Denver Home Living Huettner Capital Winter 2017/18 | Page 6

TAKE ADVANTAGE OF
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Why You Should Buy That Home Now!
f you plan to buy a new home in the next two
years, you should buy now. Buying now will save
you more than the cost of owning the home for
the next two years with small increases in home
values and interest rates. You basically get the first
two years for free. The reason is that these relatively
small increases will cost you BIG in the long run. Over 12 years, a 10 percent price increase and 1 percent
higher interest rates make a HUGE difference:
People buy new homes for a variety of reasons. Most are timed
to life events such as getting married, starting a family or
retirement. You may want to upgrade from a starter home or
need more space for a growing family. Maybe you want to be
in a specific area for schools or work. Perhaps you plan to buy
a vacation home, rental property, or a future retirement home. • Payment – Your payment will be $461.94 or
24 percent higher ($1967.76- $2429.70).
• Interest – You will pay $32,066 more in total
interest even though you waited two years to buy.
• Loan Amount – You will owe $63,859 more on your home.
Between the down payment, interest, and difference in
the amount owed on the home in 12 years, buying now
saves you $105,925 which is far more than the cost of
taxes and insurance for the first two years. Also, the
lower payment over 12 years is only $8207 more than
the higher payment over just 10 years. But you would
have to live somewhere the first two years if you wait
to buy so the actual savings is likely even higher.
However, few people ever think about buying a home
in advance of their life event. Buying now never
crosses their mind. They simply plan to move when
they have kids, their kids graduate, they switch jobs
or retire. It is just human nature. Besides, it makes
sense. Why would I buy now? The answer is because
it will likely save you tens of thousands of dollars.
The real secret here is that you will save far more buying
now than getting a great deal on a house in two years.
So, find the house you want and even pay up to get it.
I realize not everyone can buy the house they want now,
but you should at least check with a lender. Most people
are surprised what they can do, especially with recent loan
program changes. The real surprise might be that you
can’t qualify for the same house in two years, even if you
get that raise, if prices and rates jump even more. Even if
you are only downsizing your home and using a 15-year
loan, you will still come out better off in most cases.
Consider the following two scenarios over the next 12 years.
1. Buying a $500,000 home today with 20
percent down on a 30-year fixed loan at 4.25
percent and keeping it for 12 years.
2. Buying the same home in two years after home
values go up only 10 percent and interest rates
go up 1 percent and holding it for 10 years. That
same home will cost $550,000 and the same 30-
year fixed rate loan will be at 5.25 percent.
So, ask yourself if you are going to want or need a new
house in the next five years. If so, you should get pre-
approved with a lender and start looking today. If
you find the right house, why wait? You could live
in the house the first several years for free!
Keep in mind these increase estimates are over two years
when home values in Denver have increased about 10
percent each year the last three years and many market
forecasts call for 30-year mortgage rates to increase
1 percent per year each of the next two years.
By: Todd Huettner
A recognized real estate and personal finance expert with over twenty years of
experience, Todd Huettner is frequently quoted in the trade and business press including
The Wall Street Journal, CNBC, Credit Karma, and Realtor.com. He is President of Huettner
Capital, a residential real estate mortgage lender located in Denver, Colorado. In addition
to earning an economics degree and an MBA, Todd has been licensed as a real estate
agent in multiple states and been an underwriter, financial analyst, and consultant.
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