How saving plays a role in your home buying plan

Saving up to buy a home is no easy feat. Here’s what you should take into consideration when planning out a home purchase.

One of the key components of being able to successfully buy a home is having enough cash for a down payment plus closing costs. Generally, you’ll need at least $20,000 to buy a home. The old 20% down rule does mean a low payment, but may or may not make sense for your specific financial situation.  As you continue to save your ability to buy a home could be compromised if you are in a rising market such a Sonoma County, CA or other pockets of the country.

Can you get in now? Does it make sense? If you have enough money to buy a home and still meet your other financial obligations, then buying a home with a long term fixed rate mortgage is generally a safe bet.

On the other side, if you’re in a competitive market, buying a home now may mean taking on a payment slightly higher than your expectations to be able to compete. It may mean a higher payment until debt is paid off, you come into some cash, a life event happens or your income rises. All of which may make sense for taking a payment perhaps a bit higher than your preference.

Here is the challenging part…putting off buying a home may cost more in the long run and here’s how that happens

Homes typically move at a faster pace in terms of volume, activity and appreciation than your ability to save. If you are savings 8% of your gross income, but homes are appreciating at 10% for example, you are going backwards. It means your % down will be less as the home inevitably costs more in the future possibly putting you right back to where you are today if you were to buy now.

Other Factors…

Rising rates– if this happens for .375 in rate on every 100k borrowed your payment will change by $22 per month. The more home you are trying to buy the more exposure you have to payment volatility based changing rates. This of course ties directly into how much payment you’re looking to handle on a monthly basis in relationship to your purchase price.

Rising home prices or a higher-priced home: this might end up happening if you wait to buy a house in the future. This will depend on homes in your market. For example a $500,000. 1.25% of the purchase price is the calculation for property taxes. For a $500k house that is a $520 property tax obligation a number that could wane on your affordability. If you were to buy a home today for 500,000 or wait a year and that $500k home is a now a $600k, you just missed an opportunity because you were savings when 12 months earlier you could have bought the home and potentially refinanced 12 months later.

If you can buy a home using a fixed rate mortgage, move on it. This way you have two factors at work in your favor; the equity built up by virtue of making your payment each month and your point in the door in something that can help you build wealth. Case in point if you buy that house at $500,000 today and that house becomes $600,000 value in 12 months you can refinance for payment reduction making the home more affordable.

Looking to buy a home? Get a free quote now.

 

 

 

 

 

 

 

 

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When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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