The lease-renewal email arrives.

Your rent is going up again. It’s frustrating yet you tell yourself, “I’ll keep saving and once I have 20% down, then I can finally buy.”

On a $300,000 home (Yes, contrary to the headlines, there absolutely are homes currently listed for sale at or under $300,000 in Dane County) a 20% down payment would be $60,000. Let’s say you already have $15,000 saved, so you’d need another $45,000 to reach 20%.

Picking a number, we’ll say you’re comfortably able to save $500 per month…at that pace, you can get there…

It will just take 90 months, or seven and a half years.

That may sound like a responsible plan, but there is one problem:

What happens while you save?

Using a simple 4% annual appreciation example (Historic nation-wide average – Dane County is higher) a home valued at $300,000 right now would cost approximately $403,000 in seven and a half years.

By then, 20% down would no longer be $60,000. ($300,000 x 20%)

It would be approximately $80,500. (403,000 x 20%)

You did everything right. You saved $500 every month and grew your account to $60,000. Yet you would still be about $20,500 short of the new 20% target.

The finish line moved while you were running toward it.

That is why it can be so difficult to save up to enter the housing market.

This isn’t meant to be discouraging so stay with me!

What would buying sooner look like?

Compared to the examples above, purchasing the $300,000 home with 5% down requires approximately $15,000 upfront.

The estimated monthly payment is about $2,507, compared with approximately $2,150 with 20% down.

Yes, the lower down payment increases the payment by about $357 per month.

However, it also means bringing $45,000 less to closing and allows you to capture the $103,000 equity increase over the 7.5 year period.

The payment is higher, and homeowners must also prepare for maintenance and unexpected expenses. But waiting has a cost, too: more years of rent, possible rent increases and the risk that home prices continue moving faster than your savings.

The goal is not to purchase before you are financially ready.

The goal is to avoid waiting simply because you believed there was only one path.

Ask a different question..

Instead of asking:

“Should I wait until I have 20% down?”

Ask:

“What would need to be true for buying a home to improve my life?”

Could you comfortably afford the payment and continue saving?

Would you still have emergency reserves after closing?

Do you expect to remain in the home long enough for ownership to make sense?

Would buying provide greater stability, more space or a better quality of life?

At The 608 Team, we are not here to pressure you into buying. We are here to help you compare the paths in front of you.

You may decide to buy now.

You may decide to keep saving.

All we are suggesting is that the decision should be based on your complete financial picture, not the belief that you must reach 20% before the conversation can begin.

It’s important to understand your options before the finish line moves again, and that is exactly what we are here to guide you through! We have over 100 years of experience within our team and are partnered with extremely knowledgeable, vetted, local, seasoned lenders who thrive on educating our clients and providing them with options.

If you’re ready to explore which path may make the most sense for you, simply reach out to us at 608-535-9695 or Info@The608Team.com! We’re here to help!

This example is for educational purposes and assumes 4% annual compounded appreciation. Appreciation is not guaranteed. This example doesn’t include closing costs or other pre-paid items for ease of comparison.  Loan programs, rates, mortgage insurance and assistance options depend on borrower eligibility, lender approval and program availability.