Homebuyers often ask themselves whether it makes sense to wait for lower mortgage rates before making their purchase decision. After all, even slight fluctuations can have a dramatic impact on monthly payments and total interest costs over time.
But the decision ultimately lies with you and your specific financial circumstances and goals. Read on to gain more insight into the potential advantages and disadvantages of waiting for lower interest rates.
The Benefits
Many prospective home buyers are waiting for mortgage rates and/or home prices to fall before making their purchase. A lower interest rate means lower monthly mortgage payments and savings over time; however, waiting may not always be the best choice.
No one knows with any certainty what interest rates will do in the future; they could quickly decline or remain high for much longer than predicted, leaving those waiting too long to buy property at risk of missing out when interest rates decrease and other buyers make purchases before you do. If rates go down quickly enough, other buyers could beat you to your dream home!
As mortgage rates have recently increased, they still don’t compare to historical averages – creating even more incentive to start home-buying today.
The Disadvantages
Many potential homebuyers waiting to purchase property are waiting for mortgage rates to decrease before making their decision. Lower mortgage rates should mean lower monthly mortgage payments in the long run; however, waiting may have its own set of disadvantages.
One possibility is that home prices could rise due to an influx of buyers waiting for rates to decrease before making their decision to buy, driving up prices for properties for sale in your desired location.
Waiting for mortgage rates to fall could also mean missing out on the home of your dreams altogether, since inventories in many areas are already at historically low levels and you’ll face much less competition if you purchase now rather than waiting.
As always, mortgage rates should only ever be one consideration when buying a property; ultimately the choice to become a homeowner must always remain yours and made on your terms. If you meet all requirements – qualifying for a loan and financial stability among them – purchasing is certainly an attractive prospect.
The Bottom Line
Waiting until mortgage rates decline before buying your home can sometimes backfire and end up costing more in the long run.
Reason being, by waiting too long it’s likely more people will start shopping for homes when interest rates decline – leading to bidding wars on properties and forcing up their prices even further than originally projected.
By purchasing at a time when rates are at their lowest, it could save you considerable money in interest costs and refinancing options can later be expanded as necessary.
Mortgage rates may not return to their previous levels in 2020-2021 any time soon; although it is possible that they’ll eventually decline again, but this cannot be guaranteed.
With mortgage rates remaining near record levels, it may be tempting to wait until rates decrease before making the move to buy your own home. But if you are financially prepared and ready now may be better; acting now allows you to avoid missing out on opportunities while locking in rates for years ahead.