• (651) 552-3681

    Home Purchase - Home Refinance
    Serving MN WI IA ND SD

    Cambria Mortgage app
    Cambria Mortgage application

  • Mortgage rates are up, should I still buy a house?

    October 10, 2022 | Joe Metzler
  • Minneapolis, MN:  Inflation is the enemy of mortgage interest rates (and just about everything else too).  As mortgage rates are up, should I buy a house is a question I am getting daily.  The answer is yes, and here are a few reasons why:

    HOME INVENTORY

    Homes are NOT going to be getting any cheaper anytime soon. We still have a major housing shortage that has no signs of ending anytime soon.  People will always need housing. This will keep pressure on home prices.  We should not be seeing any realistic reduction in home prices. Homes are selling in one to two weeks, with a couple of offers. Historically, this is pretty awesome to sell a home in two weeks, but does feel different from the past few years when ultra low rates had homes selling within hours with multiple offers.

    INTEREST RATE

    Mortgage interest rates WILL come back down.  As you see the inflation numbers fall, you should see the rates fall too.  If you can make the payment today, there is a bit of a sting with conventional mortgage rates around 7%, but just realize you’ll very likely refinance to a better rate, probably in 2024, and probably into the upper 4’s.

    On a $400,000 loan, going from a 7% rate today to 4.875% will lower your payment $545 a month, so you won’t have the higher payment forever.

    YOU NEED A PLACE TO LIVE

    Rent versus own? Everyone needs a place to live. The benefits of homeowner are clear. No landlord, building equity, family memories, tax benefits, and more.

    Renting isn’t any cheaper these days, and even if you rent, you are still paying a mortgage.  You are just paying someone else’s mortgage. Better to be paying your own.

    FUTURE AFFORDABILITY

    Ask your parents or grandparents what their mortgage payment was back in the day.  After you get off the floor laughing, realize that back then, they thought it was a high payment too.  I remember my first car loan payment.  My Dad was in shock, saying “That is higher than my house payment.”

    But realistically, assume you get yearly small raises at just 3% to 5%.  Over just a few years of increased income, your affordability factor becomes better and better.  Someday your grandkids will be laughing when you tell them your payment today.

    Of course homeownership isn’t for everyone.  But if you are even thinking about it, reach out t our licensed and experienced loans experts at (651) 552-3681 for a confidential review of your situation and home buying power. Better yet, just click is APPLY link to get started.