{"id":113483,"date":"2025-02-27T14:43:36","date_gmt":"2025-02-27T14:43:36","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/real-estate\/should-i-wait-until-mortgage-rates-drop-before-i-buy\/"},"modified":"2025-02-27T14:43:36","modified_gmt":"2025-02-27T14:43:36","slug":"should-i-wait-until-mortgage-rates-drop-before-i-buy","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=113483","title":{"rendered":"Should I wait until mortgage rates drop before I buy?"},"content":{"rendered":"
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By Jon Gould-Knight, February 21, 2025<\/p>\n<\/article>\n
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TL;DR<\/h3>\n
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Waiting for rates to drop might not save you money if home prices keep rising.<\/li>\n
First-time buyers may still build more wealth by buying now instead of waiting.<\/li>\n
If you already own a home with a lower interest rate, the decision to move is about more than just the mortgage\u2014convenience, lifestyle, and equity should all be considered.<\/li>\n
You may have more equity than you think, and rolling it into a new home could make moving more feasible than it seems, even with a higher rate.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Don\u2019t Wait for Mortgage Rates to Drop\u2014Here\u2019s Why<\/strong><\/h2>\n
I hear people say all the time, \u201cI\u2019m going to wait until mortgage rates go down before I buy my next home.\u201d<\/strong> That makes sense in theory\u2014after all, a lower interest rate means a lower monthly payment, right?<\/p>\n
But here\u2019s the thing: waiting for rates to drop doesn\u2019t guarantee savings<\/strong>. Home prices tend to rise over time<\/strong>, and interest rates may not fall as quickly as many hope. The longer you wait, the more you may end up paying\u2014either in appreciation, in lost equity-building opportunities, or in the emotional and practical costs<\/strong> of staying in a home that no longer fits your needs.<\/p>\n<\/div>\n<\/div>\n
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What If This Is Your First Home?<\/strong><\/h2>\n
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If you\u2019re a first-time buyer<\/strong>, you might be thinking:<\/p>\n
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\u201cIf I wait, I can get a lower mortgage rate and a lower monthly payment.\u201d<\/em><\/p>\n<\/blockquote>\n
It sounds logical, but let\u2019s look at the bigger picture.<\/p>\n<\/div>\n<\/div>\n
A $350,000 home bought today at a 6.8% interest rate<\/strong> will cost more per month than the same home at a 6.25% rate in a year or two<\/strong>\u2014but will that home still be $350,000<\/strong> by then? If it appreciates even 5% per year<\/strong>, that home could cost $375,000 or more<\/strong> in the near future, wiping out the benefit of a slightly lower rate.<\/p>\n
Meanwhile, during the time you wait, you\u2019re still paying rent<\/strong>, which builds zero equity<\/strong> for you. Buying now means you start paying down a mortgage immediately while also benefiting from home appreciation.<\/p>\n
A Quick Example:<\/strong><\/h3>\n
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Buying Now<\/strong>: A $350,000 home with 10% down at a 6.8% rate<\/strong> \u2192 $2,150\/month<\/strong> principal + PMI & interest<\/li>\n
Buying Later<\/strong>: A $375,000 home with 10% down at a 6.25% rate<\/strong> \u2192 $2,250\/month<\/strong> principal + PMI & interest<\/li>\n<\/ul>\n
You may save $1,200 your first year, but you have missed out on that $50,000<\/strong> in equity that your house gained just by existing! And that\u2019s before considering that rent prices tend to rise over time, too.<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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What If You Already Own a Home with a Lower Interest Rate?<\/strong><\/h2>\n
A lot of homeowners are sitting on interest rates below 4%<\/strong> from when rates were at historic lows. The thought of giving that up to buy a new home at today\u2019s 6-7% rates<\/strong> is, understandably, hard to accept.<\/p>\n
But the question is: Is staying in your current home actually the best financial AND lifestyle decision for you?<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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When the Numbers Aren\u2019t the Only Thing That Matters<\/strong><\/h3>\n
I talk to a lot of homeowners who feel stuck<\/strong>\u2014they don\u2019t want to give up their low mortgage rate, but they also feel like their current home isn\u2019t working for them anymore<\/strong>..<\/p>\n
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Cramming into too little space?<\/strong> That extra bedroom or larger kitchen could dramatically improve your day-to-day life.<\/li>\n
