We bought a home in an expensive home market. That was the right move

My husband and I had delay buying Our “forever home” for a while, holding our small apartment with the Rock-Bottom’s mortgage rate 2.75%, which we put in during the pandemic. In the last few years, we have observed how delivery remains in stagnation, while the property values ​​continue their stable upward march.

You probably noticed that housing prices grow with timeS Sometimes the costs of housing for housing during an economic boom or declines during a decline, but overall housing prices increase by several percentage points a year.

So when we found a single -family house right where we wanted to be in Massachusetts, we realized that we had to jump on it.

I will not lie. We love our new home, but we’re dealing with a sticker shock. Although we may probably refinancing In the future, it was painful to give up our relatively cheap monthly payments just to outpace the competition.

Our situation is not unique. Tons of home buyers are locked from a challenging home market because of tougher inventoryHigh prices and expensive interest rates. Some of us feel the only way to adapt, is to lock in a manageable housing payment before things get even more financially difficult. That is why we took the immersion.

Read more: This real estate expert says home prices never diminish

Understanding in a competitive market

My family lives in a historic coastal city, north of Boston, known for its charm and stability. Because it is relatively accessible compared to Boston, it is also very desirable among future home buyers.

Increased competition for less offering available homes has increased costs. The prices of the list increased by about 50% between 2020 and 2024, according to Redfin, with homes receiving multiple offers and selling within a few weeks.

“This is one of the more sought after communities in which we saw the market flourished and flourished,” said Bob DriscolDirector of Rockland Housing Trust.

This scenario is played in the United States in numerous markets where housing owners remain placed And they refuse to give up their 3% percent. So even mortgage“You still have to deal with exceptional competition,” said Driscol.

Overtaking the prices of home

When we started shopping for real estate, I studied the local market. I knew prices were slightly reduced because the sellers were overestimation their homes. We followed single -family houses in the area and noticed a beautiful property with a remarkable price drop.

The value of the apartment we bought in 2020 was strong. After making the calculations, we realized that we could sell it and we had enough to leave 20% down on the house and cover the cost of closing. This strategy allowed us to buy our dream house with a realistic mortgage payment.

Denial of the lower mortgage percentage

To say goodbye to our 2.75% interest rate was a difficult pill to swallow, especially because these low percentage are likely never come backS Home buyers must accept this reality.

After using several popular methods to reduceThis time we ended with 6.49%. One of these methods was temporary buying 2-1, which means that our payments are based on a lower rate for First two years of the loan. We paid for the purchase, using the receipts from our sale to Kondo.

This strategy does not save us money, but provides a forced savings account and a two-year increase in which we adapt to a higher mortgage payment. Our creditor offers refinancing without costs that we can use when the rates fall.

If I could repeat our transaction, I would probably buy points from a permanent redemption discount instead of temporary buying. This is because Mortgage rates do not decrease As experts predicted they would.

“I would say that the percentages will stabilize and sit somewhere in the 6% range in 2025,” Driscol said. “We do not predict any massive speed.”

Budget dear monthly payments

Before making an offer in our new home, I did some research to calculate how our costs and budget will change. The information has helped me determine if we can actually afford to live in our new house. (We could!)

Here are some linear items I planned for.

• A mortgagee He helped me evaluate our future principal and interest payments.
• Home insurance companies provided quotes to cover the property we watched.
• Property records helped us to evaluate our monthly real estate tax and water/sewer account.
• The utility company provides average monthly electricity and gas speeds at the new address.
• Our car insurance company told us about changes in the percentage based on our new address.

After the offer was accepted, we ordered an inspection of the home, which also helped us be budgets for future maintenance costs.

When buying a home makes sense

It is challenging to buy a home right now. Prices are high as well as mortgage ratesS But it is still worth evaluating whether this is the right solution for you.

Certain steps can help you through the process. Receiving ProvisionFor example, it can help you create a residential budget. This step also enhances your position in a competitive market because the seller knows that you already have a loan on board.

Think about what you feel comfortable to pay every month and try not to focus too much on the mortgage rate.

“If you love your home, you can afford it and qualify for it, deal with the percentage,” Driscol said. “You have control over this as time progresses.”

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