Three Reasons To Consider Buying Before Rates Go Down
“I’m just going to wait to buy when the interest rates come down.”
We had plenty of buyer clients who said this last year. And it was completely understandable! Buying a home is a huge financial undertaking. One that a higher interest rate can have a significant impact on. Each point higher often equates to several hundred dollars more in a monthly payment. So waiting for rates to come down, on the surface, sure seems like a solid financial plan. However, there are reasons to consider getting back into the house hunt sooner rather than later.
Here are three reasons why you might want to buy before rates go down further:
1. More competition.
You’re not the only one waiting on the sidelines until rates go down. Every 0.5% rates go down, more and more buyers can qualify for larger loans and come back into the market. This will result in more and more homebuyers you’ll be competing with.
2. Less supply.
Even though it might not seems like it, we still have very limited housing supply. This shortage will become even more apparent as rates go down. Just because more buyers come back to the market, doesn’t necessarily mean the same number of sellers will. Why? Because there are still many homeowners with <3% mortgage rates who likely aren’t going to be enticed to sell.
3. It could end up costing you more.
And now for the economics lesson … what happens when there is high demand, but low supply? Costs increase. So while your interest rate might be lower, the cost to buy could be more. That cost could translate into the purchase price or closing costs or the time it takes to contract or any combination of these.
We’re not saying you should buy if you can’t afford to do so. However, for anyone who can afford today’s rates, it could be a good time to see what’s on the market and get ahead of the spring rush!
