Are You Waiting for Lower Mortgage Rates? Here’s Why You Shouldn’t.
With the economy slowing down, inflation moderating, and a weakening job market, there’s a strong possibility mortgage rates may drop soon. The Federal Reserve may even be forced to cut rates. But should you wait to buy a home until mortgage rates decline? The answer might surprise you.
As mortgage rates decrease, more buyers become eligible. In fact, the National Association of Realtors reports that just a 1% drop in mortgage rates could make 5 million more people eligible to buy a home. Even if only a small fraction of those buyers enter the market, increased demand could drive home prices higher and reduce available inventory.
Why Buy Now?
The benefit of buying before rates drop is that you can take advantage of property appreciation and then refinance to a lower rate when they decline. However, this comes with some costs. You must consider the temporary added interest expense and the cost to refinance. When you compare these costs to the potential gains from appreciation, the choice may become clear: marry the home today, and date the rate for now.
At the same time, this isn’t the right answer for everyone. Personal circumstances play a significant role in this decision. If you or someone you know is considering purchasing a home and needs to weigh it against the temporary interest expense, please reach out to me. I’d be happy to provide advice to help make the best decision.
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