Mortgage Interest Rates are Going Up - Should You Buy A House Now Or Wait?

Even if you have been living under a rock, you have probably heard that interest rates have gone up. Well, guess what? We have been telling you, we have been warning you for like 10 years, 12 years, since 2010. When I got in the business of real estate, we have been saying, we realtors, have been saying these rates, aren't going to last forever.

They're going to go up. And finally, finally, the rates went up every time we said the rates were going to go up, they went up a little and then they went back down. But this time it does seem to be like, maybe the rates are going to stay up and maybe even keep going up. So what does that mean for you?

If you are thinking about buying a house, should you wait to buy when the rates go back down or should you go full speed ahead today and pay the rate that you get regardless of how good it is in recent history's opinion? Well, of course, the answer is not easily given by a realtor on YouTube. I mean, really you're the only person who can answer that question, but I am here to share with you a little bit of information that might help you make that decision for yourself.

So, one thing to consider is that you should marry the house and date the rate. I mean, that's pretty cute, right? Date, the rate. So let's say, I'm not sure what rates are today, but let's say they're 5%.

Today, two years ago, I refinanced my house at 3%. So that 2%, that is a big difference. And that means that I'm not going to refinance my house at the 5% rate today because I have 3%. So if you are thinking about buying a house and you don't have anything to sell, are you gonna buy a house at 5%?

Why not? If it's the perfect house, if it's the house that you want to marry me, not like literally, but if it's the house, that's your house. If you want to call it home, if it hits all, if it checks all the boxes and you love it, you know the house, when you see it, why wouldn't you buy it?

Are you going to let somebody else live in it? Because you didn't want to pay the 5% rate? Are you going to live somewhere? You don't want to live as much because the rate is 5%. Now it's one thing. If you can't afford it, it's one thing.

If the price is too high and regardless of what the rate is, or if the rate combined with the price is just outside of your buying power, then that's an easy answer. Of course, you're not going to be able to buy that because it is just outside of your reach.

But If it is within your buying power, if you are approved for that price at 5%, why wouldn't you get it? Because you don't want to pay 5%? Who does? I don't want to pay 3%. Nobody wants to pay any percent, but that's the thing. You marry the house and you date the rate.

What if you buy it at 5% today? And what if six months from now rates are back at 3%? I don't know what's going to happen. What if they're 3% in two years, maybe you could refinance at that lower rate.

So yes, you would have paid more money in your payments between when you close and when you refinance at a lower rate, but wasn't it worth it to get the house that you love. What if you don't buy the house that you love because rates are 5% and you're going to wait for them to go down to 3%.

That's a strategy. What if they don't? What if, and I've actually had, I've had people waiting for the market to turn. So it's similar to waiting for the interest rate market to turn where they've been waiting for the market to turn for seven years.

And they've continued to rent during that timeframe because they just can't stand paying the price in today's market. They didn't like the price in 2017, 2016, 2017, 2018, 2019 2021. And they sure as heck don't like the price in 2022, because we know that the real estate prices have just gone up, up and up.

So they're patiently waiting while paying someone else's mortgage. So while the house that they could have bought seven years ago, heck even five years ago would be worth considerably more. Today. They chose not to marry the house. They chose to time the market. And it's a similar strategy when you're timing the market, waiting for the rates to go down.

We don't know if they're going to go down. The rates that we have had in the last 12 years have been historically low. They may never get that low again. They might be that low again tomorrow who knows what's going to happen. But when you are thinking about where you want to call home and you're considering not buying the house you love because rates are too high.

Well, what if you put off buying that house today at 5% and next year at 6% and the year after it's at 7%, 8%, 9%, doesn't it make more sense to pay 5% today than 7% in two years, date the rate. If the rate doesn't go down well, aren't you going to be happy that you've got that lower rate in the future?

When the rate is significantly higher date the rate, another option to consider is creative financing. So maybe a 30 year fixed loan. It's not really what you want, maybe because of the higher rates on the 30 year fixed loan, maybe a seven one arm is a better loan option for you.

The rate is fixed for seven years and then it adjusts after seven years. It adjusts one time per year. And the math is very complicated on that. I don't want to be the person to mess up the explanation on it, but talk to a lender of local expert. Somebody who knows the financing business very well.

So in the, in the past 12 years, it made sense to lock in your historically low rate for 30 years. But maybe it makes sense now to lock in for seven years, where are you going to be in seven years? Are you going to live in the same place?

Maybe, maybe not. Maybe it makes sense to do a ten one arm. There are a lot of different ways to manage your monthly payment, manage your investment in that interest rate, where you're dating the rate.

 Now, what does that mean? Date? The rate, if you're married, you probably remembered dating the people that were not really spouse material.
 You know, they were fun, but they're not the kind of person you bring home to mom and dad date the rate. So you can always change that rate with refinancing, or you can sell it or heck you could pay it off.

 You could do a Dave Ramsey and pay your mortgage off because you snowballed that finance. I know just enough to be dangerous about Dave Ramsey. So the point of all of this is waiting to buy real estate until you can time the market for not only for price, but also for the interest rate may not work out the way that you are hoping because it may not go back down.

And so if you, if you had your bets on that, you might miss out on a house that you love today to get a house you don't love as much tomorrow at a higher rate. So keep that in mind when you are trying to answer that very important question for yourself.

Do I really want to buy real estate at today's rate? Remember marry the house, date the rate, the rate is temporary. The house. Well, you might regret letting that one go. So if I can be of any assistance in your home search or answering any questions that you have.

I will have a link below this where you can schedule a call with me or anyone on my team. We would be happy to talk with you further on this topic. I'll talk to you soon.