Mortgage interest rates are up. Inflation has hit record highs. And the headline news suggests the sky is falling and the housing market is on the verge of collapse. Given all the chatter, making the decision to buy a home today comes with indecision and misgivings. Should we buy now? Or should we wait?
It is true that mortgage rates are higher than the experts anticipated. That’s the point – no one knows. Experts can use all the forecasting and projections and charts and historical models that they can get their hands on, but no one can accurately predict where the rates will sit 12 months from now. The rates may be lower. They may be higher. If you wait, you’re waiting for the unknown. What we do know, however, is that real estate appreciates. If a $500K home appreciates only 4% next year, that’s a $20,000 return on your down payment investment. Not a bad way to build wealth – even if it does cost you an extra couple hundred dollars in interest every month.
Additionally, higher rates carry an upside – most buyers have dropped out of the market. Homes are sitting longer. No longer is a listing receiving 40 offers in 24 hours. Because of this, sellers are dropping their asking prices to garner interest. And sellers now are willing to entertain lower offers and seller credits. I’m seeing it happen every day. If you wait for the rates to come down? You’ll be trying to buy a home with everyone else who waited. Competition will be fierce again, home prices will go up, and sellers won’t have to negotiate.
Finally, if you’re a renter, then I like to compare interest rate to your monthly rent. Simply put, a 7% interest rate to the bank is much cheaper than a 100% interest rate to your landlord.
My advice: don’t wait – buy now. If you can afford the home today and you love it, move forward. We can always refinance you if, or when, the rates come down. Interest rates aren’t forever. But your home? That will be.
Cathy Larson, CMA
Home Loan Advisor
NMLS 2037741
Go Mortgage, LLC (NMLS 1018) | Equal Housing Lender
