I’ve seen a lot of posts recently on social media talking about waiting for the mortgage rates to fall before buying a home.
Or vice versa, Not waiting In order for mortgage rates to fall before buying a home.
The typical argument when it comes from an interested party, such as a real estate agent or loan manager, is obviously not waiting.
If you wait they won’t get paid. Right? Right.
But do you even have to try time for the purchase to begin with?
It is impossible to put time on most things in life, especially mortgage rates
I remember when the mortgage rates hit the dreaded 8% brand at the end of 2023. At that time there were fears of double -digit rates.
But at the same time, a new tale appeared.
Maybe of desperation, or maybe out of some kind of real logic, came a cohort of real estate agents and mortgage loans with a “beat the rush” narrative.
Basically, with interest rates high, there was less competition out there. As such you could hover in and buy a home without getting into a bidding war,
And maybe you would even be able to make the seller and get a discount while you were at it. Win-win for another sub-optinal situation.
The rationale for doing so was that once the rates eventually fell, it would again give the war central.
You would have trouble coming back. Blah blah blah. This was also around the time that silly marries the house where the speed line appeared.
The prerequisite that was that the home purchase would be permanent, but the high priority rate did not have to be.
In other words, you can still get your dream home, but the 8% priority rate could be exchanged by a 4% percentage later.
It didn’t seem to work so well with priority rates still in the area with a high 6% today.
Of course, some recent buyers were able to get rid of their 7%+ rates and chin a rate with low 6% via a rate and term refinancing in September and October last year, but they probably expected much, much better.
What was even more unexpected is that when the mortgage rates eventually fell to the area by low 6%, no one seemed to bite.
After being told to hurry to buy as the rates were closer to 8%, there was a new argument to hang.
The reason was that the mortgage rates could fall even more, so why hurry in?
So the original argument was completely turned upside down and did not pan as expected.
Instead of bidding wars, it was crickets.
It was waiting for the mortgage rates to fall to 5% now that they are back to 6%.
Home buyers responded to lower priority rates by waiting for even lower (that didn’t come)
Guess what happened? You probably already know. The 30-year-old regular reverse course and went back over 7%.
Guess no one so it comes. Maybe they should have given the election just around the corner and many expected Trump to win.
And most people expected that his policies would be inflationary, which would lead to higher mortgage rates anything else equal.
While the rates have fallen since the inauguration, they are basically back to the same levels before the election.
So they went up on fear of inflation policies like customs, and then came back when Finance Minister Scott Bessent said it’s not as bad as it sounds!
In the end, the rates did not really go anywhere and they are still about 75 basic points (0.75%) higher than they were in September.
This means that those who kept on a home purchase in the hope of better were disappointed with the process.
They could have bought a home as the 30-year-old fast was 6%or even in the high 5s, but now it’s back to the high 6s.
How much does the mortgage rate in the big scheme mean?
At the end of the day, how much does the mortgage really mean something?
If you assume that you are not at the forefront of qualifying for a mortgage loan, the difference in payment is less than $ 200 for a rate of 6% against 6.75% on a $ 400,000 loan.
It’s not something, it’s still $ 200, although in the big scheme of things it is not a huge number when we talk about a big home purchase.
And as mentioned, there is also the possibility of a refinancing later (if it pans out).
But it makes you wonder if you should base your decision or buy or rent a home, or buy now or buy later, based on what may be a marginal amount.
This does not mean rush in now and buy today because you are throwing money on rent. No.
The much more important thing is without a doubt that the property that is in front of you controls all the boxes and is what you really want.
And you can predict yourself to spend the next 5-10 years there, as you probably need if you want/need to sell.
As I wrote recently if you buy a home today, you should expect to stay for a long time.
Ironically, this has high mortgage rates that have decreased the main course of refund.
This means that your loan takes much more time to whip down, and if you don’t come in with a 20% payment, you may not even be able to sell for a profit after a few years.
Even with home assessment, sales costs can be significant and eat for any sales proceeds.
So really, if you are discussing about buying a home today, think beyond the mortgage rate.
Yes, it’s a factor, but it’s not the only factor. And it is a fool’s errand to try to times on the market or guess where the rates will be (and how other buyers and sellers can respond).
Buy a home because you really want it and really can afford it. And plan to keep it for a long time.
Some questions to ask yourself
- The mortgage rates may not fall soon. What then? I still rent?
- What if prices go up before they go down again?
- How much does the difference in rate actually affect the monthly payment?
- Why do I want to buy a home right now? Can I wait? Why should I wait?
- Is there a specific priority rate that would significantly change my decision?
- Do I love the property, or do I look at it clean from a financial point of view?
- Do I buy the property because I think mortgage rates will fall and I can refinance?
- Do I buy the property because I fear I miss?
- How long do I expect to keep this property?
Read on: 10 reasons to buy a house other than for the investment
