Summer is the most popular season for moving house, especially for households with school-aged children. If you have decided to postpone buying a home because of the current interest rates, it is possible that you could wait longer than you’d planned. However, no matter where prices and rates may be, you have some different strategies to consider.
Buy now, refinance later. While it is impossible to predict when interest rates will change, almost all lenders expect rates to eventually go down. If you’re buying in an area where home prices are still rising, this approach could be worth considering, especially if you are renting and not building equity.
Make a larger down payment. If you have the funds to do this, it could help you in several ways. In addition to a possibly lower interest rate on a mortgage, it will provide lower monthly payments. Also, you may be able to forgo private mortgage insurance or cancel it sooner rather than later.
Consider a shorter loan term. While this translates into higher monthly payments, it also earns you a lower rate. For example, according to Freddie Mac, the current average rate for 30-year loans was 6.71% earlier this month, while 15-year loans came in at an average rate of 6.06%. You will also save quite a bit in long-term interest.
If you’re waiting for the rates we saw in 2021 (which sank to under 3%, according to Freddie Mac), you may never buy. Almost every economist has predicted that the 3% mortgage rate will probably never return. This is because the mega-low rates were triggered by a unique, unforeseen set of circumstances that began with a global pandemic in 2020.
Thankfully, pandemics are rare. While some forecasters predict that rates will decline over the next 12 months, they don’t see rates dropping below 5% any time soon. One takeaway from these forecasts: Sure, mortgage rates might drop a little, but this may only end in frustration — especially if you are waiting and stuck in a property that isn’t right for you. Perhaps it’s time to accept the current rate atmosphere, buy that next home, and enjoy the truly unique rewards of home ownership. Ready to get started? Contact the Core Bank mortgage team about mortgage options and get pre-approved.
The post Want to Buy a Home Now? Consider These Strategies appeared first on Core Bank.
