Check Out Why Waiting for a Lower Mortgage Rate Could Cost You
If you’ve been watching the housing market closely, then you already know that mortgage rates have been much lower than they were in the past. While you might have noticed them slowly starting to rise, you’ll be happy to know that your chance to cash in on this golden opportunity hasn’t slipped by just yet. Instead, there is a slight trend of incremental increases, but you can still enjoy lower mortgage rates than your parents did when they first bought their home. However, this only applies if you make the choice to start house hunting now. Trying to wait out an increase in rates is likely to backfire, and understanding why this can happen helps you see the benefit of cashing in on what is a great moment for buyers right now.
The Current Trend Involves an Upward Curve
During the late fall, home mortgage rates started to rise over 3% again, much to the chagrin of buyers who were stalling on their decision to start shopping. While rates have fluctuated in the past, the current projections show no sign of that happening. Instead, the average rate is expected to hit 3.17% by the end of this year. By the third quarter of 2022, you could be looking at a rate of 3.55%. While it is hard to predict what will happen beyond this point, you’ll need to consider the possibility that the rates could increase more over the next couple of years. Acting now lets you lock in that low rate before it is expected to rise higher.
Even Half a Percent Increase Adds Up Over Time
At first glance, you might be tempted to scoff at a mere increase of one-half percent. However, this adds up to more than you might think when you take into account the size of the average home loan. If you purchase a home that falls within the $350,000 range, then you could be paying more than $100 extra a month. This comes out over a thousand dollars a year that you could save by shopping for a house while you can get a lower rate. Considering that many homes for sale in Long Beach exceed this price, you could be stashing away several thousand dollars a year by buying a home now.
Rising Home Prices Can Counteract a Slightly Lower Rate
Home prices have been increasing by about 8% during the past few months. You might have even heard of a few people that you know discovering that their home was worth far more than they paid for it a few years ago. Saving on your mortgage rate is important, but you also want to consider the cost of waiting so long that the house you want increases significantly in value. Weighing out all of the factors regarding your home purchase helps you decide if you should take advantage of the best that the market has to offer for now.
Making financially-savvy decisions requires thinking about the big picture. If you plan to buy a house within the next year or two, then you likely won’t see a major plummet in mortgage rates or home prices. Instead, taking advantage of the current mortgage rate gives you the opportunity to stop worrying about rising rates and begin living your dream of being a new homeowner.