This local county housing market continues to evolve and show strong signs of growth and appreciation.
Here is what you need to know if you are going to be buying a house in 2018…
Two things to watch for is interest rates and home prices. Both heavily can affect your ability to borrow and ultimately, you’re spending power.
Interests rates could rise from the low fours to the mid fours by summer 2018. A .5 percent change in interest rate on a loan for $450,000 is approximately $130 per month.
The big elephant in the room to be concerned about is housing prices. A house for $550,000 in January 2018 could easily be $595,000 by May 2018. Using a 20 percent down payment would change the mortgage payment just over $200 per month. If you’re doing a house purchase with less than 20 percent down that has monthly PMI built in for example you’re looking at a payment change of upwards of $245 a month more.
The longer you wait to purchase a house the more you are forced to save to offset having to pay a higher price with today’s dollars than future dollars. If your home buying plans is on the longer term (two years out or longer) you want to be saving somewhere between 10-12 percent of your pre-tax monthly income. If your home buying plan is within 12 months, you want to be saving 18-20 percent of your monthly pre-tax income.
It might make sense to start looking for a house sooner if the current market continues in the trajectory that it is currently going in. Here is why- in a rising market you will have market forces working for you i.e. potentially more home appreciation in your property and your ability to drop the monthly PMI becomes within your grasp sooner not to mention the substantial tax advantages.
Looking to get a mortgage? Get a quote now– it is fast and simple.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.