Are You an Aspiring Homebuyer? Mortgage rates have steadily been climbing – reaching just under 3% last summer – leaving many prospective homebuyers questioning whether it would make more sense to wait and see if mortgage rates decline before making their purchase decision.
But delaying could cost more in the long run. Here’s why:
1. It’s a Buyer’s Market
Buyer’s markets offer homes at more reasonable prices with less competition, giving you ample time to examine properties that meet your criteria and look for great bargains.
Buyer’s markets occur when more homebuyers than sellers exist, but this doesn’t have to mean settling for something you don’t love or having to make concessions to secure a new place for yourself.
When purchasing in a buyer’s market, expect to negotiate over price with the seller as well as asking for concessions like repairs and additional contingencies.
Monitoring mortgage rates in your area and keeping tabs on key market indicators such as days on market and price trends is always a wise move, however if you feel secure enough in your financial ability and want to become a homeowner quickly then that may be different – just keep expectations realistic and don’t get distracted by speculation surrounding interest rates!
2. You Can Refinance
Mortgage rates should not be your only factor when purchasing a home; also think about your financial future and if purchasing now would fit within your budget. Remember, as mortgage rates continue to increase you could end up spending more over time!
Refinancing can still make sense depending on your unique circumstances; however, refinancing will require a new application and documentation process. To expedite this process as smoothly as possible, prepare a portfolio of documents, such as pay stubs, bank statements, federal tax returns, credit report information and proof of assets to make the process as fast and painless as possible.
In general, purchasing a home even at higher interest rates could be the right decision if your credit and other debt levels are strong and emergency funds saved up. Mortgage rates are unpredictable; make sure loan payments fit within your budget so they work for the long term.
3. You’ll Save Money in the Long Run
Many homebuyers rely on mortgage loans to purchase their properties, with most lasting 15 or 30 years and being subject to interest charges. Therefore, having a low mortgage rate can save money over time.
Unfortunately, high mortgage rates are dissuading some potential homebuyers – an understandable phenomenon given that mortgage rates have more than doubled since 2022 began.
Put off a home purchase in hopes that mortgage rates drop is likely a mistake; no one knows what will happen with mortgage rates in the near future, and waiting too long could cost thousands in interest payments and closing costs over time.
Waiting until mortgage rates decrease can put you in competition with upsizing and downsizing homeowners who put off home purchases due to higher mortgage rates, driving up prices further and making it even harder to find something suitable. As such, it may be better to purchase now rather than waiting.
4. You’ll Build Equity
Home prices and mortgage rates tend to fluctuate cyclically, but you have the power to use other factors within your control to help qualify for better mortgage rates in the future. Waiting around for lower mortgage rates to enter the market could cost you thousands over time if it means not making larger down payments or eliminating PMI entirely.
Purchase your dream home sooner rather than later to ensure you take full advantage of lower mortgage rates and start building equity faster compared to waiting – both key benefits that potential homebuyers overlook when considering whether or not to make their purchase now or wait.