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Ask A Realtor: Buy Now Or Wait To Save A Larger Down Payment?

Bianca writes:

My husband and I are a young couple with a child. We are thinking about buying our first home. We currently rent a condo for $850 monthly. We have no credit card debt, we do have car loans but don’t owe much. We have good credit and $8000 saved up for a down payment.

Would this be the best time to buy a home? Or should we wait 1 year to get a bigger down payment (we should have about $25,000 by then) in your opinion will the interest rates rise enough in the next few months that a bigger down payment wont make much difference?

Thanks for the question.  There tends to be a significant benefit to having at least 5% set aside as a down payment, so the answer to your question depends on how much you’re planning to spend on a home.  8k would be sufficient to purchase $160k home… If you can save just a little more, $10k works well for $200k purchase.  (There are options with even less than 5% down, they just aren’t as attractive.)

Obviously, a larger down payment is great, but unless you have a full 20% to put down the benefit is fairly negligible.  Regarding interest rates, they’re amazing right now, and I’m leery to project what they’ll be in the future.  I tend to think they’ll go up slowly over the next couple years, but we just don’t know.  One thing that I can say definitively though, is that prices are going up quite quickly right now, so if that trend continues you’d be better off buying this year.  Frankly, I’m more concerned that prices will rise over the next 6-12 months than I am that interest rates will change significantly.

– Jeremy

Jeremy Isaac is a local Realtor, but you probably know him better as Carrie’s husband.  Do you have a real estate question you’d like answered? Email Jeremy directly at jeremy@thecircagroup.com.

You can search the Colorado Springs MLS on Jeremy’s website, with no registration required to view homes, prices, addresses, or any other information. If you’re looking to sell your home, be sure to view his marketing portfolio and see how the use of HDR photography, professional video, and more will help your home sell for top dollar!

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