Mortgage interest rates may not be as attractive as they were in 2020 and 2021, but that doesn’t mean prospective homebuyers should delay buying. Delaying may actually work against them in the form of increasing costs down the road.
Experts advise taking the plunge and starting building equity as soon as possible, rather than postponing until later.
1. Your Credit Score
Mortgage rates typically benefit those with higher credit scores; thus if you’re planning on purchasing in the near future, working to improve your score could be one way to ensure an easier mortgage application process.
With mortgage rates increasing since their lows in 2020-2021, prospective homebuyers may feel discouraged from their dreams of homeownership. Even small increases can significantly diminish purchasing power by raising monthly mortgage payments significantly.
Although it might be tempting to wait until mortgage rates drop further, doing so could prove costly in the end. That is because you won’t have the ability to retroactively refinance if rates start increasing again – moving ahead with your plan now could save thousands over time!
2. Your Down Payment
Your mortgage lender uses your down payment as security against risk associated with your loan, so the higher it is, the less risky you appear in their eyes and consequently lower will be your interest rate.
Home prices have steadily increased, making it harder for those without large down payments to acquire property. However, several government and private programs provide assistance with down payments.
Even though mortgage rates have seen steady increases this year, you shouldn’t wait to begin your home search. When buying makes the most sense for you and your financial circumstances and goals is when using a mortgage calculator to see how different interest rates impact monthly payments and other costs.
3. Your Budget
Mortgage rates don’t have to keep you from purchasing your dream home! A mortgage calculator can help you assess if waiting for lower rates is best, or if current ones are pushing past your purchasing power and into unfeasible territory – and make adjustments as necessary in your budget plan.
As part of your budget strategy, look for opportunities to increase income through things such as asking for a raise or looking for higher-paying employment or starting side hustles to bolster it. Maintaining a surplus can give you purchasing power now while helping protect against higher rates later. Plus, refinancing loans may provide lower rates once again!
4. Your Future Plans
Many home buyers worry that mortgage rates will continue to rise, which may tempt them to wait before buying their dream home in hopes that mortgage rates drop further. Unfortunately, doing so would mean foregoing the wealth-building benefits associated with homeownership and could cause you to miss out.
Mortgage rates have seen a slight uptick since their lows in 2020, prompting potential homeowners to delay purchasing now. But it is important to keep in mind that rates could fall back down again over time.
Interviewers typically ask prospective employees about their future plans during job interviews to help gauge whether or not they plan to remain with the company long term, or are likely to leave within a short period. Homebuyers should similarly take their career goals into consideration when determining if waiting for lower mortgage rates would be wiser.