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Hello, Keith Renno here. Welcome or welcome back to the channel, wherever you are viewing this video. Want to touch on and explain this date, the rate, marry the mortgage or what I like to call the cost of waiting in today’s real estate market. I’m in California, average purchase price, about 800,000. So let’s say you’re purchasing today, putting down 10% rates currently are in the mid to upper sixes that would leave you with a mortgage payment principal. And interest of about 45 50, let’s say you wait right now, the major, um, agencies that are tracking home prices, making predictions. The average prediction here in 2023 in the year going forward is about 7%. So let’s say you wait a year, rates come down, now you’re buying that property for 850,000, $50,000 more. With that five and half percent rate, that payment would be about 43 50, about $200 less compared to buying today at today’s rate.Thank you,
But the kicker in this scenario, if you already own the property you already purchased at 800,000, and now have the opportunity to refinance rates, being again in the mid fives, all things comparable, that mortgage payment would be $4,088. That’s $250 or less compared to that $850,000 price that you’re buying at and paying that same rate in the mid fives. So that’s the cost of waiting. And let’s say it takes a year, even two years, even three years for, uh, rates to come down. Well, if you pay that extra $200 for a year, that’s $2,400. You pay it for two years, that’s $4,800. Still a whole heck of a lot less than the $50,000 price increase due to the supply and demand and the lack of inventory. We will continue to see here in California and overall why you’re perhaps hearing or being told don’t wait.
There for, it’d be more expensive to wait. ’cause if you can buy now, refinance in the future, and then long term you are saving that $250 forever long you’re in the property, have that mortgage for compared to buying at that higher purchase price. And that’s because when we see interest rates lower, that’s gonna allow more buyers to come into the market and it’s gonna become more competitive. And again, with the lack of inventory we have, that is why we are gonna see home prices continue to get bid up and why, uh, these agencies overall on average are projecting about a 7% home price increase year over year for the foreseeable future. Lemme know if you have any questions. We’ll love to chat further on this. Take care.
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