Is Waiting for Lower Interest Rates Costing You More? Why Buying Now May be the Better Option

Brian Mcintosh at Homeowners Financial Group is a mortgage expert here in the Upstate and this article is his breakdown on why making a move sooner than later could be beneficial to your wallet.

If you’re considering buying a house, you are likely to be bombarded by doom and gloom from the media or family members who bought a house once 15 years ago. There are certainly legitimate reasons why you may need to wait for interest rates to drop before making your move.

But it’s not so black and white. Waiting for lower rates can also end up costing you more money in the long run.

Let’s explore why you should consider buying now, even with interest rates hovering at around 6%.

Meet Maria and Sandy

Maria is eager to buy as soon as possible and has found a home she loves for $350,000.

Sandy, on the other hand, wants to wait for rates to drop before making her purchase so that she has a lower monthly payment.

With interest rates being at 6%, many buyers are doing exactly what Sandy is doing. This leads to fewer buyers in the buyer pool and thusly many sellers are willing to giving credits to buyers in negotiations. These credits can significantly lower a buyer’s out-of-pocket costs.

In Maria's case, her total out-of-pocket cost is only $23,000, even with a 6% interest rate, thanks to the $5000 seller credit.

The Cost of Waiting

Sandy waited to purchase and had higher out of pocket cost because the lower rate brought in a flood of buyers and lessened her chance to get seller credits.

In just six months, home price’s appreciated, causing the price of the house Sandy wants to go up by $13,000.

While it may seem like Sandy paying $5,000 more out of pocket is worth waiting and having a monthly payment that’s $200 less, there’s more to consider.

The Benefits of Buying Now

Maria has owned her home for 6 months now and her equity in the property has grown. She’s enjoyed stability and security knowing that she has a place to call her own and make long-term plans for the future. She sees that the interest rates have dropped and decided to refinance. She wraps her refinance costs into the closing to ensure that she has no additional out of pocket costs.

Meanwhile, Sandy is just now closing on her home. She’s unable to get any seller credits and paid more for her home than Maria did. Maria's equity allows for her to refinance at an even lower monthly payment than Sandy.

When Maria reaches 1 year of home ownership, she will have paid out-of-pocket costs totaling $43,000, including her down-payment.

Sandy, on the other hand, when she hits the 1 year market will have spent $47,000 out of pocket, $4,000 more than Maria.

The Bottom Line

Waiting for rates to drop may not be worth it. Buying now could save you money and give you a chance to build equity in your property.

Don’t miss out on the opportunity to own a home you love – take advantage of the current market conditions and make your move today.

Speak with an expert mortgage lender like Brian at Homeowners Financial Group to see if you should be making your move now!

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