Key Takeaways

Waiting to buy can cost more if home prices and mortgage rates rise.
Long-term home values generally trend upward, helping earlier buyers build equity sooner.
In the example, delaying one year raised the payment from $2,071 to $2,498 per month.
Buying and renting out the property could help cover the mortgage while building equity.

In This Article

Many would-be homebuyers are still sitting on the fence wondering if they should buy a home now or wait until their finances are a little stronger. Does that sound like you?

Maybe you’re giving yourself more time to save up for a bigger down payment. Or perhaps you’re waiting until you’ve got a better job, get a raise, or paid down some of your debts.

While that’s wise to some degree, it may not be so wise to wait too long, as waiting to buy a home could cost you.

Why Will Waiting to Buy a Home Cost You?

It’s no secret that home prices are through the roof these days. But the truth is, real estate prices will always increase over time.

Even if the rate of increase may slow down and even plateau from time to time, prices only go in one direction over time: up.

Let’s look at a few examples of home price appreciation over the past 12 months in the Pacific Northwest, according to real estate research firm Zillow:

Washington State: $603,303; 0.6% price decrease year-over-year
Oregon: $502,156; 0.3% price decrease year-over-year
Idaho: $481,825; 1.6% price increase year-over-year
Colorado: $538,932; 1.7% price decrease year-over-year
California: $773,735; unchanged year-over-year

While home prices may hanve not changed or even dipped over the past year in many parts, over the long run, they increase. So, anyone who bought a home over the years has been able to get into the market before price increases forced their monthly mortgage payments to increase.

At the same time, they’ve been able to take advantage of price appreciation and build home equity quickly.

Waiting Won’t Save You Money

Don’t assume that waiting a few years to buy a home will save you money. Here’s a look at how the cost of waiting can add up when mortgage rates and home prices rise.

The following estimates are based on Freddie Mac’s home price appreciation and mortgage rate projections.

Let’s say you take out a home loan in August 2026 for $250,000 at a mortgage interest rate of 6.67% on a 30-year fixed-rate mortgage. Your monthly mortgage payments would work out to be $2,071.

Over the next 12 months, home prices increase, let’s say by $50,000. Mortgage rates increase too. In this case, you would now have to take out a home loan of $300,000.

Based on the new home loan amount of $300,000 and a higher mortgage interest rate of 7.0%, for instance, your monthly mortgage payment would now be $2,498.

That means you’d be spending over $400 per month in mortgage payments if you waited a year, hypothetrically speaking.

What Would an Increase in Home Prices and Mortgage Interest Rates Mean to You?

When you take out a mortgage, you’ll need to have a sizable down payment to put toward the purchase price of the home. And perhaps you’re waiting until you’ve built up a certain amount so you can keep your loan amount low.

But at the same time, you could be setting yourself up for a much more expensive mortgage.

The calculations above based on homer price and mortgage interest rate projections paint a picture of much higher monthly mortgage obligations. Those hundreds of extra dollars that you would be spending by waiting to buy a home could be spent in different ways, including investing.

And when you tally up all that extra money spent each month, you’d be shocked at how much that would come to at the end of the year, and even over multiple years. It could add up to be a huge amount of money.

Buy and Rent

If you think you’re not ready to buy a home right now, consider purchasing a property and renting it out for the first little while to help you out financially. As we’ve already shown you, waiting to buy a home can put you in a position to spend way more than you would have bought today.

But rather than be stuck paying a mortgage on your own, perhaps buying a home and renting it out can help. Every rent check you collect can go towards paying your mortgage.

In the meantime, you’re building equity in the home and avoiding the trap of getting stuck with high home prices and mortgage interest rates in the future.

Buying a home is a big deal. But it’s also a sound investment. With the right team behind you, you can get into the market today before prices and rates continue increasing, saving you a lot of money in the long run.