If you’re waiting for interest rates to drop before buying, it might be time to change your strategy. The right opportunity could be available now–and waiting could cost you more than you realize.
With the right knowledge, tools and guidance, you may be able to negotiate a better rate, take advantage of market shifts, and even offset interest rate costs through smart contract terms or seller concessions.
The Cost of Waiting to Buy a $1,000,000 Home
If you purchase a $1,000.000 home here is the cost breakdown:
- Down payment: 20% ($200,000)
- Current mortgage rate: 6.5%
- Future mortgage rate in one year: 7.0%
- Home price appreciation rate: 5% annually
- Monthly rent if waiting to buy: $3,500
- Ownership horizon: 5 to 7 years (allows time to build equity)
Scenario One: Buy Now
- Home price: $1,000,000
- Loan amount with 20% down payment: $800,000
- Equity after one year from appreciation: $50,000
- Principal paid down in one year: $10,500
- Total equity gain in first year: $60,500
Scenario Two: Wait One Year to Buy
- Cost to buy a comparable $1,000,000 house a year later; $1,050,000
- Down payment 20%: $210,000 with a loan of $840,000
- Mortgage with an interest rate of 7.0%: $5,599/month
- No equity built or principal paydown while renting
- Rent paid over the year: $3,500 x 12 = $42,000
Cost of Waiting One Year to Buy Summary
Component Cost in One Year
Home price increase (5%) $50,000
Higher down payment (20% of $50K) $10,000
Lost equity/principal $60,500
Rent paid $42,000
Total Estimated Cost of Waiting One Year to Buy $162,500
If home values keep appreciating and rates stay the same or rise, waiting to buy a home could cost you well over $150,000 in just one year on a $1,000,000 home. If prices fall or rates drop, the opposite could happen, but most long-term buyers benefit from locking in sooner–especially if they plan to live in the home for years.
