Mortgage rates are a key element when it comes to homebuying; however, your decision should depend on your financial stability and long-term goals as an individual. Pay attention to what’s within your control – building your credit score or saving for a down payment – rather than being stuck with an interest-only mortgage for too long.
However, procrastination could come at a price. Here are a few reasons why.
1. It’s Unpredictable
Mortgage rates have an intricate relationship with the housing market and can radically affect buyer demand. Higher mortgage rates may dissuade potential homebuyers from purchasing homes altogether and drive down market activity, thus delaying purchases plans until rates decrease further. Potential homebuyers therefore often wait until mortgage rates decrease further before acting upon them.
At the same time, it’s essential to remember that no one can accurately predict where mortgage rates will head next. They could drop further but are unlikely to retrace their lows from 2020-2021 – even the most optimistic economists do not foresee rates falling under 6% anytime soon.
Waiting for lower mortgage rates to arrive can be risky and wasteful of your time. Instead, prospective homebuyers should work toward building strong credit scores and increasing down payments in order to qualify for today’s rates and save on their monthly mortgage payment when the time comes. This will make purchasing much simpler.
2. It’s Risky
Mortgage rates have seen steady increases recently, and some prospective home buyers may be deliberating delaying purchasing until mortgage rates stabilize – this could be a huge miscalculation.
As mortgage rates drop, more buyers may enter the market, creating increased competition and rising prices. Furthermore, lower payments could make qualifying for new loans simpler by decreasing debt-to-income ratio (DTI), one of the primary criteria lenders use when underwriting loans.
Waiting until mortgage rates drop can lead to missing out on finding a property that best meets your needs and budget, or making decisions based solely on market fluctuations. Mortgage interest rates tend to fluctuate dramatically and it’s impossible to predict them accurately when there is economic instability like what we’re currently experiencing.
3. It’s Unaffordable
As mortgage rates remain elevated, prospective homebuyers may find it more challenging to find and afford their dream house. But mortgage rates are projected to decline this year and next, alleviating some of the financial strain associated with purchasing property.
Lower interest rates make qualifying for a mortgage easier by decreasing debt-to-income ratio (DTI), the measure lenders use to evaluate affordability. Plus, those who buy homes now while interest rates are still low may even have opportunities to refinance at reduced rates later.
But waiting for lower mortgage rates might not always be in your best interests. When rates decline, buyer demand surges and home prices rise dramatically – negating any savings associated with lower rates. Furthermore, an inventory shortage could make finding and purchasing your dream property much harder in the near future.
4. It’s Not a Good Time to Buy
As with any major decision, taking time and carefully considering all available options can be essential to making an informed choice. But if becoming a homeowner is your goal, waiting for mortgage rates to decrease may not be your best course of action.
With interest rates increasing and home prices already sky-high, waiting may no longer make sense for you. A good way to determine whether now is the time for purchasing is getting pre-approved for a mortgage – Churchill Mortgage offers assistance in finding one tailored to meet your unique situation and budget needs.
Mortgage rates generally decline and more people become interested in purchasing homes, home prices increase as demand outpaces supply on the market. By waiting, you could miss out on finding your ideal home and may end up settling for something less desirable than what was desired by you.