Is There a Benefit To Buying a House When Interest Rates Are High?
As long as you consider your budget carefully and can afford the home you want, it doesn’t make sense to wait to buy if you are ready to make a move.
Keep in mind, there are some drawbacks to buying when rates are high.
It may be harder to get approved for the home you want when interest rates are high.
Buying when interest rates are high could mean sacrificing on some levels, such as buying a smaller or more outdated home.
On the other hand, there may be less competition amongst buyers, and sellers may be more willing to reduce prices.
Experts predict a drop of 10% to 15% before the end of year, which would be the largest housing price correction since World War II.
This market correction is making homes more affordable for many people, especially if you have a large down payment to help offset higher interest rates.
There’s less risk during the buying process.
It’s harder to qualify for a mortgage, which means you are less likely to buy more home than you can afford
You’ll also face fewer risks throughout the bidding process. In a seller’s market, buyers often feel forced to waive contingencies to compete for the home they want.
Homes are less likely to sell for more than their appraised value, which is better for buyers without extra cash because if you agree to pay more than the home’s appraised value, you’ll need to pay the difference in cash.
Once you find a home you can afford, you have options to secure a lower interest rate. You may be able to purchase “points” on your mortgage, which reduces your interest rate.
Typically, for every 1% of your mortgage loan amount you pay at closing as “discount points,” your interest rate will drop by .25%.
You can refinance later if mortgage rates drop
You’ll have received the benefit of buying a home at today’s lower prices, and then reduce your mortgage payments by refinancing at tomorrow’s (hopefully) lower rates.