
If you lock in at 5%
Your monthly is $4831.39, or $57 higher per month. Can you live with that? I could!
If you lock in at 4.5%
Your monthly is $4560/month, which is actually $214 LESS than the original scenario.
Why I’m So Excited
If you buy now, you have an opportunity to buy at a lower price, and have a very strong chance of saving money in the long run. What if you find this rate before two years’ time? You save money sooner. And if you wait, what happens if rates go down? You are going to be competing with more buyers excited to take advantage of the rates.
Get ahead of the crowd. Think differently. Be in touch for a one-on-one strategy call. We look forward to it! -S