Fall Buying by Josh Christie

Why is it better to buy a home now (Fall) in Omaha than it was in the beginning of 2023 or in 2022. This is some math I have done on a simple mortgage calculator showing how the rise in interest rates affects monthly payments between then and now. To keep this simple let’s take a home that is listed at $250,000 with $4,000 in annual taxes and assuming $1,500 a year for insurance.

For this exercise, let’s use 3% interest rate and a 7% interest rate for today’s example. Also, assuming a 5% down payment for each.

3% Interest Rate – $250,000 x 0.05 = $237,500 loan at 3% = a monthly principal and interest of just over $1,000 a month. Add in insurance and taxes for a total payment of $1,460.00 per month.

7% Interest Rate – $250,000 x 0.05 = $237,500 loan at 7% = a monthly principal and interest of $1,580 and with tax and insurance totaling $2,038.43 for a net increase of $578.43 per month.

Math shows the increase but perhaps the most important difference between the two is the environment in which
homes were sold between now and last year. Many homes in 2022 would sell in a day and could have had as much as
20+ offers on the home where the final price could have been as high as $50k over the original price. This presented a
lot of challenges for buyers in 2022. One is the appraisal value of the home. If the appraisal comes in low, the buyer,
most likely, has already declared an amount in cash to cover the difference (appraisal gap coverage) and will need to
bring that amount in cash additional to down payment and other costs when closing on the home therefore requiring a
larger cash to close and an increase to the figures mentioned above due to the increase in final sales price for the home.
You could be overpaying for your home, home inspections were virtually unheard of, and FHA and VA loans were losing
out to conventional loans and cash offers with ease. The difference in monthly payments above is wiped out many
times over in these times.

Today the landscape is very different and a fantastic opportunity for buyers. With the average time on market
increasing and sometimes the list price being reduced, home buyers have a fantastic opportunity to get the same home
at a discount while also having the possibility to have a home seller pay a portion of closing costs all while the buyer is
having the upper hand in negotiations when it comes to home and radon inspections, making the home purchase
contingent on the home appraising at the agreed value (you don’t overpay) and opening the door to many FHA and VA
home buyers.