Waiting for lower rates before buying a home?

Minneapolis, MN:  We get it. Today's mortgage interest rates are bouncing around rates not seen for 20-years, causing many people to pause their home purchase plans.  Who can blame you.  But, is waiting costing you more money in the long run than buying today, then refinancing when mortgage rates drop?

First, understand home prices have continue to go up, bucking what many people thought, that home prices were going to crash.  Instead, we just had another year with ‘exceptionally strong’ home price gains over 6%, and 2024 is expected to be about the same.

The Payment Math

Let us assume a home that was priced at $400,000 just two years ago. Figure 20% down, and your loan amount would be $320,000.  The loan only payment at 7.50% * on a standard 30-yr fixed would be $2,237.

Now assume you wait two years, AND the homes appreciation per year is just 5% (lower than recent actual). That means that $400,000 home is now $450,000. With 20% down, your loan amount is $360,000, but rates have dropped realistically to 6.00% *. On a 30-yr fixed, the loan only payment is $2,158 per month

We all see the 'cheaper' payment... But... YOU CAN NOT out-save home price appreciation!

While You Waited

1. YOU lost the $50k in YOUR equity to the price increase.

2. You still rented and made the landlord rich instead of yourself.

3. You didn't live in your nice new home the last two years.

4. You didn't really "save" much by waiting.

Q: Was 'waiting' really worth waiting for $79 per month?

Plus, You Can Alway Refinance

Now, factor in that sample 7.50%* rate on your $320,000 loan on the house you bought today.  Experts expect mortgage rates to drop significantly by late 2026.  If you refinance then, you could potentially save $300 or more per month, making today's purchase look even smarter.

The Bottom Line:

BUY TODAY if you can. Do we know home prices will continue to rise, and can we guarantee rates will drop in the future?  Of course not. But both of those items are extremely realistic as we continue to have a huge shortage in home inventory, and as inflation gets under control, mortgage interest rates WILL drop.

Finally, remember: The best time to buy was always 5-years ago!

*These hypothetical examples are illustrations for educational purposes only and are not an offer to lend, not today's rates, a rate you can lock, nor an official Loan Estimate. Qualification and rate for any loan is dependent on individual circumstance and subject to, but not limited to employment/income, credit history, acceptable liquid assets to close, and the current mortgage interest rate market. ** There is no guarantee of rates dropping, but highly probable.