Click here for gateway access to MLS
Trouble finding the perfect home?
Click here for off market properties list
Click here for a FREE Home Price Evaluation
Should I sell now or later?
Today I have a special guest with me. His name is David Lawver from Kal Financial and he is nationally recognized as a top-producing mortgage originator, and he has been in this business for 10 years. In addition to this, he's the host of Silicon Valley radio hour, which focuses on finances, real estate and other issues. This program airs on KLIV on Saturdays at 9:00 a.m.
Now, what we're going to focus on today is whether or not you should sell now or wait to list your property in the summer. David gets this question a lot as a mortgage professional, and he has put together some charts to show you where interest rates are headed and how this will affect you if you're thinking about selling your home in the near future.
What will it cost you to wait to sell in the summer?
This analysis covers a person selling & buying a home today, versus a person selling & buying a home in the summer. Home prices often rise 5-10% during the summer, so keep that in mind for now. This is taking a $750,000 starter home with a loan balance of $400,000 and selling it today. That money is then being parlayed into a $1.2 million dollar purchase price, leaving an $850,000 loan from the proceeds of this sale. In the summer scenario we're assuming the previous house of $750K rose in value to $825K, but that also the new purchase price rose proportionally in value to $1.31 million. This leaves a loan amount of $885K with the higher down payment.
After running the numbers, the monthly payment savings from buying today versus waiting until summer is $695 per month. When you buy today, the total interest over the lifetime of the loan is $700,455, and in the summer this amount would jump to $874,000. In total, your savings for purchasing a home today rather than in the summer would be just under $175,000.
Further, if that savings of $695 per month is reinvested at 5%, the person who buys today versus in the summer will have a bank account with $578,000 in it. This is on top of the $175,000 in interest savings.
What we can deduce from this is that if you buy today, you can save hundreds of thousands of dollars. However, if you can invest your savings you can actually gain on this transaction. Buying now can make a huge difference for the average buyer. The first few times that David ran this exercise he found it hard to believe how much you could save just by buying earlier rather than later. These numbers don't lie, though.
What you need to realize is that buying before the summer rush is a key long-term financial strategy. If you're thinking of buying or refinancing, be sure to contact David. He can be reached at (408) 834 4571 or email him at email@example.com.