Tired of the layout or neighborhood?<\/strong> Sometimes, your priorities change, and your home no longer suits them.<\/li>\n
Wishing for a shorter commute?<\/strong> A little extra in your monthly payment could be worth the time saved each day.<\/li>\n<\/ul>\n
Money is important, but so is your comfort, happiness, and time.<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Your Home Equity Might Be the Key<\/strong><\/h3>\n
If you\u2019ve owned your home for several years, you may have more equity than you think. The average homeowner gained over $30,000 in equity in 2023 alone<\/strong>\u2014and in some markets, even more. That equity can be rolled into a new home<\/strong>, reducing your loan amount and making the higher rate less of a burden.<\/p>\n
For example:<\/p>\n
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You bought a home for $350,000 <\/strong>five years ago with 10% down.<\/li>\n
It could now be worth $480,000<\/strong> now<\/li>\n
Let\u2019s say you still owe $295,000<\/strong> on your mortgage.<\/li>\n
That\u2019s $180,000 in equity<\/strong> that you could use toward a new purchase.<\/li>\n<\/ul>\n
Even if you buy a more expensive home, your large down payment helps keep the new mortgage manageable<\/strong>\u2014offsetting some of the pain of today\u2019s higher rates.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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Will Mortgage Rates Drop Anytime Soon?<\/strong><\/h2>\n
Nobody has a crystal ball, but most projections suggest mortgage rates will stay above 6% for the foreseeable future.<\/strong> Even if they do drop, it\u2019s likely to be a gradual decline<\/strong>, not an overnight plunge.<\/p>\n
And here\u2019s the thing: If rates do drop significantly in the future, you can always refinance<\/strong>. But waiting to buy a home that fits your life<\/strong> right now could cost you in rising home prices, lost equity opportunities, and the personal costs of staying in a home that no longer works for you.<\/p>\n<\/div>\n<\/div>\n<\/figure>\n
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The Bottom Line<\/strong><\/h2>\n
Waiting for lower rates might seem like a safe strategy, but in many cases, it costs more than it saves<\/strong>. Whether you\u2019re a first-time buyer or a current homeowner, focusing only on interest rates can cause you to overlook other key factors\u2014like appreciation, equity, and quality of life<\/strong>.<\/p>\n
The right time to buy isn\u2019t just about the rate. It\u2019s about your financial situation, your lifestyle needs, and your long-term goals. If you\u2019re unsure what makes sense for you, let\u2019s talk.<\/strong> The best decision is an informed<\/strong> one.<\/p>\n<\/div>\n<\/div>\n
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Jon Gould-Knight<\/h2>\n
Broker | WA<\/p>\n
He\/Him<\/p>\n
Hello! I\u2019m a heart-centered real estate agent based in Vancouver, serving folks throughout Southwest Washington. My goal is to help you find more than just a house\u2014I want to help you find a home that truly feels like yours. I believe the home-buying journey should feel empowering, exciting, and tailored to your unique needs, and I\u2019m here to make that happen. Whether you\u2019re a first-time buyer or an experienced buyer\/seller who has been burned by non-empathetic or pushy brokers, I\u2019m committed to guiding you every step of the way with honesty, clear communication, and creative problem-solving.<\/span>
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\nI\u2019ve wanted to work for Living Room Realty ever since I first dipped my toes into real estate nearly a decade ago. The branding & overall vibe have always aligned with my design passion. After a career detour into 3D design and animation pulled me out of the Portland Metro Area for the past 7 years, I\u2019m back in real estate and getting the opportunity to join my first brokerage crush!\u00a0<\/span>
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\nMy clients have described me as patient, proactive, and thorough\u2014always ready to answer questions, explain the unexpected, and go the extra mile (sometimes literally!).<\/span>
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\nI have a passion for craft food and drink as I roast my own coffee, eat the spiciest food I can get my hands on, and I even used to host a haunted beer tour through various breweries in downtown Portland. In my down time I love to hang out with my wife, Kit, and our pets Minerva the pug and Dumbledore the cat. I\u2019m also a huge film, stand-up, and theater fan, with a background in both graphic design and theater arts. Fun fact: I\u2019ve even been an extra on Grimm and Portlandia!<\/span>
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\nLet\u2019s get together for a coffee or tea soon!<\/span><\/p>\n
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