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

TAKE ADVANTAGE OF I 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. 6