How rates impact your decision to buy now or later (with specific examples)

Attached is a great chart showing how different price points and interest rates can impact your monthly payments. As you can see one percentage point can make a difference on your monthly payments. A lot of buyers are postponing their purchase waiting for the rate to go down. Perhaps thinking they can’t get into the house they want at the moment with the rate. If you are thinking of buying next year when the rates are lower, consider how the market is doing.  Say you want to buy a $450K home. You wait one year for the rate to go down from 7%-6% for example (saving $295 a month in payments – per photo below). The average home increase in the DMV annually is 4%. So in one year your $450K house is now selling for $468K. Yes you will have saved money ($3540) by not buying then, but the house may now cost you $15K more.

You can always refinance but you can’t turn the clock back to when the house was alot cheaper. Some buyers have opted to purchase something smaller than they were initially wanting, with the goal of having an investment they can sell or rent in 2 years – then move into the home they have been dreaming of.

So if you have a home at a higher rate, as the rates continue to drop slowly but surely, consider refinancing once they hit a spot you are comfortable with. Have a home now and are concerned about selling as you have a sweet mortgage at 3%. Consider renting. The rental market is at an all time high as there is currently a shortage of homes on the market so more people are renting. Feel free to ask me for a rental analysis for how much your property would likely rent for.