What’s a first time buyer to do today?

You’ve probably read all the articles saying how much more per month the average house payment is today with the increase in interest rates. I have too.

While I don’t dispute their findings, I don’t really find them helpful. Yes, had somebody bought the same house sooner, they could have had a cheaper mortgage payment. Those rates don’t exist anymore. Why not tell first time buyers what they should do rather than making them focus on the wrong thing.

Let me tell you the biggest way these higher rates are costing you. If you are sitting on the sidelines, holding out for a year or so before re-entering the market, you’re paying a steep price in a lot of ways:

  1. You are not building equity.
  2. You are not getting the tax deductions homeowners get.
  3. You are not making money from the rising value of your home.
  4. You are deferring the date when you will have whatever home you own paid off.

All of that seems to me to be much more costly than paying a few hundred extra bucks a month to own a home. If you don’t have the extra money that today’s mortgage would be, I suggest buying a cheaper house. Buy what you can afford. Owning any home is a better investment than renting.

I have always said the best time to buy a house was yesterday and that the second best time is today. That is because homeownership is the best way to create wealth for the average person. It’s more than just owning where you live. It is about investing in yourself. You do that by leveraging time. The sooner you start, the sooner the benefits begin and the quicker they compound.

2 thoughts on “What’s a first time buyer to do today?

  1. Good points John. I’d add, after where we’ve been for years in central KY and most the US demand-wise, prices are extremely likely to go down. Rather they they’ll level out and time on market ~might – and that’s an if – spend a little more time on market. The other factor is rent is going nuts from all I read. Local and national articles about this almost weekly for the last month or so. So to your point, “yesterday or now” is better than later.
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    1. Rents are definitely going up. I have one house that I rented for $1500 two years ago. The tenant bought their own house and I had no trouble renting it for $2000 a month. That’s a a 33% increase!

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