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Are higher mortgage rates forcing you to put off homeownership? Read on to see how you’re not alone.
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Buying a home is a challenge these days because housing inventory is very low on a national level and property values are still elevated. But for some buyers, today’s mortgage rates may be spelling the difference between being able to make an offer on a home and having to wait.
A good 35% of Americans say that rising mortgage rates have priced them out of the real estate market, according to a recent Quicken survey. But if you feel that way, you should know that waiting for mortgage rates to come down may not be your best bet.
Today’s mortgage rates could be here to stay for a while
A big reason why today’s mortgage rates seem so outrageous is that in mid-2020, rates plunged to record lows, and they stayed low through the end of 2021. It wasn’t until a few months into 2022 that rates started to climb at a rapid clip, pushing more buyers out of the market.
Meanwhile, mortgage rates have been stuck in the 6% range since the start of 2023. And at this point, buyers might need to come to terms with the fact these rates could be the norm for quite some time.
In fact, historically speaking, today’s mortgage rates aren’t so bad. There was a period back in the mid-1990s when signing a mortgage meant locking in an interest rate in the 9% range. And even in the early 2000s, it was common to sign a mortgage in the 6% range.
The reason today’s borrowing rates for mortgages seem so high is that buyers aren’t used to them. But if you’re looking to buy a home, you may need to get on board with them to bring that dream to life. Otherwise, you might get stuck in a holding pattern as a renter.
Now to be clear, there’s absolutely nothing wrong with renting a home on a long-term basis rather than buying one. For some people, not owning a home means having more predictable housing costs and not having to spend the time on maintenance and repairs. But if homeownership is a goal of yours, you might have to convince yourself that today’s mortgage rates are acceptable enough to move forward.
Refinancing is also an option
Mortgage rates may not shift too drastically in the near term from where they are today. But if you can afford to buy a home at today’s borrowing rates, remember that it’s always possible to refinance a mortgage down the line.
Rates may not drop enough for refinancing to make sense for a good number of years. But if you can afford the mortgage payments you start out with, you can simply keep making them until an opportunity arises to lower them.
If you’re looking to buy a home, it’s natural to want as low a mortgage rate on your loan as possible. But you may have to accept the fact that rates aren’t going to fall below 6% for quite some time and make your peace with that.
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