Should I Wait for Rates to Drop or Act Now?
Before you get too far into the process of buying a house, you want to be certain you’re ready for homeownership. Given your financial circumstances at this point in your life, is now a good time to buy a house?
Even though changes in mortgage interest rates could make homeownership more affordable, you’ll want to be sure you’ve improved your credit score* and debt-to-income (DTI) ratio. Those factors could have a significant influence on the rate you could qualify for, maybe even as much as recent mortgage rate changes.
Where rates stand today (and how we got here)
Mortgage interest rates today are generally lower than they were a year ago. Led by Chairman Jerome Powell, the Federal Reserve has recommended rates stay about where they are for most of this year after lowering rates three times to end 2024. President Donald Trump has urged the Fed to lower rates, but the nation’s central bank has resisted the pressure, citing concerns over inflation and uncertainty over the president’s tariff threats.
What experts are watching for the next move in mortgage rates
Most eyes are on Powell and the Fed. A change in the federal funds rate of even a quarter of a percentage point could signal a drop in mortgage interest rates. The nation’s central bank at its latest meeting in mid-June did not predict whether it could cut rates by the end of the year but did suggest cuts might be possible.
What happens if I wait to buy a home
If you wait to buy a home and mortgage interest rates increase, it will make housing less affordable. It also could mean fewer homes for sale and higher purchase prices.
Home prices generally have increased over the past several years. For example, Richmond, Virginia is one of the most competitive housing markets in the country. A home purchased there in January 2023 for $294,763 could sell for about $438,500 in today’s market, data from Redfin shows.
Mortgage rate history aside, the National Association of REALTORS® in its most recent report suggests that more homes are on the market now for buyers to choose from and more borrowers are signing contracts for home sales.
Conventional wisdom suggests mortgage interest rates are likely to either stay where they are a bit longer or come down some, which could make homes more affordable and put more of them onto the market.
When it makes sense to buy now in the current housing market
There really is no wrong time to buy a house. Mortgage interest rates, home purchase prices, life events and your overall financial situation all help determine homebuying conditions, whether it's your first house or your ultimate dream home.
What that generally means is: If you need a house and your finances allow it, you should buy a house. If mortgage interest rates and prices come down, the difference over the life of something like a 30-year mortgage could matter some but likely won’t be a dealbreaker.
How can I start the mortgage process today?
You can start today with Guaranteed Rate Affinity, get pre-approved and learn how much you can afford to borrow!
*Guaranteed Rate Affinity does not provide credit counseling or credit repair services.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
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