Waiting for Rates to Drop? Here's What Every Homebuyer Should Consider
Mortgage rates are an important part of the home-buying equation, but the "average" rate you hear about in the news isn't necessarily the rate you'll have to settle for. Your interest rate is influenced by several factors, including your credit score, income, assets, loan type, and overall financial profile.
In fact, there’s something many consumers don’t consider at all when it comes to thinking about homebuying affordability. It’s called your “Blended Average Rate”. Your blended average rate is the total interest each person pays on every credit card they have; every car loan, every personal loan, every student loan, every HELOC, and more. Some people pay more interest on debt than others, and it all comes into play when you’re considering your monthly affordability on owning property. My job as a realtor isn’t to let you feel hopeless because of the rate number we see in the news, it’s to find solutions. This is one of them. If you carry a lot of debt, consider consolidating, paying it off, or negotiating a payoff from the seller in your offer in order to balance out your overall “rate”.
There are so many solutions, work-arounds, and creative ways that you can take advantage of to get yourself into homeownership, without feeling restricted by the national average mortgage rate. That's why speaking with a knowledgeable lender is one of the first and most valuable steps you can take towards your goal. A good lender can help you understand your options and identify the financing strategy that best aligns with your goals and budget.
Many buyers are surprised to learn how many financing programs and creative solutions are available. From rate buy-downs and down payment assistance programs to specialized loan products, there may be opportunities to reduce your upfront costs or achieve a monthly payment that feels more comfortable than you expected. While you can’t control the national mortgage rate, you can control your monthly payment. That’s good news!
Still, it's common for buyers to wait on the sidelines in hopes that interest rates will fall. While rates may decrease in the future, they can just as easily move higher. Trying to perfectly time the market is difficult, and waiting may mean missing out on the right home or paying more later. While you don’t want to be house-poor, if you can find a monthly payment that works for you short-term, the long-term equity that you gain can be well worth a small sacrifice. Owning a home for only three years, can give you a substantial amount of equity and credit that you can use to step up and purchase your next home. And you can keep growing your investment portfolio from there. There’s a saying that goes: When is the best time to plant a tree? 20 years ago! When is the 2nd best time to plant a tree? Now!
If you're considering purchasing a home, the best place to start is with a conversation. Connecting with a lender can help you understand what's possible, what your true buying power is, and what options may be available to you today.
And remember, if interest rates decrease after you purchase, refinancing may allow you to secure a lower rate and monthly payment in the future while continuing to build equity in your home.
