Quote:
Originally Posted by Bill Bumface
Let's use your example, a house drops $20k by waiting a year.
Scenario 1: You buy the house now, and build a year's worth of equity via mortgage payments. That is ~$11,000 worth of equity in year 1 of a 25 year $400K mortgage. You also lost $20k in equity due to the price dropping.
Net equity for the year: -$9,000
Interest payments: ~$11,000
Scenario 2: You wait a year. You spend $18,000 on rent. The house drops by $20k
Rent payments: $18,000
So in scenario 1, you are out $20k, in scenario 2 you are out $18k. You also will save around $10,000 on the life of the loan.
Anyway you look at it, financially, it's worth it to wait a year for a $20k price drop.
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If you find a place you love now, and you are planning to stay long term it may not be worth it to wait the year. I would be willing to pay more for something I knew I could buy and loved, rather than waiting a year and hoping something was available.
If you are staying less than 5 years, I would say renting and waiting would be a better choice.