Whether you’re a seasoned homebuyer or looking for your first home, one thing remains true: the possibilities are endless. The thought of these boundless opportunities is exciting, but a multitude of questions can also cast a stressful shadow over this incredible time. Here, we’ve outlined three of the most important factors to help make your home buying and decision-making experiences as effortless as possible.
1. LOOK BEYOND THE PRICE TAG
Many buyers tend to fixate on the home price. However, if you are securing a mortgage, you’ll want to analyze a broader scope of fees that can increase this monthly payment. A number of communities have MUDs or PIDS, which push tax rates much higher. When selecting a community to call home, you should consider homeowners insurance, HOA fees, utilities, maintenance, and repairs.
Additionally, purchasing a new home opens buyers to a collection of benefits that are sometimes overlooked. A buyer whose previous home was built in 1991 received an electric bill of $330, however when he moved into his new Trophy home this past August — the hottest month of the year — his bill fell to just $120. As a new home requires less maintenance, buyers can also expect a substantial reduction in repair costs compared to those associated with an older home. Collectively, at today’s interest rates, you could pay an additional $75,000 for a new home and still have the same monthly outflow as a buyer who purchases a 30-year-old “fixer-upper.”
2. GO THE DISTANCE
Travel time can be a driving force for buyers to move closer or away from the city. On one hand, the further you commute, the more you spend on gas, vehicle wear and tear and, most importantly, time away from your loved ones. On the other hand, driving a few extra miles each day could save you hundreds of dollars per month in mortgage payments.
A breakdown of the numbers: if two people in a household commute, every extra mile traveled is equivalent to about 1,000 miles per year. Given this, if you saved $10,000 on your mortgage and drive an extra mile a day, you would spend only $48 more per month on gas (estimating a mile at $.575 per the IRS) while saving $833 per month on your mortgage. Collectively, you would save $702 per month to live in a more affordable community just a short drive from city offerings.
3. TIMING IS EVERYTHING
It’s no secret that the Dallas-Fort Worth real estate market is currently in high demand as residents and major employers relocate to the Metroplex. Last year saw median home prices in DFW rise by 9% for a new $350,000 home, surpassing the nationwide long-term average appreciation rate of approximately 4% per year. With interest rates reaching historic lows, buyers should consider making their move now versus making the potentially costly decision of waiting a year.
To put this in perspective, if you purchased your first home at an interest of 8.25% and your second home at an interest of 6.5%, a return to even a 4.5% interest rate would cost approximately $125,000 extra in interest over the life of the loan.
Whenever you’re ready to invest in your own DFW dream space, our experienced team is just a click away.
*All numbers are estimates only and given as guidance. As with any investment, we encourage you to do your own research and determine the suitability of the investment for you.