Buyers should focus on what they can control rather than try to predict mortgage rates!!!
The math on buying a home grew even more depressing in recent weeks as mortgage rates approached 7%. Further frustrating buyers is the expectation rates could remain high for some time.
The average rate on the standard 30-year fixed mortgage rose to 6.96%, according to a survey of lenders released on Thursday by mortgage-finance giant Freddie Mac.
Many of those waiting for the right time to buy a home had hoped mortgage rates peaked last year. Rates dropped a bit in early 2023, but elevated mortgage rates seem to be sticky. Though some still predict mortgages will be cheaper by year’s end, much depends on the Federal Reserve’s decision at its September meeting. The Fed doesn’t set mortgage rates directly, but a further increase to interest rates could in turn push mortgage rates even higher.
Rather than trying to make a bet on the direction of rates, potential home buyers should focus on what they can control, such as their budgets and choice of property. Here are four ways to cope with today’s higher rates:
No crystal ball
Trying to time your home buying based on economic forecasts isn’t only stressful, but often impractical. Buying or selling a home is a medium-to-long-term investment that can’t be precisely timed. For most people, the right time comes down to persosnal circumstances.
Downsize your expectations
Higher interest rates mean your housing budget won’t go as far, so potential buyers may need to adjust their price range downward. It helps to be flexible and willing to make compromises.
Focus on the monthly payments
Buyers should consider how much interest rates influence their potential monthly housing payment. Financing a $440,000 home with 20% down payment at a 7% mortgage rate would mean a monthly payment of roughly $2,300, while a 6% mortgage rate would save a buyer about $200 a month. Make sure your monthly payments don’t bust your overall budget. See what other areas in your budget you can cut to give you enough breathing room.
Shop for the best possible rate
You can negotiate your mortgage rate. Begin with your primary financial institution. Ask if there are any discounts available based on your relationship or how you may qualify for any potential ones. It may be worth moving over assets if that means you receive a lower rate, which may range from a quarter to full percentage point. Ask me for any recommendations for competitive quotes.
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