Why It Makes Sense to Buy Before Mortgage Rates Move Lower

Seattle area Real Estate Broker, Kim Mulligan, posted this on Facebook a couple of days ago regarding a recent listing:

“For those of you that were clamoring to be my neighbor, I have bad news. A pricing war ensued and an offer was chosen last night. Ends up we had well over 80 parties tour the home in two days, several offers came forth, and a lucky buyer will get to share a fenceline with me. Why do I mention this? Many people think that there isn’t a market right now because of interest rates. Yes, buyers are careful and shy. The truth is some people have to move in any market. Sellers don’t need to be afraid to list their homes. Yes, buyers are choosey, but priced and presented well, and with the right lender where you can change your interest rate when it drops down again, your home could sell within 3 days as well!

Why should you buy (and sell) now? Quite simply, should rates move to the 5’s (as Fannie Mae is forecasting for later next year), many people who have been waiting and wanting to buy will enter the already competitive market. This will not only push home prices higher, it will also cause the market to be incredibly competitive (bidding wars).

Not only will you pay more for the home due to increased competition, the longer you wait, the more the home will appreciate (depending on the area the home is located in).  Waiting to buy causes people to lose that opportunity for appreciation and for paying down the equity while they’re living in the home waiting to refinance to a lower rate (hopefully in 6-12 months).

Bottom line, if you’re living in your current house because you don’t want to give up your 3% rate or because you’re not thrilled with current rates (which are historically closer to a “normal” rate), you may want to at least consider the option of buying now when you won’t have as much competition as you’ll have when rates come down.

PS: We have a couple of programs that may be attractive to you; including a cash buyer program, if you’re facing multiple offers (like Kim’s listing last week) or if you have a home to sell, the cash buyer program enables you to buy before your existing home is sold.

Another option is the “All in One Loan” which is a 30 year heloc attached to a checking account. Because of how this mortgage works, it essentially takes today’s interest rate out of the equation. Your deposits to the account go directly to reducing the principal balance which dramatically reduces the interest you pay over time. I have a simulator on the right that where you can run numbers.

As always, if you’re considering buying a home (or refinancing), I am happy to help you! Even if you’re thinking your move is a year or so away, it makes sense to start a plan now so you’re in the best position for when your next home finds you.

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