I’ve heard a Realtor friend of mine tell me before, the best time to buy a home was 5 years ago. For some of us, that doesn’t make sense, but from what we’ve seen, it is always better to jump in than later down the road.
There’s a good chance rates may be dropping in the not-too-distant future based on a slowing economy, moderating inflation and a weakening job picture. It’s also likely the Fed will be forced to start cutting rates.
So, should you wait for rates to decline before making your home purchase? The answer might surprise you.
As rates move lower, more buyers will become eligible to purchase. In fact, the National Association of Realtors states that for every 1% decline in mortgage rates, 5 million more people can be eligible to buy.
Even if a small fraction of these eligible buyers decides to move forward, it will likely pressure prices higher and shrink the number of available home choices even further.
The advantage of buying ahead of a drop in rates is that you can capture the substantial benefit of appreciation, then refinance to a lower rate once they come down. However, this does come with a cost.
The added temporary interest expense along with the cost to refinance must be considered. When you weigh it against the much greater benefit of appreciation, the choice may become clear to marry the home today, while dating the rate in the interim.
I have the tools to allow you to evaluate what the forecasted appreciation is on the home you’re looking to purchase and weigh it against the temporary interest expense to see if it makes sense for you.
Don’t hesitate to reach out with any questions along your home buying journey.
