Buying a Home

Generally, military families or individuals choose to buy a home after careful consideration:

  • Can I financially afford to buy a home?
  • Is it lower than the cost of renting?
  • Am I planning to live here long term? Am I doing to be able to rent this home if I receive orders somewhere else in a year?
  • Will I use a no money down VA Loan or choose put a downpayment?

Most people discuss buying a home for months or years before making their first move. Homebuyers generally aren’t looking at interest rates until after they’ve decided to buy a home. Ideally, you are buying a home when prices and interest rates are at their lowest, but that isn’t usually the case. The housing market is constantly changing. If you wait for the perfect moment, you might never see a rate decrease – you might have a dwindling inventory to choose from as well.

Interest Rates AND Home Prices Can Change

Another thing to keep in mind, is that interest rates aren’t at a record high. They are higher than they were a few years ago; however, they are still very manageable rates. Home values can also change, that’s why you should look at the values of similar homes and neighborhoods. Interest rates are just one of the many facets that should be considered when buying a home.

If you can afford to buy a home, go for it! Even if interest rates change, they are not likely to go down significantly – there’s a greater chance of an increase. If you’re planning your budget around your downpayment, it won’t go as far if you wait too long and home prices increase. You never know how the value of homes may change at any moment.

Reasons NOT to Wait on Rates

Maybe the your competitors want to wait it out. This is great news for you! Less competitors vying for the same homes mean more options and less stress. Since not as many people are buying homes, you can take your time and not worry as much about bidding wars and multiple competing offers. If it’s part of your financial plan to purchase a family home or to use it a rental property in the future, there are fewer benefits to waiting.

One advantage of buying a home when interest rates are high is that it may help you get a lower purchase price. When interest rates are high, fewer people are able to afford homes, which can lead to a decrease in demand and lower home prices. Additionally, when interest rates are high, lenders may be more willing to negotiate loan terms and interest rates to attract borrowers.

Another advantage of buying a home when interest rates are high is that it can help you build equity faster. When interest rates are high, more of your monthly mortgage payment goes towards the principal balance of your loan, which can help you build equity in your home more quickly.

According to Investopeida.com, “Buying a home as mortgage interest rates are rising is nothing to fear. From a historical standpoint, a 5% mortgage rate is still remarkably low. And a mortgage today with a fixed rate for the next 30 years is still considerably cheaper than historical comparisons, as seen in data provided by mortgage lender Freddie Mac.” (Full article HERE)

Refinancing

If for some reason rates plummet there are ways to made adjustments. After purchasing your home, if it makes sense, you can look into refinancing options. If interest rates drop, and you’ve paid down a portion of your mortgage, your lender can help you. Just keep in mind that with refinancing, it is a new loan, so you will incur closing costs. The fees are anywhere from 2-6% of your new mortgage. (Rocket Mortgage)

The bottom line is, don’t let interest rates scare you away from buying a home. As always, it is important to work with a knowledgeable real estate agent to guide you through these different scenarios. Let us help pair you with one of our agents!

Looking for a military-friendly real estate agent in your area to buy or sell a home? Click here to fill out our Military Real Estate Questionnaire and we will help find you an agent that is a great fit or send a us a message.

Looking for a military-friendly real estate agent in your area to buy or sell a home? Click here to fill out our Military Real Estate Questionnaire and we will help find you an agent that is a great fit or send a us a message.