2013 is the time to buy

While I was driving the other day I started thinking about homeownership. I came to the conclusion that I will never be ready to buy a home. Just like I don’t expect to wake up one day and desperately want kids. I mean, deep down in my heart those are things that I want and am excited about, but they are such significant decisions it will be hard for me to ever pull the trigger.

Realizing I have serious commitment issues, I needed to do something bold. When Girl Ninja came home from work last week I told her “Girl Ninja, we are going to buy a house in 2013.” She was just as shocked as I was that those words came out of my mouth.

To be honest. I still don’t really want to own a home. Sure, it would be cool to paint our walls and have more than 600 sqft of living space, but the thought of committing to one place for more than a few months totally stresses me out (We’ve been on a month-to-month lease for a year now).

So if I don’t want to buy a house, why would I?

Math. 

The economy and our personal finances have aligned in such a way that the universe is practically begging us to buy a house. Emotions need to take a backseat when the numbers look this good.

Here are the facts as I see them….

• By March 2013 we should reach our 100k savings goal.
• Interest rates are expected to stay at near historic lows for most of 2013, possibly ticking up in the fourth quarter.
• Our savings account pays less than 1% interest.
• We, at some point in the future, want to buy a house.
• We pay $975/month for rent.

Now let’s look at two different scenarios: 

We buy a $300k house Summer 2013 with an interest rate of 3.6%. We put $60k down to avoid paying PMI, leaving us with a mortgage of $240,000. This makes our monthly payment $1,091. About $370 goes to principal and $720 goes to interest.

Now let’s pretend we wait two years to buy a house, after interest rates have increased. 

We buy a $300k house in Summer 2015 with an interest rate of 5%. I put $60k down to avoid PMI, leaving us with a mortgage payment of $1,288. Of which, only $288 goes to principal (instead of $370) and $1,000 goes to interest (instead of $720).

Do you see what I see? If we want to buy a house anytime in the next five years, 2013 is the year to do it. Rates can’t stay low forever. They WILL start to go up, likely within the next 12-18 months.

The crappy economy is going to force this purchase a little sooner than we personally wanted, but when the stars (or in this case the numbers) align, you can’t ignore a great opportunity.

A depressed real estate market + Low Interest Rates + $$$ in Savings = Time To Buy A Home