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  • Writer's pictureSarah McKee

Why Waiting for Lower Interest Rates Might Cost You More



With interest rates continuing to climb, I’m not surprised to hear potential buyers say they want to wait for interest rates to drop before taking the plunge into the real estate market. While everyone wants the lowest possible interest rate, waiting for rates to fall might not always be the best strategy. Waiting might make sense for you, but there are certainly some compelling reasons why you should consider jumping into the housing market sooner rather than later.


1. The Storm of Pent-Up Demand

One of the most significant reasons not to wait for interest rates to drop is the huge amount of pent-up buyer demand. Many would-be homebuyers postpone their plans during economic uncertainty or high rates, but as the economy stabilizes, these buyers re-enter the market with a vengeance. The result? Increased competition (hello, multiple bids!) for the limited supply of homes available, which can drive prices upward.


Think about it this way: if you wait for interest rates to dip, you might pay significantly more because of the fierce competition and rising prices. By acting sooner, you could potentially lock in a more favorable purchase price before it escalates beyond your budget.


2. You Can Refinance, But You Can't Change Purchase Price

Interest rates fluctuate over time, and while it's essential to secure a competitive rate, remember that you can refinance your mortgage later on. Your ability to refinance provides a valuable safety net that allows you to take advantage of lower rates when they become available. However, the purchase price of your home is a fixed number, and once it's set, you can't change it.


Imagine you wait for interest rates to drop before buying a home, only to find that prices have surged. When you eventually secure that lower interest rate, it may not offset the additional expense you incur due to the increased purchase price. By acting proactively and purchasing a home when you're financially ready, you have more control over your overall housing costs.


3. Building Equity and Wealth

Homeownership is not just about having a place to call your own; it's also a powerful wealth-building tool. The longer you own a home, the more equity you can accumulate. Equity is the difference between your home's value and the outstanding balance on your mortgage. As property values tend to appreciate over time, owning a home sooner allows you to build wealth earlier. By waiting for interest rates to drop, you delay the opportunity to build equity and potentially miss out on years of potential appreciation.



In conclusion, while the allure of lower interest rates is understandable, waiting for them to drop before buying a home might not always be in your best interest. The combination of pent-up buyer demand driving prices up and the ability to refinance your mortgage down the line makes a compelling case for taking action sooner rather than later. Remember, homeownership is a journey that extends beyond interest rates; it's about securing your place in the housing market and building wealth for your future. So, don't let the fear of rates hold you back. If you are wondering if it makes sense to seize the opportunity to invest in your dream home sooner rather than later, let’s talk!

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